Return To Opportunities List

Opportunities

Lighting Service & Maintenance with Distribution

CASH FLOW
$699,591

Specifications

  • Price
    $2,925,000

  • Revenue
    $7,454,956

  • Equipment
    $340,000

  • Inventory
    $1,000,000

  • Location
    Phoenix, Arizona

  • Reason for Sale
    Divestment

  • Service Area
    United States (90%), Canada (5%), Central America (5%)

  • Employees
    23: Sales (8), COO (1), Office Manager (1), VP (1), Operations Manager (1), Sales Director (1), Accounts Manager (1), Warehouse (9), 1099 (as needed)

  • Intangible Assets
    Strong customer relationships, many large clients, excellent staff tenure

This full-service lighting provider has mastered design, distribution, installation, maintenance, and repair since 1998. With a 9,600 sq. ft. headquarters in Phoenix, Arizona and two satellite branches- this business meets the needs of over 3,000 active clients nationwide. The majority of customers are in the United States (90%), while 5% of clients are located in Canada and another 5% are in Central America.  The owner of this business is passive, and the current management and staff intend to stay on after the sale allowing for consistency of service. The staff is well-trained, and many employees have been with the company for 5-20 years.  Team members include a sales department, a solid warehouse staff, a knowledgeable management team, and 1099 contractors are hired as needed.  The management team is planning to stay on, ensuring continuity of operations. 

 

Working with commercial and industrial businesses is the focus of this company.  There sales have increased to $7,454,956 over the past year! Large restaurant chains, hotels, multi-family housing projects, universities, and industrial customers are only the beginning of the diverse and impressive client list that results in steady work throughout the year.    Providing excellent customer service, they seek to buy and sell products at the lowest price possible.  Due to their approach, they can provide products and services for far less than their competition. 

Business Highlights

  • Year Established: 1998
  • Location:  Phoenix, Arizona
  • Service Area: United States (90%), Canada (5%), Central America (5%)
  • Clients: 3,000+ active, commercial and industrial
  • Services: Distribution, lighting maintenance, retrofitting, lighting and sign installation
  • Building: Location 1: 9,600 sq. ft.  Location 2: 5,000 sq. ft.    Location 3: storage only
  • Reason for Selling: Divestment
  • Employees: 23: Sales (8), COO (1), Office Manager (1), VP (1), Operations Manager (1), Sales Director (1), Accounts Manager (1), Warehouse (9), 1099 (as needed)
  • Hours: 6:30 – 5:00 M-F
  • Seller Training Period: Management is planning to stay on
  • Growth Opportunities: Expand electrical services, improve online presence and user experience by adding online ordering
  • Current Owner’s Responsibilities:  Passive, oversight only

Financial Highlights

  • List Price: $2,925,000
  • Gross Sales:
    • 2018: $7,454,956
  • Cash Flow:
    • 2018: $699,591
  • Assets Included in Purchase
    • Equipment: $340,000: Cranes (2), vans (2), trucks (5), lifts (3), misc. tools
    • Inventory: $1MM+
    • WIP:  $625,000
    • Intangible Assets: Strong customer relationships, many large clients, excellent staff tenure

