Industrial & Corporate Electric Company
Industrial and corporate companies in Central Pennsylvania can rely on this team of union electricians to complete projects in a timely and accurate manner. With a stellar reputation, this company has earned long-term client relationships with local colleges and universities, local health care facilities, and commercial businesses. With work in progress topping $3MM and an additional $1.5MM in secured contracts, this team is consistently busy throughout the year and their services are in high demand. Assets include nearly $300,000 in equipment and $160,000 in vehicles.
Located within driving distance of many commercial, health care, and educational facilities, work is typically completed within a 70-mile radius of the office. The headquarters features 4,000 total square feet, which includes a large office (1,000 sq. ft.) and heated shop (3,000 sq. ft.). This building is available for sale outside the sale of this business.
The team consists of twenty-seven individuals, including three office staff, seven foremen, and two project managers who also complete estimations. The number of those working in the field fluctuates upward based on the demands of a project. All electricians are union members.
- Year Established: 1975
- Location and Service Area: Central Pennsylvania
- Services: Commercial general electrical services
- Client Sites: Plants and factories, hospitals, retail, restaurants, universities and colleges
- Building: 4,000 sq. ft.: office (1,000 sq. ft.) with kitchenette, heated shop (3,000 sq. ft.) the building is for sale outside the sale of this business.
- Reason for Selling: Retirement
- Employees: 27: 2 estimators/project managers, 3 office staff, 7 foremen, 15+ electricians in the field
- Hours: M-F 8-4:30
- Seller Training Period: 90 days transition – Owner willing to stay on for a year if desired
- Growth Opportunities: Increase work with the universities and colleges, build on hospital and health care facility projects, market services
- Current Owner’s Responsibilities: Oversight
- List Price: $2,190,000
- Gross Sales:
- 2018: $5,371,748
- 2017: $5,562,163
- Cash Flow:
- 2018: $552,649
- Assets Included in Purchase*
- Equipment: $292,000: Standard electrical tools and equipment
- Vehicles: $160,000: 9 vehicles
- Inventory: $36,000: Standard electrical inventory
- A/R: $1,107,000
- WIP: $3,000,000
- Secured Work: $1,500,000
- Intangible Assets: Excellent long-term client relationships, positive reputation, well-trained and knowledgeable team, room for growth within territory
*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||$225,816||$564,015||$359,140||$74,425|
|Compensation to Owner||$65,332||$65,332||$65,332||$62,616|
|11% Tax on total W2 Salaries||$7,187||$7,187||$7,187||$6,888|
|Meals & Entertainment||$9,497||$4,885||$7,006||$7,533|
|Auto-Personal Use||$22,661||$13,572||$17,537||$18,771||50% Personal|
|Rent||$61,084||$61,864||$61,402||$64,489||$36,000 annual onward going rent 1-2 years|
|Seller's Cash Flow = Total Addbacks + Net Income||$552,649||$742,414||$548,730||$274,791|
|Profit Margin||10.28 %||13.35 %||7.12 %||3.96 %|
- 13% profit margin in 2017
- The income fluctuates based on available jobs that this company feels are good projects to bid. There is ample work available in the market for those looking to take on additional jobs.
Typical Services and Clients
- General electrical work
- New construction
- Building wiring
- High voltage installations
- Generation systems
- HVAC power systems
- Automation controls
- Plants and factories
- Universities and colleges
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Total Employees: 27+
- 2 estimators/project managers
- 3 office staff
- 7 foremen
- 15+ electricians in the field
- Additional team members are hired as needed for projects.
- Increase work with the universities and colleges
- Build on hospital and health care facility projects
- Market services to generate new business
- Offer service plans for large clients
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 3-year-average cash flow was used with a prescribed multiple is 3.4. With this information, the computation is as follows:
$614,598 x 3.4 = $2,089,633
The fair market value found above positions the business list price at $2,190,000.
Purchase Price: $2,190,000
12%Buyer Down Payment: $262,800
18%Seller Financing: $394,200
70%Bank Loan: $1,533,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,349.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $20,146.
After business expenses and loan payments, a buyer with a 12.5% down payment of $262,800 would retain a profit of $284,659, which results in a 108% 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 $2,190,000 with the terms listed above, the coverage ratio is 1.86.
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.
3-Year Average Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
3-Year Average Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
This folder is empty.
Access to this Deal Room is restricted
Would you like to access the deal room?Yes, please
Already have an account? Log in here.
Print, sign and send to:210 N 78th St. 2nd Floor
Omaha, NE 68114
Or fax to: