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Opportunities

Kansas City Residential Roofing and Exterior Improvements

CASH FLOW
$562,507

Specifications

  • Price
    $1,300,000

  • Revenue
    $1,902,574

  • Cash Flow
    $562,507

  • Equipment
    $165,853

  • Account Receivable
    $437,000

  • Employees
    55: 5 managers, 10 in sales, 40+ 1099 contracted workers

  • Location
    Kansas City Area

  • Service Area
    Within a 30-mile radius for residential and regionally for commercial work

An average of 400 roofs are completed each year with these experts in residential roofing and exterior improvements. Current customers are mainly residential clients (70%), while working with commercial clients (30% of current business) is an area of great potential growth.  Comfortable working with insurance companies, this company can manage the details associated with fulfilling claims.  In addition to roofing, this team of 40-50 subcontracted workers completes exterior projects including painting, gutter and siding installation, as well as stone restoration.  The current owner does not work in the field and most duties could be assumed by the well-trained and reliable management team.  

The roofing season, due to weather, is primarily March through October or November.  Average residential roof prices average $10,000 and a commercial roof could be $75,000 - $100,000.  This business does offer financing though a third party.  

Operating from 1,000 square feet of space, the team of managers requires little to operate efficiently.  The sales force is made up of 10 representatives who focus on social media and door-to-door connections to generate business outside of the insurance claims.  

 

Business Highlights

  • Year Established:  2013
  • Location: Kansas City Area
  • Service Area: Within a 30-mile radius for residential and regionally for commercial work
  • Clients: Residential 70%, Commercial 30%; This company works with a lot of insurance claims.
  • Services: Roofing, painting, gutters, siding, restoration, consulting and estimates
  • Lease: 1,000 sq. ft.: Four offices, a conference room
  • Reason for Selling: Exit strategy
  • Employees: 55: 5 managers, 10 in sales, 40+ 1099 contracted workers
  • Hours: M-F 9-5
  • Seller Training Period: 90-120 days
  • Growth Opportunities: Expand work with commercial clients, manage resources to maximize profitability
  • Current Owner’s Responsibilities: Owner/operator, does not work in the field and most duties could be absorbed by a new owner or the current management staff

Financial Highlights

  • List Price: $1,300,000
  • Gross Sales:
    • 2018: $1,902,574
  • Cash Flow:
    • 2018: $562,507
    • 2017: $386,606
  • Assets Included in Purchase*
    • Equipment: $165,853: Furniture, equipment, 3 vehicles, iPads, ladders, sprayers
    • A/R: $437,000
    • Intangible Assets:

*amounts may vary



Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan.-Dec.
Tax ReturnNotes
20182017
GROSS SALES$1,902,574$2,827,995
Net Income Shown on Financial Statement$334,279$90,184
ADDBACKS
Compensation to Owner$314,000$110,000
Other unrelated Salaries$0$200,000
11% Tax on total W2 Salaries$0$34,100
Depreciation$0$44,157
Interest$4,021$7,905
Contributions/Donations$4,500$260
Meals$5,208$0
Replacement$-100,000$-100,000Replacement for the position
Entertainment $499$0
TOTAL ADDBACKS$228,228$296,422
Seller's Cash Flow = Total Addbacks + Net Income$562,507$386,606
Profit Margin29.57 %13.67 %
  • Profit Margin 2018: 30%

Typical Clients and Services

Clients:

  • Residential 70%
  • Commercial 30%
  • This company works with a lot of insurance claims.

Services:

  • Roofing
  • Painting
  • Gutters
  • Siding
  • Restoration
  • Consulting
  • Estimates

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

Employees

Total Employees: 55

  • 5 managers
  • 10 in sales
  • 40+ 1099 contracted workers

Growth Opportunities

  • Expand work with commercial clients
  • Manage resources to maximize profitability

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

$562,507         x          2.3       =          $1,293,766

The fair market value found above positions the business list price at $1,300,000.


Funding Example

Purchase Price:                          $1,300,000

15%Buyer Down Payment:      $195,000

15%Seller Financing:                $195,000

70%Bank Loan:                         $910,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $3,635.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $11,959.

After business expenses and loan payments, a buyer with a 15% down payment of $195,000 would retain a profit of $199,477, which results in a 102% 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 $1,300,000 with the terms listed above, the coverage ratio is 2.07. 

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. 

Attachments

  • Business Summary
    • Identifies important business information in an organized, quick-reference format
     
  • Cash Flow Analysis
    • The owner’s profit is the sum of business net income, any owner’s perks, & any non-onward going expenses (cash flow)

Purchase Price:

$1,300,000

$
%
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: %

Attachments

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210 N 78th St. 2nd Floor
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