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High Hazard Safety Training With 40% Profit

CASH FLOW
$598,822

Specifications

  • Equipment
    $187,540

  • Location
    Northern California

  • Account Receivable
    $78,000

  • Service Area
    California

  • Profit Margin
    40%

  • Employees
    Senior Trainer (4), Jr. Trainer (2), Office Staff (2), 1099 Trainers (3)

  • Intangible Assets
    Outstanding reputation, many long-lasting relationships with clients, quality programming, high demand for services, superior customer service, specialized knowledge

  • Revenue
    $1,485,746

  • Price
    $2,534,000

This dynamic and successful business is a leader in the industry for high-hazard training.  With major clients including top names in the business, there is a continual demand for classes and room to grow.

 

 

Operating in three main areas of training, construction equipment training, OSHA safety classes, and train-the-trainer classes, this instructional facility offers a total of 44 classes.  This company is distinct in that they offer hands-on high hazard training in addition to classroom education.  This approach increases the competency of those participating in the class and has been very beneficial for the development of services.  The owner has a large inventory of specialized equipment for hands-on training for classes such as fall protection, confined spaces, rigging, traffic flagging, and excavation.  This company uses existing and proprietary materials for training.  Advanced payment is required of most students. 

 

With 9 highly-trained OSHA Training Institute Certified employees, and 2 office employees, this staff is able to absorb all duties currently performed by the owner except for billing, quoting, and oversight.

 

Over the years, this company has proven to be a leader in the field of high hazard training and has had very little loss of clientele.  Students are sent to training by their companies and those business-to-business relationships remain strong. 

 

Business Highlights

  • Year Established:   2004
  • Location and Service Area:  Northern California
  • Clients:   Small - Large Companies, 300-400 students/month 
  • Enrollment: Booked solid 2 weeks out, partially booked 2 months out
  • Services:  High Hazard Training Classes
  • Building:  Location 1: 4,800 sq. ft. classrooms, office; Location 2: 5,000 sq. ft. classroom, storage
  • Reason for Selling:  Retirement
  • Employees:  Senior Trainer (4), Jr. Trainer (2), Office Staff (2), 1099 Trainers (3)
  • Seller Training Period: 90 days transition
  • Growth Opportunities:   Add staff to increase capacity, expand facility to increase capacity, advertise
  • Current Owner’s Responsibilities:   Senior Management, quoting, billing, 1 day of training

Financial Highlights

  • List Price: $2,534,000
  • Gross Sales:
    • 2017: $1,485,746
    • 2016: $1,047,734
    • 2015: $692,090
    • 2014: $603,840
  • Cash Flow:
    • 2017: $598,822
    • 2016: $345,765
    • 2015: $161,763
    • 2014: $198,171
  • Assets Included in Purchase*
    • Intangible Assets:   Outstanding reputation, many long-lasting relationships with clients, quality programming, high demand for services, superior customer service, specialized knowledge
    • Equipment: $230,492    Computers, harnesses, forklifts (6), aerial boom lift, training equipment
    • A/R:  $78,000
    • Vehicles:  $89,239
    • Furniture & Fixtures:  $2,562
    • A/R: $78,000                                     

 *amounts may vary

Clients

  • Small – Large Construction Companies  70%
  • General Industry Businesses   30%

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

Services

  • High Hazard Safety Classes 
  • Construction Equipment Training
    • Aerial Lift
    • Front Loaders
    • Forklift
    • Scissor Lift
    • And More! 
  • OSHA Safety Classes
    • CPR & First Aid
    • OSHA safety classes
    • LEAD EPA Certification
    • Traffic Control
    • Rigger & Signals
    • And More! 
  • Train-the-Trainer Classes
    • Aerial Lift
    • Confined Space
    • Excavation
    • And More!

Employees

  • Senior Trainer (4)
    • Directly train the students 
  • Junior Trainer (2)
    • Directly train the students 
  • 1099 Trainers (3)
    • Directly train the students 
  • Office Staff (2)
    • Bookkeeping
    • Scheduling
    • Billing

Growth Opportunities

  • Add staff to increase capacity
  • Expand facility to increase capacity 
  • Advertise

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 2017 Cash Flow was used with a prescribed multiple is 4.  With this information, the computation is as follows:

$598,822         x          4.24     =          $2,539,005

The Fair Market Value found above positions the business List Price at $2,534,000.

Funding Example

Purchase Price:                          $2,534,000

12.5%Buyer Down Payment:       $316,750

12.5%Seller Financing:                $316,750

75%Bank Loan:                          $1,900,500

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $5,905.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $24,975.

After business expenses and loan payments, a buyer with a 12.5% down payment of $316,750 would retain a profit of $228,256, which results in an 72% 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 $2,534,000 with the terms listed above, the coverage ratio is 1.62. 

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:

$2,534,000

$
%
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:
2017 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2017 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
Omaha, NE 68114

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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.