Communications & Marketing Agency in DC
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.
- 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
- 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 Statement||P&L Statement|
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$192,862||$30,151||$-3,827||$85,712||$344,845|
|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|
|Non-Business Telephone||$1,625||$2,630||$2,630||$2,630||$2,630||Personal Expense|
|Insurance Premiums for Owners: Health||$7,856||$11,673||$11,673||$11,673||$11,673||Personal Expense|
|Meals & Entertainment||$1,050||$2,111||$2,016||$2,376||$830||Personal Expense|
|Auto-Personal Use||$3,628||$3,542||$2,983||$2,270||$2,738||Personal 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|
|Seller's Cash Flow = Total Addbacks + Net Income||$327,416||$200,957||$136,038||$238,043||$511,721|
|Profit Margin||43.51 %||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
- Federal government
- Local government
- Local agencies
- Local businesses
- Full-marketing services including print and digital materials
- Community outreach
- 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.
- Part-time (3)
- 1099 contractors (7)
- Work with additional agencies
- Include social media management
- Bid more projects
- Increase internal capacity
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
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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