Distribution & Installation Lightin
Working with commercial and industrial businesses is the focus of this company. There sales have increased to $7,454,956 over the past year! Large restaurant chains, hotels, multi-family housing projects, universities, and industrial customers are only the beginning of the diverse and impressive client list that results in steady work throughout the year. Providing excellent customer service, they seek to buy and sell products at the lowest price possible. Due to their approach, they can provide products and services for far less than their competition.
- Year Established: 1998
- Location: Phoenix, Arizona
- Service Area: United States (90%), Canada (5%), Central America (5%)
- Clients: 3,000+ active, commercial and industrial
- Services: Distribution, lighting maintenance, retrofitting, lighting and sign installation
- Building: Location 1: 9,600 sq. ft. Location 2: 5,000 sq. ft. Location 3: storage only
- Reason for Selling: Divestment
- Employees: 23: Sales (8), COO (1), Office Manager (1), VP (1), Operations Manager (1), Sales Director (1), Accounts Manager (1), Warehouse (9), 1099 (as needed)
- Hours: 6:30 – 5:00 M-F
- Seller Training Period: Management is planning to stay on
- Growth Opportunities: Expand electrical services, improve online presence and user experience by adding online ordering
- Current Owner’s Responsibilities: Passive
- List Price: $2,950,000
- Gross Sales:
- 2018: $7,454,956
- Cash Flow:
- 2018: $699,591
- Assets Included in Purchase
- Equipment: $340,000: Cranes (2), vans (2), trucks (5), lifts (3), misc. tools
- Inventory: $1MM+
- WIP: $650,000
- Intangible Assets: Strong customer relationships, many large clients, excellent staff tenure
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
|Net Income Shown on Financial Statement||$141,302||$246,602||$360,692||$-78,708|
|Compensation to Owner||$94,100||$117,000||$115,314||$115,275|
|11% Tax on total W2 Salaries||$10,351||$12,870||$12,685||$12,680|
|Meals & Entertainment||$14,227||$11,887||$11,660||$12,956|
|Line Item 18 - Employee Benefit Program||$10,000||$10,000||$10,000||$10,000||For owner's family of 5|
|Warehouse payroll tax||$3,571||$2,892||$3,438||$0|
|Warehouse fringe benefits||$10,204||$9,487||$9,066||$0|
|Warehouse Equipment repair||$1,515||$534||$230||$0|
|G&A Licenses & Fees||$166||$166||$166||$0|
|Customer Service Salaries||$38,142||$37,988||$37,128||$0|
|Customer Service Payroll Taxes||$6,979||$7,400||$9,730||$0|
|Customer Service Fringe Benefits||$9,113||$11,676||$14,021||$0|
|G&A Division Manager Salaries||$50,460||$206||$0||$0|
|G& A Payroll Taxes||$3,572||$3,372||$3,419||$0|
|Building Repairs & Maintenance||$4,510||$4,801||$8,713||$0|
|Seller's Cash Flow = Total Addbacks + Net Income||$699,591||$875,274||$927,820||$262,417|
|Profit Margin||9.38 %||13.69 %||13.03 %||4.24 %|
- Full cash flow available in the deal room
- Commercial retailers
- Restaurant chains
- Industrial facilities
- Multi-family housing
- Small businesses
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
A Sample of Services and Products Available
- Lighting Design
- Energy Analysis and Management
- Maintenance, Service, and Repair
- Inventory Management
- Utility Rebate Programs
- LEDs and CFLs
- Fluorescent Lighting and Lamps
- Halogen Lamps
- Emergency Lighting
- Metal Halide Lamps
- Incandescent Lamps
Specific information regarding services and products is available upon the receipt of a signed Non-Disclosure Agreement.
- COO (1)
- VP (1)
- Operations Manager (1)
- Sales Director (1)
- Accounts Manager (1)
- Office Manager (1)
- Sales (8)
- Warehouse (9)
- 1099 (as needed)
- Expand electrical services
- Services could include non-lighting electrical services
- Significant opportunity to increase income
- Great profit margins in this type of work
- Easy to integrate into current projects and for current customers
- Improve online presence and user experience
- Increase functionality of the website
- Include customer log-in
- Include customer communication, ordering, and service request portals
- Add online ordering with excellent user experience
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 4.21. With this information, the computation is as follows:
$699,591 x 4.21 = $2,945,278
The fair market value found above positions the business list price at $2,950,000.
Purchase Price: $2,950,000
15% Buyer Down Payment: $442,500
15% Seller Financing: $442,500
70% Bank Loan: $2,065,000
Seller financing 10-year term at a rate of 4.50% equals a monthly loan payment of $4,586.
Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $22,926.
After business expenses and loan payments, a buyer with a 15% down payment of $442,500 would retain a profit of $369,450, which results in an 83% 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 $2,950,000 with the terms listed above, the coverage ratio is 2.12.
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.
**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.**
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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