Kansas City Residential Roofing and Exterior Improvements
Experts in residential roofing and exterior improvements, this company completes an average of 400 roofing projects annually. 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.
- 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
- List Price: $1,350,000
- Gross Sales:
- 2018: $2,037,879 Jan. – Oct.
- 2017: $2,827,995
- Cash Flow:
- 2018: $396,248 Annualized
- 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 Statement||P&L Statement|
Jan. - Oct.
|Net Income Shown on Financial Statement||$115,620||$90,184|
|Compensation to Owner||$250,000||$110,000|
|Other unrelated Salaries||$0||$200,000|
|11% Tax on total W2 Salaries||$27,500||$34,100|
|Replacement||$-83,333||$-100,000||Replacement for the position|
|Seller's Cash Flow = Total Addbacks + Net Income||$330,207||$386,606|
|Profit Margin||16.20 %||13.67 %|
- Profit Margin 2017: 14%
Typical Clients and Services
- Residential 70%
- Commercial 30%
- This company works with a lot of insurance claims.
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Total Employees: 55
- 5 managers
- 10 in sales
- 40+ 1099 contracted workers
- Expand work with commercial clients
- Manage resources to maximize profitability
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 3.5. With this information, the computation is as follows:
$386,606 x 3.5 = $1,353,121
The fair market value found above positions the business list price at $1,350,000.
Purchase Price: $1,350,000
15% Buyer Down Payment: $202,500
15% Seller Financing: $202,500
70% Bank Loan: $945,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $3,775.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $12,419.
After business expenses and loan payments, a buyer with a 15% down payment of $202,500 would retain a profit of $192,280, which results in a 95% 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 $1,350,000 with the terms listed above, the coverage ratio is 1.99.
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.
- 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)
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.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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