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Commercial Architecture Firm for 60+ Years

CASH FLOW
$5,321,906

Specifications

  • Price
    $23,500,000

  • Revenue
    $10,895,581

  • Cash Flow
    $5,321,906

  • Location
    Quebec, Canada

  • Account Receivable
    $1,000,000

  • Employees
    38: Architects, Non-Licensed Architects and Architectural Technicians, Interior Designers, Administrative

10 million in sales coast to coast across Canada! You do not need to be a Quebec or Toronto firm to own this business. This firm boasts $10.8MM in sales, a 50% profit margin, 41 employees in an 8,000 sq. ft. office space, allowing for plenty of room for their success and year over year growth. The business has an average AR amount of $1MM and has $18MM under contract. There are currently 4 owners/officers, all of whom are willing to stay on under new ownership and expand geographically (cash flow includes this).  Developing long-term client relationships and producing thoughtful, high-quality buildings has allowed this firm to draw from its loyal and growing client base year after year.  Servicing Quebec & GTA.

 

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.

Business Highlights

  • Year Established:  1959
  • Location:  Quebec, Canada
  • Service Area: Canada coast-to-coast, with a focus on Quebec and Ontario
  • Clients: Commercial property owners, investors, end users, and contractors
  • Services: Commercial full-service architecture firm and interior design
  • 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 by selling to a strategic buyer
  • Employees: 41: Architects, Non-Licensed Architects and Architectural Technicians, Interior Designers, Administrative 
  • 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

Financial Highlights

All prices in CAD unless noted

  • List Price: $23,500,000 CAD

                 $17,813,553 USD

  • 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
*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementP&L StatementP&L StatementP&L StatementNotes
2018201720162015
GROSS SALES$10,895,581$7,162,565$7,640,752$5,144,134
Net Income Shown on Financial Statement$5,536,658$2,263,285$2,120,466$1,514,113
ADDBACKS
Amortization$62,861$63,851$63,564$61,180
Interest$0$20,251$4,283$4,587
Contributions/Donations$32,622$21,430$20,220$15,408Non-onward going expense
Auto Expense$24,165$16,291$14,608$16,3671/3 is personal
Cell Phones$3,600$3,600$3,600$3,600$300/month for personal lines
Related Companies$0$280,976$0$0
Salary Adjustment$-338,000$0$0$0Adjustment for Partner's onward going Salary
TOTAL ADDBACKS$-214,752$406,399$106,275$101,142
Seller's Cash Flow = Total Addbacks + Net Income$5,321,906$2,669,684$2,226,741$1,615,255
Profit Margin48.84 %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

Clients:

  • Business owners
  • Investors, including institutional
  • End users
  • Contractors
  • Developers

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.

Employees

Total Employees: 41

  • Architects 
  • Non-Licensed Architects and Architectural Technicians 
  • Interior Designers
  • Administrative 

Growth Opportunities

  • 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

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, 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

Funding Example

Purchase Price:                                $23,500,000

15%Buyer Down Payment:            $3,525,000

30%Seller Equity or Earn out:       $7,050,000

55%Bank Loan:                             $12,925,000

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $143,494

After business expenses and loan payments, a buyer with a 15% down payment of $3,525,000 would retain a profit of $2,548,972, which results in a 72% 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 $23,500,000 with the terms listed above, the coverage ratio is 1.92. 

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. 

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210 N 78th St. 2nd Floor
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