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Opportunities

Childcare Near Immanuel Hospital

CASH FLOW
$104,727

Specifications

  • Price
    $335,000

  • Revenue
    $505,294

  • Cash Flow
    $104,727

  • Location
    Near Immanuel Hospital, Omaha

  • Equipment
    Standard office furniture, cribs, tables, chairs and more

  • Lease
    $2,600

  • Employees
    5 FT Teachers, 2 PT Floaters, 1 FT Administrative Assistant, 1 Cook

  • Valuation
    $350,835

  • Intangible Assets
    Excellent reputation, strong Facebook presence

  • Profit Margin
    21%

  • Reason for Sale
    Spend more time with family

  • Down Payment
    15%

This childcare center on the north side of Omaha has great expansion opportunities with minimal costs. Licensed for 56, the center has 63 FT & PT enrollees and sees an average of 42 children daily. The center sets itself apart by offering healthy meal planning, with all food prepared in-house by the center’s Cook. Due to this effort, the daycare exceeds Nebraska’s state minimum for healthy food requirements!

On staff are 5 full-time teachers (1 Lead Preschool, 2 Toddler, 2 Infant), 2 part-time Floaters, 1 Administrative Assistant and 1 Cook. The center is located in a 4,000-sq. ft. space with dedicated rooms for toddlers, infants and school-aged children, as well as a kitchen for food preparation. Outside is a fenced-in playground.

Growth exists in changing the daycare over to infants and toddlers only. This will boost daily attendance and increase sales. The daycare is also licensed for late night hours, and a buyer could explore the option of extending current hours to cover a 2nd shift. With permits in place, a buyer could knock down some walls within the center to accommodate for enrollments.

Listed at a great price, this is a highly-rated center in a well-trafficked part of Omaha that can easily continue to grow. This would be perfect for an existing daycare looking for a second location, or for an educational professional interested in owning a business.

Business Highlights

  • Location: Sorensen Parkway, north side of Omaha
  • Enrollment: 63 (FT & PT) – licensed for 56 per day
    • Average of 42 on a daily basis
    • 24 are school age
    • 95% Title XX, 5% Private
  • Services: Healthy meal planning (all food is prepared on site by the center’s Cook), Step Up Program, Summer Fitness Program
  • Lease: 4,000 sq. ft. / $2,600/month on a 5-year lease
  • Reason for Selling: Spend more time with family
  • Employees: 5 FT Teachers, 2 PT Floaters, 1 FT Administrative Assistant, 1 Cook
  • Hours: Mon – Fri 6:30am to 7:30pm
  • Seller Training Period: 90 days
  • Growth Opportunities: With light remodeling, center could expand to add 10+ enrollments. Change daycare to only infants and toddlers. Daycare licensed for extended hours, but does not currently utilize them.
  • Current Owner’s Responsibilities: Director, has a quality Assistant Director positioned to assure Director role

Financial Highlights

  • List Price: $335,000
  • Gross Sales
    • 2017: $505,294
  • Owner Profit/Cash Flow
    • 2017: $104,727

 

  • Profit Margin: 27%
  • Assets Included in Purchase:
    • Equipment: Standard office furniture, cribs, tables, chairs and more
    • Vehicles: 1 Van
    • Intangible Assets: Excellent reputation, strong Facebook presence

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$505,294$528,770$435,641$227,432
Net Income Shown on Financial Statement$51,182$61,773$74,059$56,678
ADDBACKS
Compensation to Owner$42,000$48,970$41,823$17,100Selling as Owner/Operator
11% Tax on total W2 Salaries$4,620$5,387$4,601$1,881
Business Investment$2,440$0$0$0Not business related
Gifts & Contributions$4,485$5,079$1,534$050% personal
Depreciation$0$0$0$941Non-cash item
TOTAL ADDBACKS$53,545$59,436$47,958$19,922
Seller's Cash Flow = Total Addbacks + Net Income$104,727$121,209$122,017$76,600
Profit Margin20.73 %22.92 %28.01 %33.68 %

 

  • 21% increase in sales between 2015 and 2016
  • 3-year average profit margin of 26%

Employees

  • 1 Lead Preschool Teacher
  • 2 Toddler Teachers
  • 2 Infant Teachers
  • 1 Floater (School Children)
  • 1 Floater (Preschool)
  • 1 Administrative Assistant (monitors day-to-day needs, reviews curriculum, general administrative duties)
  • 1 Cook

Seller is the center’s Director.

Growth Opportunities

  • Light remodeling for expansion
    • The center has the ability to knock down a wall to expand the current facility, and to accommodate 10+ enrollments
  • Change daycare to only infants and toddlers
    • Profits and full-time enrollment would increase if only infants and toddlers were enrolled
    • School-aged children are PT and hold spots that could be better used by younger children
  • Saturday services
    • The daycare is licensed for Saturday services
    • Depending on demand, the center could be open for extra hours on Saturday

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          Multiplier          =          Price

“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.

“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).

The Cash Flow for 2017 is $104,727, and the prescribed multiplier is 3.2.

With this information, the computation result follows:

$104,727         x          3.2       =          $335,126

The List Price for the business is set at $335,000.

Funding Example

Purchase Price:                       $349,000

15% Buyer Down Payment:     $52,350

15% Seller Financing:               $52,350

70% Bank Loan:                      $244,300

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $976.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $3,210.

After business expenses and loan payments, a buyer with a down payment of $52,350 would retain a profit of $54,490, which results in a 104% 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 $349,000 with the terms listed above, the coverage ratio is 2.08. 

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:

$335,000

$
%
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 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 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
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