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Hospitality Furniture & Fixtures Distributor

CASH FLOW
$517,001

Specifications

  • Price
    $2,200,000

  • Revenue
    $1,699,404

  • Profit Margin
    30%

  • Location
    Las Vegas. Nevada

  • Reason for Sale
    New Ventures

  • Intangible Assets
    Established relationships with clients and recurring orders

  • Equipment
    $50,692

  • Lease
    2,000 sq. ft. – 6 offices, kitchen, conference space & common space

  • Employees
    13: 1 consultant & 2 owners on site; 10 contractors

As a main distributor and certified supplier for the hotel and hospitality industry, this company specializes in providing branded, as well as custom manufactured products Positioned perfectly in Las Vegas, this leader in hospitality furniture fixtures & equipment procurement is committed to providing exceptional quality products at 20-30% less than their competitors.

 

Servicing clients all over the world, they have delivered and installed goods in more than 25 countries to date and are expanding daily. Clients include the US Government, the United Nations and hospitality clients including major hotel brands.

 

With work in progress totaling over $2MM, average orders range between $70-$150k with many recurring orders and vendors. At the in-house design studio, clients can view 500-700 catalogs and swatch books to select products for purchase.

 

The current owners are responsible for operations, but a new owner could assume those responsibilities or hire on an additional staff member. Areas for growth include the addition of staff to increase order capacity.

Business Highlights

  • Year Established: 2010
  • Location: Las Vegas, NV
  • Service Area: National (95%) International (5%)
  • Clients: 25 ongoing projects at one time
  • Services: Supplying custom branded products for hospitality developments, commercial buildings, the US Government and the United Nations
  • Lease: 2,000 sq. ft. – 6 offices, kitchen, conference space & common space
  • Reason for Selling: New ventures
  • Employees: 13: 1 consultant & 2 owners on site; 10 contractors
  • Seller Training Period: 90 day transition
  • Growth Opportunities: Build the team to increase project capacity
  • Current Owner’s Responsibilities: Owner/Operator

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$1,699,404$935,496$3,052,184$3,010,837
Net Income Shown on Financial Statement$492,417$51,854$95,413$516,145
ADDBACKS
Compensation to Owner$0$0$0$66,000
11% Tax on total W2 Salaries$0$0$0$7,260
Depreciation$0$0$0$919
Interest$18,660$0$0$89
Auto-Personal Use$161$2,760$4,630$35920% personal
Meals & Entertainment$5,763$2,993$6,249$3,76690% personal
TOTAL ADDBACKS$24,584$5,753$10,879$78,393
Seller's Cash Flow = Total Addbacks + Net Income$517,001$57,607$106,292$594,538
Profit Margin30.42 %6.16 %3.48 %19.75 %
.

Employees

  • Total Employees: 13
    • 2 owners on site
    • 1 consultant on site
    • 10 international contractors

Growth Opportunities

  • Areas for growth include the addition of staff to increase order capacity.

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 4.59.  With this information, the computation is as follows:

$517,001         x          4.59     =          $2,373,035

The fair market value found above positions the business list price at $2,200,000.

Funding Example

Purchase Price:                    $2,200,000

15%Buyer Down Payment:   $330,000

15%Seller Financing:             $330,000

15%Bank Loan:                   $1,332,040

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $6,152.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $20,238.

After business expenses and loan payments, a buyer with a 15% down payment of $330,000 would retain a profit of $200,321, which results in a 60% 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 $2,200,000 with the terms listed above, the coverage ratio is 1.63. 

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:

$2,200,000

$
%
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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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.