Flooring Install – Owner Does No Labor
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.
- 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!)
- 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 Statement||P&L Statement|
January - December
|Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$59,155||$28,056||$97,918||$23,577|
|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|
|Meals & Entertainment||$19,986||$10,074||$8,010||$5,888|
|Auto Lease||$11,700||$0||$0||$0||Personal Lease|
|401K to Owner||$3,464||$3,925||$0||$0||To Owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$172,733||$157,638||$195,275||$124,649|
|Profit Margin||7.99 %||6.59 %||8.33 %||5.26 %|
- Consistent sales year-over-year!
Typical Clients and Products
- Main contractors
- Interior designers
- End users
- Health care
- Nail salons
- Fast food restaurants
- Government facilities
- Banks and credit unions
- Materials selection assistance
- Cost control
Commercial Flooring Products:
- Vinyl tile
- Sheet vinyl flooring
- Ceramic tile
- Porcelain tile
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Office Manager
- Project Manager
- Warehouse Manager
- 1099 crews
- Expand to additional commercial categories
- Expand area served
- Market to contractors
- Hire installation staff
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.
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.
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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