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L Statement
TOTAL
Tax Return
TOTAL
Tax Return
TOTAL
Tax Return
TOTAL
Notes
2018201720162015
GROSS SALES$7,454,956$6,390,540$7,122,827$6,190,559
Net Income Shown on Financial Statement$141,302$246,602$360,692$-78,708
ADDBACKS
Compensation to Owner$94,100$117,000$115,314$115,275
11% Tax on total W2 Salaries$10,351$12,870$12,685$12,680
Interest$55,380$35,634$55,731$78,685
Depreciation$0$148,861$43,883$18,284
Amortization$0$55,008$68,785$56,645
Meals & Entertainment$14,227$11,887$11,660$12,956
Contributions/Donations$1,218$0$0$0
Cell Phone$6,600$6,600$6,600$6,600$550/month
Travel$12,000$12,000$12,000$12,000$1,000/month
Auto Expense$78,000$18,000$18,000$18,000$1,500/month
Line Item 18 - Employee Benefit Program$10,000$10,000$10,000$10,000For owner's family of 5
Management Fee$10,000$0$0$0
Delivery Depreciation $0$0$1,640$0
Warehouse Depreciation $206$205$205$0
G&A Depreciation $1,049$1,427$1,461$0
Professional fee$735$0$0$0
Warehouse labor $45,475$38,036$41,716$0
Warehouse payroll tax$3,571$2,892$3,438$0
Warehouse fringe benefits $10,204$9,487$9,066$0
Warehouse Equipment repair $1,515$534$230$0
G&A Licenses & Fees $166$166$166$0
Customer Service Salaries $38,142$37,988$37,128$0
Customer Service Payroll Taxes$6,979$7,400$9,730$0
Customer Service Fringe Benefits $9,113$11,676$14,021$0
G&A Division Manager Salaries $50,460$206$0$0
Rent $84,565$76,032$74,819$0
G& A Payroll Taxes$3,572$3,372$3,419$0
Building Repairs & Maintenance $4,510$4,801$8,713$0
Utilities$6,151$6,590$6,718$0
TOTAL ADDBACKS$558,289$628,672$567,128$341,125
Seller's Cash Flow = Total Addbacks + Net Income$699,591$875,274$927,820$262,417
Profit Margin9.38 %13.69 %13.03 %4.24 %
  • Full cash flow available in the deal room

Typical Clients

  • Commercial retailers 
  • Restaurant chains 
  • Hospitals 
  • Hotels 
  • Industrial facilities 
  • Churches 
  • Universities 
  • Multi-family housing 
  • Small businesses 

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

A Sample of Services and Products Available

Services

  • Lighting Design
  • Energy Analysis and Management
  • Maintenance, Service, and Repair
  • Installation
  • Inventory Management
  • Utility Rebate Programs 

 

Products

  • LEDs and CFLs
  • Fluorescent Lighting and Lamps
  • Halogen Lamps
  • Emergency Lighting
  • Metal Halide Lamps
  • Incandescent Lamps
  • Ballasts
  • Fixtures

 

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

Employees

Employees: 23

  • COO (1)
  • VP (1)
  • Operations Manager (1)
  • Sales Director (1)
  • Accounts Manager (1)
  • Office Manager (1)
  • Sales (8)
  • Warehouse (9)
  • 1099 (as needed)

Growth Opportunities

  • Expand electrical services
    • Services could include non-lighting electrical services
    • Significant opportunity to increase income
    • Great profit margins in this type of work
    • Easy to integrate into current projects and for current customers 
  • Improve online presence and user experience
    • Increase functionality of the website
    • Include customer log-in
    • Include customer communication, ordering, and service request portals
    • Add online ordering with excellent user experience

Valuation Details

The Firm 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, 2018 cash flow was used with a prescribed multiple is 4.18.  With this information, the computation is as follows:

$699,591         x          4.18     =          $2,924,290

The fair market value found above positions the business list price at $2,925,000.

Funding Example

Purchase Price:                          $2,925,000

15% Buyer Down Payment:      $438,750

15% Seller Financing:                $438,750

70% Bank Loan:                      $2,047,500

Seller financing 10-year term at a rate of 4.50% equals a monthly loan payment of $4,547.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $22,731.

After business expenses and loan payments, a buyer with a 15% down payment of $437,750 would retain a profit of $372,248, which results in an 85% 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 $2,925,000 with the terms listed above, the coverage ratio is 2.14. 

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. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$2,925,000

$
%
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

Document Title / Description

This folder is empty.

Access to this Deal Room is restricted

Would you like to access the deal room?

Yes, please

Interested in
this business?

Complete the following information to sign an NDA and see more details!

Already have an account? Log in here.

Click to download NDA form

Print, sign and send to:

210 N 78th St. 2nd Floor
Omaha, NE 68114

Or fax to:

f 402.939.0857

Thinking of Selling?
When selecting an M&A firm, please use the following Scorecard: click here for our Scorecard


The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.