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Marketing & Brand Development for Specialty Food & Beverages

CASH FLOW
$74,324

Specifications

  • Price
    $148,000

  • Revenue
    $223,794

  • Location
    Vermont

  • Profit Margin
    33%

  • Equipment
    $10,500

  • Reason for Sale
    Family

  • Intangible Assets
    Long standing clients both locally & nationally, reputation that strives above their competitors, and a niche industry space for clients served

  • Lease
    3-year lease (in year 1) at $800/month for 900 square/feet within a historical building offering 3 rooms and an open layout

  • Employees
    4: 1 full-time designer & illustrator, 1 part-time web programmer & designer, and 1-2 interns assisting with all facets of the business

Specializing in the food and beverage marketing industry, this company offers 9 full service options for clients including print, packaging, branding, web & digital design, content marketing, video, trade shows, vendor coordinating and custom packaging design.  This four-people design shop has established not only local clientele, but regional and national clients as well.

 

They have made a name for themselves by offering topnotch products and services. With four work stations in a 900 square foot open layout, the overhead for this business is quite low for this small yet efficient staff. 

 

The business operates with Adobe Creative Suite and the project management system Team Work.   All work stations are equipped with dual monitors and Mac Systems.  The business is fully equipped with photography, videography, and lighting equipment allowing every job to be completed with ease.

 

A buyer is able to invest 20% down and have a return of $47,223 in year one after all debt is paid. That is an ROI of 160%.

Business Highlights

  • Year Established: 2012
  • Location: Vermont
  • Clients: 20% Regionally, 20% Locally, and 60% Nationally.
  • Client Type:  All clients are within the food & beverage industry
  • Services: Packaging, Print, Branding, Web & Digital Design, Content Marketing, Video, Tradeshows, Vendor Coordinating, and Custom Packaging Design
  • Lease: 3-year lease (in year 1) at $800/month for 900 square/feet within a historical building offering 3 rooms and an open layout
  • Reason for Selling: Family
  • Employees: 4: 1 full-time designer & illustrator, 1 part-time web programmer & designer, and 1-2 interns assisting with all facets of the business
  • Seller Training Period: 90 Days
  • Current Owner's Responsibilities: Project Manager

Financial Highlights

  • List Price: $148,000
  • Gross Sales:
    • 2017: $223,794
    • 2016: $279,254
  • Cash Flow:
    • 2017: $74,324
  • Assets Included in Purchase*
    • Equipment: $10,500 – 4 Work Stations complete with Mac Systems, Photography Equipment, Videography Equipment, Lighting Equipment, Scanner & Copier
    • Intangible Assets: Long standing clients both locally & nationally, reputation that strives above their competitors, and a niche industry space for clients served

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnNotes
20172016
GROSS SALES$223,794$279,254
Net Income Shown on Financial Statement$8,939$-4,529
ADDBACKS
Compensation to Owner$50,786$48,857
11% Tax on total W2 Salaries$5,586$5,374
Interest$0$427
Meals & Entertainment$1,067$1,947
Amortization$278$1,667
Non-Business Telephone$2,160$2,160$180/month
Profit Sharing$2,225$2,108To Owner
Auto-Personal Use$3,283$3,271
TOTAL ADDBACKS$65,385$65,811
Seller's Cash Flow = Total Addbacks + Net Income$74,324$61,282
Profit Margin33.21 %21.94 %
  • 2017 profit margin: 33%!

Typical Clients and Services

This design firm serves all types of clients within the food & beverage industry.

Services include:

  • Packaging
  • Print
  • Branding
  • Web & Digital Design
  • Content Marketing
  • Video
  • Tradeshows
  • Vendor Coordinating
  • Custom Packaging Design

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

Employees

Employees: 4

  • Full-time designer & illustrator (1)
  • Part-time web programmer & designer (1)
  • Interns assisting with all facets of the business (1-2)
  • All employees work at the office except one remote PT employee

Growth Opportunities

  • Increase video production project revenue – advertisements, stop-motion animation, and long-form features

 

  • Specialty food businesses need unique designs to help them stand out.  This company has extensive experience in designing food packaging, advertising, and more. 

 

  • Expand with the plant-based food market – This company has been approached by several plant-based food companies to complete work in this area. 

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 2017 cash flow was used with a prescribed multiple is 2.  With this information, the computation is as follows:

$74,324           x          2          =          $148,648

The fair market value found above positions the business list price at $148,000.

Funding Example

Purchase Price:                          $148,000

20%Buyer Down Payment:         $29,600

30%Seller Financing:                  $44,400

50%Bank Loan:                            $74,000

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $828.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $1,431.

After business expenses and loan payments, a buyer with a 20% down payment of $29,600 would retain a profit of $47,223, which results in a 160% 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 $148,000 with the terms listed above, the coverage ratio is 2.74. 

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:

$148,000

$
%
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
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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.