Decorative Overlays & Concrete Coating for Commercial Use
With the average job billing at over $10,000, this concrete polishing & finishing company has accomplished huge growth over the past 3 years. Services include concrete polishing, acid staining, decorative overlays, and methyl methacrylate (MMA) of which 95-97% are for interior projects. With 5 FT laborers on staff year-round and up to 13 depending on workload, this company completes around 25 jobs per month ranging from remodels (60%) to new construction (40%). Two owners currently handle administration, sales, orders, and training – however both of their positions could easily be absorbed into one.
Based in the Kansas City Metro, 70% of jobs are completed in the local area and 30% out of town. All laborers are W2 employees and trained by the company. An office space is not necessary to operate this business, a new owner would simply need a storage space to house the equipment and supplies. The current owners have a flexible training time frame of 3-6 months, if desired, to ensure a smooth transition.
Expanding residential services would be an excellent opportunity for growth. The sellers have not fully immersed into that demographic as there is more demand than they can currently meet. A buyer could also consider offering additional services such as concrete pouring and pressure washing.
- Year Established: 2007
- Location and Service Area: Kansas City Metro
- Services: Concrete polishing, acid staining, coating, decorative overlays, methyl methacrylate (MMA)
- 60% remodel / 40% new
- 95 – 97% interior / 3 – 5% exterior
- Average job bills at $10,000
- 70% in town / 30% out of town
- Building: Storage space for supplies and equipment would be needed.
- Reason for Selling: Partnership dividing
- Employees: 5 FT Laborers during the winter; up to 13 from February/March – November. Laborers are W2 employees and trained by the company.
- Growth Opportunities: More residential. Concrete pouring. Pressure washing.
- Current Owner’s Responsibilities: Sales, training, scheduling, and ordering. There are 2 owners, but both of their positions could be handled by one.
- List Price: $269,000
- Gross Sales
- 2018: $783,499
- 2017: $680,892
- 2016: $576,528
- 2015: $284,576
- 2014: $199,135
- Owner Profit/Cash Flow
- 2018: $91,572
- 2017: $90,929
- 2016: $98,884
- YOY Growth/Sales Trends: Sales grew 102% between 2015 and 2016, with 2017 at 18% growth!
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
|P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$15,119||$-4,928||$49,659||$47,881||$13,348|
|Compensation to Owner||$49,569||$37,778||$35,445||$17,564||$0|
|11% Tax on total W2 Salaries||$5,453||$4,156||$3,899||$1,932||$0|
|Interest||$10,683||$21,056||$3,357||$725||$0||non-onward going expense|
|Non-Business Telephone||$2,441||$3,912||$3,674||$3,006||$2,400||Personal cell phone expense|
|Legal Expense||$0||$9,472||$0||$0||$0||Non-onward going expense|
|Meals & Entertainment||$105||$3,971||$0||$0||$0|
|Bank Charges||$0||$4,440||$0||$0||$0||One-time expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$91,572||$90,929||$98,884||$72,133||$17,525|
|Profit Margin||11.69 %||13.35 %||17.14 %||25.35 %||8.80 %|
- 102% growth between 2015 and 2016
|Acid staining||Decorative overlays||Polished concrete|
|Leveling||Hand grinding||MMA (methyl methacrylate)|
|Microtoppings||Stamped concrete||Pressure washing|
|Chip & Quartz||Concrete countertops||Epoxy floors|
Commercial | Residential | Interior | Exterior
- 60% remodel
- 40% new
- Referral sources: Contractors and suppliers
- 95 – 97% interior
- 70% in Kansas City Metro
- About once every 2 weeks, there is a job out of state
- Team will typically travel within a 6 to 8-hour radius to a job site
- Average job bills at $10,000
- Most jobs take less than 1 week to complete
- Handle about 6 jobs each week
- 7 – 10 commercial jobs per month with some residential in between
- Typical clients include schools, gyms, churches, and state government projects
- Average job requires 3 – 4 Laborers
- 5 FT during the winter months
- In season (February/March – November) there are about 13 FT Laborers
- Trained by the company
Sellers handle sales, training, scheduling, and ordering. As they have a full staff of Laborers, the sellers rarely work on job sites, but do check in for quality assurance. Please note that both positions could be absorbed into one.
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 2018 is $91,572. The prescribed multiplier is 2.94.
With this information, the computation result follows:
$91,572 x 2.94 = $269,222
The List Price for the business is set at $269,000.
Purchase Price: $269,000
15% Buyer Down Payment: $40,350
15% Seller Financing: $40,350
70% Bank Loan: $188,300
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $752.
Bank Loan 8-year term at a rate of 5.50% equals a monthly loan payment of $2,475.
After business expenses and loan payments, a buyer with a 15% down payment of $40,350 would retain a profit of $52,851, which results in a 131% 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 $269,000 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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