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Communications & Marketing Agency in DC

CASH FLOW
$327,416

Specifications

  • Price
    $985,000

  • Revenue
    $752,470

  • Equipment
    $10,000

  • Location
    Maryland

  • Account Receivable
    $73,000

  • Profit Margin
    44%

  • Lease
    1,000 sq. ft.: Offices, reception

  • Employees
    10: Part-time (3), 1099 contractors (7)

  • Intangible Assets
    Positive reputation, many successful campaigns meeting their intended purpose, wide-ranging experience with governments, local agencies, and businesses, nationally recognized work

Providing robust and thorough marketing plans is a specialty of this firm.  From digital communications including website and social media campaigns to print design and media purchasing, creativity and strategy work hand-in-hand.  Detailed services include market research, strategic communications development, and event planning.  This company also prides itself on being culturally responsive by offering language translation as well as adaptations for different cultural preferences, allowing clients to find a deeper trust and a wider applied use of this dynamic team’s work.

DC suburb firm offering full-stack marketing since 1999! Based out of a comfortable, fully furnished office, three part-time employees and seven contractors this group of writers, marketing managers, researchers, strategists, translators, and graphic designers provide comprehensive strategic communications planning. Creating impactful and recognizable marketing campaigns for local governments and businesses alike is what this business does best.  Their effectiveness in implementing cross media services results in annual sales over $700k and a 27% profit margin.  

Business Highlights

  • Year Established: 1999
  • Location: Washington, D.C. suburb 
  • Service Area: 50-mile radius of D.C.
  • Clients: Federal and local governments, local agencies, businesses
  • Services: Full-marketing services including print and digital materials, community outreach, translations, research, internal and external documents, event planning, cross media campaigns, strategic planning
  • Lease: 1,000 sq. ft.: Offices, reception
  • Reason for Selling: Exit planning
  • Employees: 10: Part-time (3), 1099 contractors (7) 
  • Seller Training Period: 6 months transition
  • Growth Opportunities: Work with additional agencies, include social media management, bid more projects, increase internal capacity
  • Current Owner’s Responsibilities: Contract oversight

Financial Highlights

  • List Price: $985,000
  • Gross Sales:
    • 2018: $752,470
    • 2017: $714,646
    • 2016: $573,323
  • Cash Flow:
    • 2018: $327,416
    • 2017: $200,957
    • 2016: $136,038
  • Assets Included in Purchase*
    • Equipment: fully furnished office
    • A/R:  $73,000
    • Intangible Assets: Positive reputation, many successful campaigns meeting their intended purpose, wide-ranging experience with governments, local agencies, and businesses, nationally recognized work

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan. Dec.
Tax ReturnTax ReturnTax ReturnTax ReturnNotes
20182017201620152014
GROSS SALES$752,470$714,646$573,323$1,001,767$1,853,738
Net Income Shown on Financial Statement$192,862$30,151$-3,827$85,712$344,845
ADDBACKS
Compensation to Owner$106,080$106,080$106,080$113,641$126,669
11% Tax on total W2 Salaries$11,669$11,669$11,669$12,501$13,934
Depreciation$0$1,483$2,718$7,167$7,894
Interest$0$0$96$73$508
Non-Business Telephone$1,625$2,630$2,630$2,630$2,630Personal Expense
Insurance Premiums for Owners: Health$7,856$11,673$11,673$11,673$11,673Personal Expense
Meals & Entertainment$1,050$2,111$2,016$2,376$830Personal Expense
Auto-Personal Use$3,628$3,542$2,983$2,270$2,738Personal Expense
Simplified Employee Pension for Owner$0$25,000$0$0$0
Keyman Insurance for Owner$964$965$0$0$0
Legal Advice for sale of company$378$4,216$0$0$0
Misc. Owner's Expenses$1,154$1,437$0$0$0
Contributions/Donations$150$0$0$0$0
TOTAL ADDBACKS$134,554$170,806$139,865$152,331$166,876
Seller's Cash Flow = Total Addbacks + Net Income$327,416$200,957$136,038$238,043$511,721
Profit Margin43.51 %28.12 %23.73 %23.76 %27.60 %
  • Profit margin 2018: 44%
  • The dip from 2015 to 2016 was due to an account turnover that has now been replaced by a more profitable client. 

Typical Clients and Services

Clients:

  • Federal government
  • Local government
  • Local agencies
  • Local businesses

Services:

  • Full-marketing services including print and digital materials
  • Community outreach
  • Translations
  • Research
  • Internal and external documents
  • Event planning
  • Cross media campaigns
  • Strategic planning

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

Employees

Employees: 10

  • Part-time (3)
  • 1099 contractors (7)

Growth Opportunities

  • Work with additional agencies 
  • Include social media management 
  • Bid more projects 
  • Increase internal capacity

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 2018 cash flow was used with a prescribed multiple is 3.01.  With this information, the computation is as follows:

$327,416         x          3.01     =          $985,522

The fair market value found above positions the business list price at $985,000

Funding Example

Purchase Price:                             $985,000

15% Buyer Down Payment:      $147,750

20% Seller Financing:                $197,000

65% Bank Loan:                         $640,250

 

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $3,127

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $8,414.

After business expenses and loan payments, a buyer with a 15% down payment of $147,750 would retain a profit of $188,924, which results in a 128% 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 $985,000 with the terms listed above, the coverage ratio is 2.36.

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:

$985,000

$
%
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:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 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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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.