Return To Opportunities List

Opportunities

Home Improvement & Window Retail

CASH FLOW
$192,624

Specifications

  • Price
    $715,000

  • Cash Flow
    $192,624

  • Revenue
    $2,494,149

  • Equipment
    $39,000

  • Down Payment
    10%

  • Account Receivable
    $260,000

  • Reason for Sale
    Owners have separate business they wish to focus on

  • Location
    Nebraska & Iowa

  • Employees
    Both locations have receptionists and many contracted 1099 installers; one location has 1099 sales reps

Specializing in vinyl window and door installation, the sellers of this franchise business have locations in Nebraska and Iowa. Together, the stores gross over 2.4M in sales and profit the owners nearly $200,000 in cash flow. As part of a nationally-recognized name brand, these stores promise huge growth potential coupled with absolutely no franchise fees!

Open for 6 years, each location has a warehouse and storefront, as well as a showroom. As the franchise is a volume-based model, inventory is ordered for each project and not kept until sold. These stores are being sold on a partly owner/operator model, but a new owner could easily hand out many of the owner’s duties to current 1099-contracted installers.

Each location is minimally run, with receptionists at both offices and many contracted 1099 installers. Included in the purchase price is $389,000 in assets, including equipment and branded vehicles. At a purchase price of $715,000, a buyer paying just 10% down could expect a first year’s profit of $78,805 after debts.

Business Highlights

  • Years in Business: 6
  • Location: Nebraska & Iowa
  • Building Lease: Both locations have a storefront, showroom and warehouse
  • Reason for Selling: Owners have separate business they wish to focus on
  • Employees: Both locations have receptionists and many contracted 1099 installers; one location also has 1099 sales reps
  • Seller Training Period: 90 days
  • Growth Opportunities: Contract seller’s duties out to existing installers; targeted marketing; work with remodelers and homebuilders to push product
  • Current Owner’s Responsibilities: One of the owners has a lot of duties that could be spread to the installers, and the other handles marketing

Financial Highlights

  • List Price: $715,000
  • Gross Sales
    • 2016: $2,494,149
    • 2015: $2,304,226
  • Cash Flow
    • 2016: $192,624
    • 2015: $111,489
  • Assets included in purchase: $389,000
    • Equipment: $39,000
    • Vehicles: $90,000 in branded trucks
    • A/R: $260,000 in combined A/R between both locations

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax Return
Combined
Tax Return
Iowa
Tax Return
Nebraska
Tax Return
Combined
Tax Return
Iowa
Tax Return
Nebraska
Notes
201620162016201520152015
GROSS SALES$2,494,149$604,824$1,889,325$2,304,226$561,187$1,743,039
Net Income Shown on Financial Statement$-31,333$-20,743$-10,590$-83,159$-15,659$-67,500
ADDBACKS
Compensation to Owner$91,850$12,462$79,388$84,000$9,000$75,000
11% Tax on total W2 Salaries$10,104$1,371$8,733$9,240$990$8,250
Interest$24,424$1,130$23,294$18,303$279$18,024Non-onward going expense
Depreciation$17,875$169$17,706$19,361$169$19,192Non-cash item
Meals & Entertainment$939$0$939$1,104$60$1,044Expenses unrelated to the business
Marketing Consultant$31,200$15,600$15,600$15,700$15,700$0Outside marketing company no longer used
Non-Business Telephone$1,440$0$1,440$1,440$0$1,440$120/mo for personal cell phone
Sales Manager Salary$26,000$0$26,000$26,000$0$26,000Business being sold as owner/operator
Sales Manager Commission$19,500$0$19,500$19,500$0$19,500Business being sold as owner/operator
Travel$625$625$0$0$0$0Travel expenses unrelated to business
TOTAL ADDBACKS$223,957$31,357$192,600$194,648$26,198$168,450
Seller's Cash Flow = Total Addbacks + Net Income$192,624$10,614$182,010$111,489$10,539$100,950
Profit Margin7.72 %1.75 %9.63 %4.84 %1.88 %5.79 %
  • Sellers had a Marketing Consultant position that they discontinue due to poor return
  • One location has a Sales Manager position that was made redundant by the salesmen

Products

  • Windows
    • Replacement vinyl
      • Single hung, double hung, sliding, casement, awning, bay & bow, picture
    • Grid patterns: colonial, prairie, diamond
    • Grid styles: flat, contoured, simulated
    • Glass energy options: obscure, Niagara
  • Doors
    • Replacement doors
      • Sliding, swing
    • Grid patterns: colonial, prairie, diamond
    • Grid styles: flat, contoured, simulated
    • Glass energy options: obscure, Niagara and glue chip-glass
  • Roofing
    • Repairs and replacement
    • Class 4 Impact Resistance
  • Siding
    • Repairs and replacement

Services

  • Installation of vinyl windows and doors
    • Installation included in pricing
    • Average order takes 2 to 3 weeks to be built and shipped
    • Average order takes less than 1 day to install
  • Repair and replacement of roofing and siding
  • Professional installation
    • Installers go through a strict screening process
    • Each installer caries Public Liability Insurance, Workmen’s Compensation Insurance and Property Damage Insurance
  • Lifetime warranty

Process

  • Network of independent business owners across the U.S.
  • Extensive network allows for purchase of large volumes of windows directly from manufacturers to precise standards
    • Makes for tremendous discounts passed on to consumer
  • Each window is individually measured
    • Custom order is submitted to manufacturer for production
    • Manufacturer builds windows and ships them to warehouse

Market & Growth Outlook

  • The franchise model is built on a volume basis
    • Growth is endless and depends on the staff in place and owner’s needs
  • There are no franchise fees, so independent businesses are not hindered by the franchise impinging on sales numbers
  • Increase marketing efforts to drive new sales and name recognition
  • No inventory costs, as product is ordered per job
  • Work with remodelers and homebuilders to push product

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:

2016 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.

With this information, the computation is as follows:

$192,624         x          3.9       =          $751,233

The Fair Market Value of this business is $750,000. However, due to the seller’s wish to devote time elsewhere, the business is being listed at a discounted price of $715,000.

Funding Example

Purchase Price:                          $715,000

10% Buyer Down Payment:             $71,500

10% Seller Financing:                   $71,500

80% Bank Loan:                             $572,000

Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $1,333.

Bank Loan 7-year term at a rate of 5.25% equals a monthly loan payment of $8,152.

After business expenses and loan payments, a buyer with a 10% down payment of $71,500 would retain a profit of $78,805, a 110% 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 $715,000 with the terms listed above, the coverage ratio is 1.69. 

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:

$715,000

$
%
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:
2016 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2016 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: %

Attachments

Document Title / Description

This folder is empty.

Access to this Deal Room is restricted

Would you like to access the deal room?

Yes, please

Interested in
this business?

Complete the following information to sign an NDA and see more details!

Already have an account? Log in here.

Click to download NDA form

Print, sign and send to:

210 N 78th St. 2nd Floor
Omaha, NE 68114

Or fax to:

f 402.939.0857

Thinking of Selling?
The top 5 questions to ask any potential broker:


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.