Endoscope and Instrument Manufacturer
This company is a leader in precision manufacturing of laser welded HD endoscopes and other surgical equipment. An innovative manufacturer and distributor of endoscopes and related equipment, this business develops and distributes several hundred products worldwide. Specializing in minimally invasive surgical equipment, these endoscopes and hand instruments are used in the areas of urology, arthroscopy, laparoscopy, otorhinolaryngology, gynecology, and gastroenterology.
Built upon the fundamental perspective of being highly responsive to customer needs, client feedback is vital to the growth of this business. The ability to work with the manufacturer to tweak their instruments to improve the usability as well as the effectiveness is imperative to building superior products as well as brand-loyalty.
Currently sales are focused in Latin America, though this company has sold products worldwide. With an emphasis in expanding into the US and Canadian markets, a new buyer could potentially increase sales.
The current owner attends to business development and financial management and the duties could be assumed by the new owner.
- Year Established: 1995
- Location: Miami, Florida
- Service Area: International customers
- Products: Endoscopes: rigid, semi rigid, flexible Fields: Urology, arthroscopy, laparoscopy, ENT, etc.
- Number of Clients: 5,000 past and current clients
- Building: 4,500 sq. ft., designed for this company, 5 offices, showroom/warehouse with 4 workstations, shipping and receiving with rolling door and ramp *Building for sale outside the sale of the business
- Reason for Selling: Retirement
- Employees: Sales (3), Shipping and testing (1)
- Seller Training Period: 90 days transition
- Growth Opportunities: Expand US market, expand into countries outside of current focus
- Current Owner’s Responsibilities: Business development, financial management, passive 10-15 hours/week
- List Price: $2,350,000
- Gross Sales:
- 2017: $2,516,508
- 2016: $2,506,784
- Cash Flow:
- 2017: $493,872
- 2016: $385,471
- Assets Included in Purchase*
- Equipment: Device testing equipment
- Inventory: $600,000 in devices
- Intangible Assets: Positive reputation, responsive to the needs of the customers, innovative, export to some countries with fewer regulations
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Notes|
|Net Income Shown on Financial Statement||$88,901||$-47,467|
|Compensation to Owner||$260,431||$275,818|
|11% Tax on total W2 Salaries||$28,647||$30,340|
|Insurance Premiums for Owners: Health||$23,388||$21,642|
|Meals & Entertainment||$6,518||$4,911|
|Non-Business Telephone||$3,600||$3,600||3 lines at $300/month|
|Consulting Fee||$0||$7,012||Non-onward going expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$493,872||$385,471|
|Profit Margin||19.63 %||15.38 %|
- Profit margin 20% for 2017
- Profit margin 15% for 2016
- Medical equipment distributors
- Owners of hospitals
- Owners of medical clinics
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- HD endoscopes
- Arthroscopic endoscopes
- Video systems
- Orthopedic power equipment
- Flexible, semi-rigid, and rigid instruments
- And many more!
- 3 full-time employees
- Shipping and testing
- 1 full-time employee
- Expand US market
- Expand into countries outside of current focus
- Continue to expand product line
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 4.75. With this information, the computation is as follows:
$493,872 x 4.75 = $2,345,892
The Fair Market Value found above positions the business List Price at $3,350,000.
Purchase Price: $2,350,000
10%Buyer Down Payment: $235,000
15%Seller Financing: $352,000
75%Bank Loan: $1,762,500
Seller Financing 6-year term at a rate of 4% equals a monthly loan payment of $5,515.
Bank Loan 8-year term at a rate of 5.75% equals a monthly loan payment of $22,948.
After business expenses and loan payments, a buyer with a 10% down payment of $235,000 would retain a profit of $152,319, which results in a 65% 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 $2,350,000 with the terms listed above, the coverage ratio is 1.45 (will round up).
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.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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