H1B Long-Term IT Placement
Since 2012, this company has been providing knowledgeable and professional staff for IT and software development departments in 24 states across the United States. All H1B visa holders working for this company are also sponsored by this company. With a bill rate of $63, there is an average gross margin of $15. This successful placement company earned over $23MM in 2017 alone! Working with a diverse client base, employees work in areas such as health care, hospitality, government, and retail. Currently working with over 300 individuals, this in-demand service is managed from Central Illinois.
Contracted placements are typically over one year or longer and clients often request 5-10 placements at a time. Employees relocate to the business location and fully integrate into the technology team on site. This business also works with H1B visa recipients to place highly-trained individuals into U.S. companies. Enticing employees to temporary contracted positions, this business offers health, dental, vision, and life insurance benefits. Though this company carries workers compensation, they have not had a claim as of October 2018.
Operating from a building that is available for continued lease, it may also potentially be available for sale outside the sale of the business. The current owner is fully involved in the day-to-day operations, but the company runs well without daily oversight!
This company has a minority status – though no contracts are tied to this.
- Year Established: 2012
- Location: Central Illinois
- Service Area: Employing individuals in 24 states
- Clients: Private and public sectors: Retail, healthcare, government, hospitality, and much more!
- Services: Long-term IT staffing
- Building: 2,600 sq. ft.: Private offices (3), conference room, kitchen, server room, oversized cubes (13); the building is available for continued lease or potentially for sale outside the sale of the business
- Reason for Selling: The business is successful, and the owner would like to shift gears
- Employees: Sales (3), Recruiters (6), HR (1), Bookkeeping (2), Networking (1 PT)
- Hours: M-F 8-5
- Seller Training Period: 90 days transition
- Growth Opportunities: Increase recruiting efforts, build placement contracts, increase service area
- Current Owner’s Responsibilities: Owner/operator
- List Price: $12,050,000
- Gross Sales:
- 2018: $29,400,249 Annualized
- 2017: $25,948,305
- 2016: $23,518,850
- 2015: $15,409,854
- Cash Flow:
- 2017: $5,014,178
- 2016: $1,219,566
- 2015: $2,278,818
- Assets Included in Purchase*
- A/R: $4MM
- Intangible Assets: Wide service area, few competitors in the area, long-term client relationships, excellent network for finding talent
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Jan. - July
|P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$1,099,423||$4,705,810||$1,062,696||$2,227,105|
|Compensation to Owner||$75,002||$100,003||$67,502||$0||Owner|
|Other unrelated Salaries||$48,562||$90,003||$41,250||$0||Owner's wife|
|11% Tax on total W2 Salaries||$13,592||$20,901||$11,963||$0|
|Meals & Entertainment||$0||$0||$1,300||$1,196|
|Seller's Cash Flow = Total Addbacks + Net Income||$1,263,304||$5,014,178||$1,219,566||$2,278,818|
|Profit Margin||7.37 %||19.33 %||5.19 %||14.79 %|
- Continued sales growth year over year!
Typical Clients and Services
- Private and public sectors
- Health care
- Long-term IT staffing
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Sales (3)
- Recruiters (6)
- HR (1)
- Bookkeeping (2)
- Networking (1 PT)
- Educated professionals
- Recent graduates
- H1B visa holders
- Increase recruiting efforts
- Build placement contacts
- Increase service area
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 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 four-year average cash flow was used with a prescribed multiple is 4.52. With this information, the computation is as follows:
$2,669,556 x 4.52 = $12,066,393
The fair market value found above positions the business list price at $12,050,000.
Purchase Price: $12,050,000
15%Buyer Down Payment: $1,807,500
15%Seller Financing: $1,807,500
70%Bank Loan: $8,435,000
Seller financing 7-year term at a rate of 4.50% equals a monthly loan payment of $25,125.
Bank loan 10-year term at a rate of 5.5% equals a monthly loan payment of $91,542.
After business expenses and loan payments, a buyer with a 15% down payment of $1,807,500 would retain a profit of $1,269,559, which results in a 70% 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 $12,050,000 with the terms listed above, the coverage ratio is 1.91.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.
four-year cash flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
four-year cash flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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