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Flooring Install – Owner Does No Labor

CASH FLOW
$172,733

Specifications

  • Price
    $450,000

  • Revenue
    $2,161,532

  • Location
    Omaha, Nebraska

  • Equipment
    Furniture, fixtures, forklift

  • Inventory
    Inventory ordered for each project

  • Reason for Sale
    Retirement

  • Employees
    3: Office manager, project manager, warehouse manager

  • Lease
    3,500 sq. ft.: Office (30%) reception, open and private offices, kitchenette; warehouse (70%)

  • Intangible Assets
    Long-term relationships with clients, reputation for providing quality workmanship and services, experienced team with long tenure

Currently including $1MM in the pipeline and $700k in backlog, this business offers a wide selection of ceramic tile, vinyl flooring, and carpeting to customers. The owner does not do any labor, only works on bidding and sourcing, and spends about half the year in AZ!  The 4-person team prepares and wins competitive bids resulting in steady work throughout the year.  Consistently earning over $2.3MM annually, subcontractors install projects covering many different industry areas including restaurants, health care, as well as retail.  For a low multiple, you can have this successful and trusted business as your own. 

 

Focusing operations in Omaha and Lincoln, 5% of this company’s projects are completed in greater Nebraska. Providing excellent customer service and project management to general contractors, architects, building owners, and end users is certainly key to this company’s success. 

Utilizing subcontractors for installation reduces the number of necessary employees and though the team may be small, it is effective.  An office manager, project manager, and warehouse manager join the owner in day-to-day operations. The owner currently manages the estimates, oversees the bid development, and works with suppliers to manage costs.  The owner can complete his duties remotely, and his presence is not required in the office for smooth operations.

Business Highlights

  • Year Established:  1988
  • Location: Omaha, Nebraska
  • Service Area: Omaha/Lincoln (95%), Nebraska (5%)
  • Services: Commercial flooring: ceramic, vinyl, carpet
  • Clients: Fast food restaurants, banks, government facilities, health care facilities, dealerships, retail
  • Building: 3,500 sq. ft.: Office (30%) reception, open and private offices, kitchenette; Warehouse (70%)
  • Reason for Selling: Retirement
  • Employees: 3: Office manager, project manager, warehouse manager, and several 1099’s crews
  • Hours: M-F 6:30-4:00
  • Seller Training Period:  6 months, owner willing to train until the buyer has full knowledge of bidding 
  • Growth Opportunities: Expand to additional commercial categories, expand area served, market to contractors, hire installation staff
  • Current Owner’s Responsibilities: Bidding and sourcing, can be done from anywhere (Owner spends ½ the year in AZ!)

Financial Highlights

  • List Price: $450,000
  • Gross Sales:
    • 2018: $2,161,532
    • 2017: $2,391,147
    • 2016: $2,345,183
    • 2015: $2,369,986
  • Cash Flow:
    • 2018: $172,733
    • 2017: $157,638
    • 2016: $195,275
    • 2015: $124,649
  • Assets Included in Purchase*
    • Equipment: Furniture, fixtures, forklift
    • Vehicles:  Delivery truck
    • Inventory:  Inventory ordered for each project
    • A/R: $505,000
    • Backlog:  $700,000
    • Intangible Assets:  Long-term relationships with clients, reputation for providing quality workmanship and services, experienced team with long tenure                                  

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
January - December
Tax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$2,161,532$2,391,147$2,345,183$2,369,986
Net Income Shown on Financial Statement$59,155$28,056$97,918$23,577
ADDBACKS
Compensation to Owner$16,728$31,995$21,600$21,600
11% Tax on total W2 Salaries$1,840$3,519$2,376$2,376
Depreciation$2,573$2,755$4,378$6,655
Interest$17,374$20,140$24,135$28,556
Meals & Entertainment$19,986$10,074$8,010$5,888
Auto$25,169$34,561$22,044$22,34670% Personal
Travel$7,544$15,413$7,614$6,45180% Personal
Cell Phone$2,400$2,400$2,400$2,400$200/month
Personal Internet$4,800$4,800$4,800$4,800$400/month
Auto Lease$11,700$0$0$0Personal Lease
401K to Owner$3,464$3,925$0$0To Owner
TOTAL ADDBACKS$113,578$129,582$97,357$101,072
Seller's Cash Flow = Total Addbacks + Net Income$172,733$157,638$195,275$124,649
Profit Margin7.99 %6.59 %8.33 %5.26 %
  • Consistent sales year-over-year!

Typical Clients and Products

Clients:

  • Main contractors
  • Architects
  • Interior designers
  • End users

Commercial Businesses:

  • Health care
  • Nail salons
  • Fast food restaurants
  • Restaurants
  • Dealerships
  • Retail
  • Government facilities
  • Schools
  • Banks and credit unions

Services:

  • Materials selection assistance
  • Cost control
  • Installation

Commercial Flooring Products:

  • Vinyl tile
  • Sheet vinyl flooring
  • Ceramic tile
  • Porcelain tile
  • Carpet

 

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

Employees

Employees: 3

  • Office Manager 
  • Project Manager 
  • Warehouse Manager
  • 1099 crews

Growth Opportunities

  • Expand to additional commercial categories 
  • Expand area served 
  • Market to contractors 
  • Hire installation staff

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 2018 cash flow was used with a prescribed multiple is 2.61.  With this information, the computation is as follows:

$172,733         x          2.61     =          $450,833

The fair market value found above positions the business list price at $450,000.

Funding Example

Purchase Price:                       $450,000

10% Buyer Down Payment:     $47,000

15% Seller Financing:               $67,500

75% Bank Loan:                      $337,500

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,258.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $4,435.

After business expenses and loan payments, a buyer with a 10% down payment of $47,000 would retain a profit of $104,409, which results in a 232% 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 $450,000 with the terms listed above, the coverage ratio is 2.53. 

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:

$450,000

$
%
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:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 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
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