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Interior Design & Architecture in Texas

CASH FLOW
$506,084

Specifications

  • Price
    $890,000

  • Revenue
    $1,746,916

  • Account Receivable
    $133,000

  • Location
    Houston, Texas

  • Service Area
    Houston (90%) with national projects

  • Reason for Sale
    New ventures

  • Profit Margin
    31%

  • Employees
    9: Senior Designer (1), Designers (4), Receptionist (1), Architects (2), Warehouse Assistant (1)

  • Intangible Assets
    Positive and fruitful relationships with builders, outstanding reputation, high-end client base, skilled and knowledgeable team

With a corner on the high-end, full-service architecture and design market in Houston, this company is a dynamic partner for homeowners and commercial developers alike.  This firm has the ability to design a project from top to bottom, or to recreate an existing space from the inside out.  Clients can choose from architecture services, interior design work, architecture and design specifications planning, and interior transformation projects.  Many clients package these services, choosing two or more options to complete their vision.  Working on projects from $1MM to $17MM, high-end vision, fine finishes, and high-quality craftsmanship are essential and have been perfected by this team. 

 

With an incredibly beautiful office, this company certainly puts its best foot forward.  With 7,200 square feet of working space, the true centerpiece is the resource room.  With nearly every finishing touch at one’s fingertips, this space has everything from flooring to upholstery to drawer pulls.  This hands-on design space is a true benefit.

 

The current owners are dedicated to creating a comfortable and exceptional experience for their customers.  One owner is the principal architect and creative director, while the other owner is responsible for business development and management.  The entire team is highly-trained with the Senior Designer and Lead Architect able to assume many duties currently held by the owners.

Business Highlights

  • Year Established: 2006
  • Location: Houston, Texas
  • Service Area: Houston (90%) with national projects
  • Services:  Architecture, interior design, architecture and design specifications, interior transformations
  • Clients: Homeowners, builders, developers
  • Lease: Stunning space with 7,200 sq. ft., 3 conference areas, private offices (4), kitchen, small warehouse, incredible resource room (2,500+ sq. ft.)
  • Reason for Selling: New ventures
  • Employees: 9:  Senior Designer (1), Designers (4), Receptionist (1), Architects (2), Warehouse Assistant (1)
  • Hours: M-F 9:00-5:00
  • Seller Training Period:  90 days transition
  • Growth Opportunities: Expand team to increase capacity, Increase work with developers, Hire a remote workforce
  • Current Owner’s Responsibilities: Owner 1: Business management and development, design oversight; Owner 2: Architect and core creative director

Financial Highlights

  • List Price: $890,000
  • Gross Sales:
    • 2017: $1,746,916
    • 2016: $1,402,329
    • 2015: $1,392,170
    • 2014: $1,087,252
  • Cash Flow:
    • 2017: $506,084
    • 2016: $84,121
    • 2015: $279,610
    • 2014: $71,325
  • Assets Included in Purchase*
    • Equipment: Computers, printer, plotters, furniture, fixtures
    • A/R: $133,000
    • Intangible Assets: Positive and fruitful relationships with builders, outstanding reputation, high-end client base, skilled and knowledgeable team

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$1,746,916$1,402,329$1,392,170$1,087,252
Net Income Shown on Financial Statement$382,554$-32,958$250,743$32,690
ADDBACKS
Interest$0$81,288$815$2,131
Depreciation$0$21,354$2,605$6,387
Meals & Entertainment$9,966$8,230$10,129$2,961
Contributions/Donations$5,700$0$0$0
Taxes$76,323$0$0$0
Auto$25,541$207$3,798$21,156Personal 2 vehicles
Cell Phone$6,000$6,000$6,000$6,000$500/month family plan
Travel$0$0$5,520$0
Officer's Salary$42,500$0$0$0
TOTAL ADDBACKS$166,030$117,079$28,867$38,635
Seller's Cash Flow = Total Addbacks + Net Income$548,584$84,121$279,610$71,325
Profit Margin31.40 %6.00 %20.07 %6.55 %
  • 29% profit margin in 2017!

Typical Clients

  • Individual homeowners
  • Builders
  • Commercial Developers

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

Services and Projects

  • Architecture
    • Site planning
    • Create plans
    • Create construction drawings
    • New construction
    • Renovations

 

  • Interior Design
    • Interior
    • Exterior
    • All rooms of the home
    • Space planning
    • Cabinetry design
    • Furniture, lighting, rugs, furniture, drapery, art, accessorizing, etc.

 

  • Architecture and Design Specifications
    • Help the owner or developer make all choices small to large relating to design and functionality
    • Hinges, lights, switches, cabinets, outlets, appliances, fixtures, flooring, textiles, etc.

 

  • Interior transformations
    • Refreshing interior spaces with an owner’s current belonging
    • Space planning and rearranging
    • Often done in one day!

 

  • Projects
    • Residential homes
    • Offices
    • Medical complexes
    • Multi-family living
    • Community centers
    • Recreation centers

Employees

Employees: 9 

  • Senior Designer (1)
  • Designers (4)
  • Receptionist (1)
  • Architects (2)
  • Warehouse Assistant (1)

Growth Opportunities

  • Expand team to increase capacity 
  • Increase work with developers 
  • Hire a remote workforce to expand capacity as well as regional work

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 four-year average Cash Flow was used with a prescribed multiple is 3.79.  With this information, the computation is as follows:

$235,285         x          3.79     =          $891,730

The Fair Market Value found above positions the business List Price at $890,000.

Funding Example

Purchase Price:                       $890,000

10% Buyer Down Payment:     $89,000

15% Seller Financing:             $133,500

75% Bank Loan:                      $667,500

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,489.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $8,772.

After business expenses and loan payments, a buyer with a 10% down payment of $89,000 would retain a profit of $100,156, which results in a 113% 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 $890,000 with the terms listed above, the coverage ratio is 1.74. 

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:

$890,000

$
%
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.