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Contract Screen Printer Including Licensed Merchandise Clients

CASH FLOW
$268,801

Specifications

  • Price
    $1,129,000

  • Revenue
    $971,021

  • Equipment
    Printing presses, dryers

  • Location
    Arizona with local and national clientele

  • Profit Margin
    28%

  • Employees
    11 FT: General manager (1), Office Manager (1), Artist (1), Shipping (1), Press Operators (3), QA Technicians (1), PT Bookkeeper (1), General Labor (2)

  • Intangible Assets
    Long-term relationships with clients, knowledgeable staff, confidentiality

  • Reason for Sale
    New ventures

  • Inventory
    Ink

As a leader in the imprinted textiles market, this family-owned business is a nationwide provider of high-quality contracted printing services.  Working directly with small businesses, companies, small screen printers, and small embroiderers, this is a wholesale print shop without custom or retail operations.  Customers deliver items to this print-only shop, so the owner does not maintain a large inventory of SKUs.  Several clients have licensed merchandise items printed with this business. 

 

Due to an experienced and knowledgeable staff, this shop can process high volume orders and is capable of printing over 8,000 items per day.  Turnaround averages 3-5 days and customers receive their items in a timely manner.  Utilizing the in-house ink mixing department and several ink types such as Plastinol-based, water-based, Crystalina, and Shimmer, this company can print in any custom or standard color on a wide array of items and fabrics (100% cotton, 50/50 poly blends, spandex, nylon, and canvas).  Currently, the majority of printed items are t-shirts and sweatshirts/hoodies. 

In addition to production staff, an art specialist is on staff to handle any needs related graphics and preparing the graphics for printing.  The owner is involved in day-to-day operations and duties can be assumed by a new owner.

Business Highlights

  • Year Established:  1987
  • Location:  Arizona with local and national clientele
  • Services:  Wholesale imprinting of textiles, including licensed merchandise
  • Building: 3,200 sq. ft.: Office (30%), Warehouse (70%)
  • Reason for Selling:  New ventures
  • Employees:  11 FT: General manager (1), Office Manager (1), Artist (1), Shipping Clerk (1), Press Operators (3), QA Technicians (1), PT Bookkeeper (1), General Labor (2)
  • Seller Training Period: 90 days transition
  • Growth Opportunities:  Expand client base, expand into new markets, targeted advertising
  • Current Owner’s Responsibilities:  Day-to-day oversight, owner does not print

Financial Highlights

  • List Price: $1,129,000
  • Gross Sales:
    • 2017: $971,021
    • 2016: $883,222
    • 2015: $791,366
    • 2014: $642,677
  • Cash Flow:
    • 2017: $268,801
    • 2016: $169,109
    • 2015: $85,810
    • 2014: $83,654
  • Assets Included in Purchase*
    • Equipment: Printing presses, dryers
    • Inventory: Ink
    • A/R:  $30,000 with 15-day turnaround, as of 5.18
    • Intangible Assets: Long-term relationships with clients, knowledgeable staff, confidentiality

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$971,021$883,222$791,366$642,677
Net Income Shown on Financial Statement$93,467$55,625$6,436$40,196
ADDBACKS
Compensation to Owner$84,000$41,000$0$0
Tax on total W2 Salaries$14,335$4,510$0$0
Depreciation$0$50,744$62,808$25,776
Interest$0$3,171$1,562$540
Non-Business Telephone$3,120$3,120$3,120$3,120$260/month for personal lines
Insurance Premiums for Owners: Health$4,320$4,320$4,320$4,320Personal expense
Auto-Personal Use$14,161$985$1,726$1,05010% is personal
Gifts$7,895$5,634$5,838$8,652Non-onward going expense
Dump Trailer$7,990$0$0$0Personal expense
Dryer$12,295$0$0$0Personal expense
Plane$27,218$0$0$0Personal expense
TOTAL ADDBACKS$175,334$113,484$79,374$43,458
Seller's Cash Flow = Total Addbacks + Net Income$268,801$169,109$85,810$83,654
Profit Margin27.68 %19.15 %10.84 %13.02 %
  • 50% growth since 2014!

Typical Clients

  • Ad specialty businesses 
  • Promotional products distributors 
  • Embroiderers 
  • Smaller screen printers 

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

Services

  • Contracted screen printing
  • Wholesale clients
  • Licensed merchandise printing
  • Art services to prepare for printing 
  • Printing on any type of textile item
    • T-Shirts
    • Sweatshirts/hoodies
    • Jerseys
    • Bandanas
    • Hats
    • Bags
    • And many more items! 
  • Printing in any color
  • Custom color mixing
    • Plastinol-based inks
    • Pantone matching system
    • Specialty inks 
  • Printing on textiles
    • 100% cotton
    • 50/50 poly blends
    • Spandex
    • Nylon
    • Canvas

Employees

  • 9 FTE
    • General manager (1)
    • Office Manager (1)
    • Artist (1)
    • Shipping Clerk (1)
    • Press Operators (3)
    • QA Technicians (1)
    • General Labor (2) 
  • 1 PTE
    • PT Bookkeeper (1)

Growth Opportunities

  • Expand client base 
  • Expand into new markets 
  • Targeted advertising to other ad specialty businesses 
  • Attend additional trade shows/workshops 
  • Move to a larger location to accommodate additional employees and equipment 
  • Add equipment to increase production

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, a 2017 Cash Flow was used with a prescribed multiple is 4.25.  With this information, the computation is as follows:

$268,801         x          4.25     =          $1,129,922

The Fair Market Value found above positions the business List Price at $1,129,000.

Funding Example

Purchase Price:                            $1,129,000

12.5%  Buyer Down Payment:        $141,125

12.5% Seller Financing:                  $141,125

75% Bank Loan:                              $846,750

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,631.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $11,128.

After business expenses and loan payments, a buyer with a 12.5% down payment of $141,125 would retain a profit of $103,699, which results in a 73% 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 $1,129,000 with the terms listed above, the coverage ratio is 1.63. 

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:

$1,129,000

$
%
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
Omaha, NE 68114

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