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B2B Manufacturer of Rec Equipment

CASH FLOW
$615,372

Specifications

  • Price
    $2,800,000

  • Revenue
    $4,189,066

  • Inventory
    $103,000

  • Service Area
    Worldwide customers

  • Equipment
    $245,000

  • Lease
    13,000 sq. ft.: manufacturing factory, offices

  • Reason for Sale
    The owner is looking for a buyer to help the company grow!

  • Employees
    Sales/design (1), Financial Controller (1), Administration (1), Factory Manager (1), Welders (3), Fabricating Supervisor (1), Fabricators (2), Sewing (1), Temporary employees (1-10 as needed)

  • Intangible Assets
    Superior reputation, excellent innovation of product, established long-standing relationships with customers, experienced and knowledgeable team, creativity in concept

 

Redefining the inflatable entertainment game industry, this leading manufacturer has been creatively developing new amusement experiences since 1985.  The work is all done in a large 13,000 sq. ft. building, which includes both the manufacturing factory and offices.  A focus on mechanical innovation in tandem with a playful imagination has allowed this company to merge the technical aspects of the games with the ability to endlessly redefine their products.  With customers across the United States and around the world, this company has created a superior attraction that customers love!

 

As a crowd favorite, mechanical bull rides are a signature product for this company.  Due to the in-house development of innovative mechanisms within the ride, the client has the ability to customize this experience with new characters that can be easily manufactured by this experienced team.  These customizations can also be created in such a way that clients can change the character attachments without professional assembly assistance.  Also included in the product lineup are incredible inflatable obstacle courses, action games, tandem race games, and so much more.

 

The current owner is responsible for general management duties and the well-trained and knowledgeable staff can assume most day-to-day operation duties. 

 

Business Highlights

  • Year Established: 1985
  • Service Area: Worldwide customers
  • Customers:  Entertainment centers and parks, bars, corporations, rental industry
  • Products: Inflatable amusement games and rides
  • Lease: 13,000 sq. ft.: manufacturing factory, offices
  • Reason for Selling: The owner is looking for a buyer to help the company grow!
  • Employees: Sales/design (1), Financial Controller (1), Administration (1), Factory Manager (1), Welders (3), Fabricating Supervisor (1), Fabricators (2), Sewing (1), Temporary employees (1-10 as needed)
  • Hours: Office: 8:00 - 5:30
  • Seller Training Period: 90 days transition
  • Growth Opportunities: Expand further into entertainment centers, add interactive components, expand into new global markets
  • Current Owner’s Responsibilities: General Manager

Financial Highlights

  • ·         List Price: $2,800,000
  • ·         Gross Sales:
    • o   2017: $4,189,066
    • o   2016: $4,268,298
    • o   2015: $3,511,211
    • o   2014: $3,362,392
  • ·         Cash Flow:
    • o   2017: $615,372
    • o   2016: $734,654
    • o   2015: $530,010
    • o   2014: $190,687
  • Assets Included in Purchase*
    • Equipment: $245,000: CNC Machine, welders, tools, cutting machine, wide format digital printer
    • A/R: $355,000 as of 12.17
    • o   Work in Progress: $300,000
    • Intangible Assets: Superior reputation, excellent innovation of product, established long-standing relationships with customers, experienced and knowledgeable team, creativity in concept

*amounts may vary

  • ·         List Price: $2,800,000
  • ·         Gross Sales:
    • o   2017: $4,189,066
    • o   2016: $4,268,298
    • o   2015: $3,511,211
    • o   2014: $3,362,392
  • ·         Cash Flow:
    • o   2017: $615,372
    • o   2016: $734,654
    • o   2015: $530,010
    • o   2014: $190,687
  • Assets Included in Purchase*
    • Equipment: $245,000: CNC Machine, welders, tools, cutting machine, wide format digital printer
    • A/R: $355,000 as of 12.17
    • o   Work in Progress: $300,000
    • Intangible Assets: Superior reputation, excellent innovation of product, established long-standing relationships with customers, experienced and knowledgeable team, creativity in concept

*amounts may vary


Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$4,189,066$4,268,298$3,511,211$3,362,392
Net Income Shown on Financial Statement$13,885$62,525$48,732$5,634
ADDBACKS
Compensation to Owner$262,202$231,939$168,546$113,055Owner
Other unrelated Salaries$41,123$45,156$43,180$0Employee 1 "B"
Other unrelated Salaries$0$64,360$65,601$19,582Employee 2 "C"
7.8% Tax on total W2 Salaries$23,659$26,633$21,632$10,346
Depreciation$0$33,396$32,443$38,362
Interest$97,732$89,522$4,820$1,980
Meals & Entertainment$3,348$2,673$2,045$1,728
Auto- Audi$19,372$17,028$15,613$0
Auto - Land Rover$17,227$18,792$6,702$0
Auto Fuel$7,832$5,916$7,531$0
Auto Volkswagon$0$10,655$8,349$0
Auto Audi 2$0$0$5,486$0
Auto Rolls Royce$0$0$23,833$0
Auto SE Toyota$0$0$8,602$0
Auto Lauderdale Imports$0$0$5,000$0
Auto Maintenance$805$2,679$7,216$0
Cell Phone$6,455$5,976$5,024$0
Travel$28,565$44,284$0$0
MEdical Insurance$47,389$32,001$22,381$0
Insurance Aetna$0$0$630$0
Insurance Allstate$0$0$6,462$0
Insurance Am Modern$0$0$2,041$0
Insurance BB&T$0$0$3,097$0
Insurance Nationwide$0$0$1,259$0
Insurance Safeco$0$0$1,278$0
Personal Expenses$45,778$41,119$12,507$0Sam's Club, Amazon, Houzz, Etc.
TOTAL ADDBACKS$601,487$672,129$481,278$185,053
Seller's Cash Flow = Total Addbacks + Net Income$615,372$734,654$530,010$190,687
Profit Margin14.69 %17.21 %15.09 %5.67 %
  • 2017 profit margin: 15%

Typical Clients

  • Location-based entertainment parks/centers
  • Family entertainment centers
  • Trampoline parks
  • Party rental industry
  • Corporations
  • Bars

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Products

  • Inflatable obstacle courses
  • Action-oriented games
  • Tandem race games
  • and so much more!

Specific information regarding products is available upon the receipt of a signed Non-Disclosure Agreement.

Growth Opportunities

  • Expand further into entertainment centers 
  • Expand further into trampoline parks 
  • Investigate new designs and new consumer areas to target 
  • Add interactive components to the rides and games 
  • Expand into new global markets 
  • Expand into museums and zoo with custom designs 
  • Create dog-centered items such as splash pads for dog parks 
  • Seek out interested multi-family housing customers 
  • Create floating obstacle courses

Valuation Details

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, the 2017 Cash Flow was used with a prescribed multiple is 4.5.  With this information, the computation is as follows:

$615,372         x          4.5       =          $2,769,174

The Fair Market Value found above positions the business List Price at $2,800,000

Funding Example

Purchase Price:                             $2,800,000

10%Buyer Down Payment:             $280,000

20%Seller Financing:                      $560,000

70%Bank Loan:                             $1,960,000

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $10,440.

Bank Loan 10-year term at a rate of 6% equals a monthly loan payment of $21,760.

After business expenses and loan payments, a buyer with a 10% down payment of $280,000 would retain a profit of $228,971, which results in a 82% 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 $2,800,000 with the terms listed above, the coverage ratio is 1.59. 

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. 

Purchase Price:

$2,800,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2017 Average Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2017 Average Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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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.