IT Support for Chicago Department of Aviation
Providing excellent IT support as a subcontractor to the Chicago Department of Aviation, this business has an incredible 70% profit margin. With very low overhead, all work is completed on-site, so no office or the related expenses are needed. Employees for this company work at O’Hare International Airport, Midway International Airport, and a downtown office for the Chicago Department of Aviation. All locations are in the Chicago metro area.
There are three separate contracts for three separate contractors for three separate services. Contract 1 has been earned for over 7 years and is a month-to-month contract. Contract 2 has been earned for 3 years and there are 2 years left on a 5-year contract with a possible 2-year extension. Contract 3 has been earned for over 12 years and there are 2 years left on a 5-year contract.
This business has been a provider to the Chicago Department of Aviation for over 13 years. Having weathered administration changes, they are an incumbent provider and have a deep knowledge of the systems and infrastructure used by their client as well as the distinct ability to focus on and address the detailed needs of this large and complex organization. The Chicago Department of Aviation has committed to spending 8.5B in the next 10 years at O’Hare and an additional 5B at Midway, ensuring that contracts for work will be available in the near future.
Services offered by this dynamic small business are desktop support, access management system support, and telephony support for desktop telephones. Two employees handle the access management support, while telephony support is handled by an as needed contractor.
- Year Established: 2005
- Location: Chicago, Illinois
- Clients: 3 contracts for 3 contractors for 3 services: Contract 1: earned 7+ yrs. (month-to-month contract), Contract 2: earned 3 yrs. (2 yrs. left on 5-yr. contract, w/ 2 yr. extension), Contract 3: earned 12+ yrs. (2 yrs. Left on 5-yr. contract)
- Services: IT support, access management support, telephony support for the Department of Aviation
- Lease: No office! Employees work on-site.
- Reason for Selling: Retirement
- Employees: FT (1), 1099 FT (1), 1099 as needed (1)
- Seller Training Period: 6-9 months
- Growth Opportunities: Increase contract amount or duties in next RFP, increase staff to take on additional contracts, grow with the technology into additional spaces
- Current Owner’s Responsibilities: Desktop support, business development
- List Price: $1,830,000
- Gross Sales:
- 2017: $591,212
- 2016: $397,457
- 2015: $253,530
- 2014: $173,443
- Cash Flow:
- 2017: $416,060
- 2016: $303,666
- 2015: $164,408
- 2014: $140,147
- Assets Included in Purchase*
- Intangible Assets: Extremely low overhead, incumbent IT contractor to the Chicago Department of Aviation, on-site service, extremely reliable, great customer service, innovative ideas for customers
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$416,060||$162,699||$8,837||$110,686|
|Meals & Entertainment||$0||$7,916||$9,100||$13,500|
|Commissions||$0||$117,900||$129,840||$0||Paid to Owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$416,060||$303,666||$164,408||$140,147|
|Profit Margin||70.37 %||76.40 %||64.85 %||80.79 %|
- Consistent growth in the past four years!
- 2016-2017: 49% growth
- 2015-2017: 133% growth
- 2014-2017: 241% growth
- Desktop Support
- o Supports proprietary Financial Management Systems (FMS)
- o Supports aviation software
- o Supports Microsoft Office and standard Microsoft programs
- This project is managed and completed by the owner
- Access Management Support
- Provide employees and dignitaries access to secured areas throughout the airports
- Support the security camera system
- Two individuals work on this project
- FT (1)
- 1099 PT (1)
- Telepnohy System Support
- Voiceover IT phones
- An individual (1099) is hired as needed to support this project
- Increase contract amount or duties in next RFP cycle
- Increase staff to take on additional contracts
- Grow with the technology into additional spaces
- Diversify client base
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 4.4. With this information, the computation is as follows:
$419,060 x 4.4 = $1,830,664
The Fair Market Value found above positions the business List Price at $1,830,000.
Purchase Price: $1,830,000
15% Buyer Down Payment: $ 274,500
15% Seller Financing: $ 275,500
70% Bank Loan: $ 1,281,000
Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $5,118.
Bank Loan 7-year term at a rate of 6% equals a monthly loan payment of $18,714.
After business expenses and loan payments, a buyer with a 15% down payment of $274,500 would retain a profit of $130,087, which results in a 47% 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 $1,830,000 with the terms listed above, the coverage ratio is 1.45.
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: $
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Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
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Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
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Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
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