Architecture & Design w/ 38 Employees
In operating as full-service architects for commercial property owners, investors, and contractors, this company has developed unique areas of specialization. By focusing on commercial architecture and industrial design, this firm has created incredible fulfillment centers, manufacturing plants, data centers, big box retailers, offices, dealerships, and mixed-use properties. The knowledgeable team provides everything a client may need from master planning and site selection to interior design and project management.
Guided by a strong leadership team, this lineup of eleven architects, seventeen technicians and non-licensed architects, two interior designers, and three administrative staff offer superior and consistent customer service. The diverse staff has come from around the globe. All team members are fully bilingual and can communicate in both Canadian official languages. This close-knit team has excellent tenure and the current partners would love to remain a part of this dynamic company after the sale. A new owner would be well-served in keeping this strong and knowledgeable team in place to generate continued growth, to foster the outstanding company culture, and to maximize unique assets.
- Year Established: 1959
- Location: Quebec, Canada
- Service Area: Canada coast-to-coast
- Clients: Commercial property owners, investors, end users, and contractors
- Services: Commercial full-service architecture firm
- Building: 8k sq. ft.: State-of-the-art space with private offices (7), conference rooms (3), staff work stations
- Reason for Selling: Opportunity for growth
- Employees: 28: Architects, Non-Licensed Architects and Architectural Technicians, Interior Designers, Administrative
- Hours: M-F 8:30-5:30
- Seller Training Period: All partners prefer to stay on – which is accounted for in ongoing Cash Flow for a Buyer
- Growth Opportunities: Expand geographically, increase fulfillment/distribution center projects, increase data center projects, build interior design services and integrate into projects
- Current Owner’s Responsibilities: All owners are present and work with clients daily and plan to continue employment under new owner
- List Price: $23,900,000 CAD
- Gross Sales:
- 2018: $10,895,581
- Cash Flow:
- 2018: $5,321,906
- Assets Included in Purchase*
- Equipment: $115,000: Plotters, printers, computers, servers, interior design materials closet
- Average A/R: $1MM
- Under Contract: $18MM
- Intangible Assets: Very long-term client relationships, many repeat clients, excellent reputation, positive company culture, experience throughout Canada
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$5,536,658||$2,263,285||$2,120,466||$1,514,113|
|Contributions/Donations||$32,622||$21,430||$20,220||$15,408||Non-onward going expense|
|Auto Expense||$24,165||$16,291||$14,608||$16,367||1/3 is personal|
|Cell Phones||$3,600||$3,600||$3,600||$3,600||$300/month for personal lines|
|Salary Adjustment||$-338,000||$0||$0||$0||Adjustment for Partner's onward going Salary|
|Seller's Cash Flow = Total Addbacks + Net Income||$5,321,906||$2,669,684||$2,226,741||$1,615,255|
|Profit Margin||48.84 %||37.27 %||29.14 %||31.40 %|
- Currency in CAD
- Sales dipped a bit in 2017 due to a restructuring on the use of subconsultant costs. They did reduce the engineering costs and increased cash flow and the profit margin in the process. The new approach has continued into 2018
Typical Clients and Services
- Business owners
- Investors, including institutional
- End users
Selected Example Services:
- Commercial full-service architecture firm
- Site selection
- Due-diligence reviews
- Architectural design
- Drawings and specs
- Interior design
- Project management
- Construction review
- Site supervision
- Master planning
Specific information regarding clients and services are available upon the receipt of a signed Non-Disclosure Agreement.
Total Employees: 38
- Non-Licensed Architects and Architectural Technicians
- Interior Designers
- Expand geographically
- Increase fulfillment/distribution center projects
- Increase data center projects
- Build interior design services and integrate seamlessly into projects
- Work with US companies to create architectural plans at a reduced rate by capitalizing on the Canadian/US exchange rate
The Firm Business Brokerage used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, 2018 cash flow was used with a prescribed multiple is 4.5. With this information, the computation is as follows:
$5,321,906 x 4.5 = $23,948,577
The fair market value found above positions the business list price at $23,900,000
15%Buyer Down Payment: $3,585,000
30%Seller Equity or Earn out: $7,170,000
55%Bank Loan: $13,145,000
Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $145,936
After business expenses and loan payments, a buyer with a 15% down payment of $3,585,000 would retain a profit of $2,501,774, which results in a 69% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $23,900,000 with the terms listed above, the coverage ratio is 1.89.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
**The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.**
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