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Opportunities

Mobility Equipment

CASH FLOW
$136,971

Specifications

  • Price
    $505,000

  • Revenue
    $2,033,285

  • Profit Margin
    7%

  • Location
    Omaha and Des Moines

  • Service Area
    150 mile radius of Omaha

  • Inventory
    $78,200

  • Reason for Sale
    Retirement

  • Employees
    12: (2) Service Intakes, (1) Warehouse, (1) Service Op Manager/ATP, (1) ATP, (1) Driver/Home Mod

  • Intangible Assets
    Contracts, advertising campaign, strong relationships with referral base

 

The sales for this DME store front and home installation business consistently surpass the $2M mark each year.  There are also over $200K in tangible assets, allowing for partial collateralization on a bank loan.  This medical equipment retail with a home modification component has been serving families within a 150-mile radius of Omaha since 2006. There are a number of different opportunities for growth and recently-won contracts paving a bright future.

The main location in the Omaha metropolitan area serves as a retail store for clients needing mobility equipment, such as wheelchairs, scooters, vehicle lifts, walkers and bath chairs.

Employees are on staff to handle service intakes, warehousing, service operations, and assistive technology (wheelchair fits and mobility). The current owner handles compliance, contracts with payors, bidding, and billing.

Referral sources include physical therapists and occupational therapists, and doctors offices.

 

Business Highlights

  • Year Established: 2006
  • Location: Omaha and Des Moines Metro Areas
  • Service Area: 150-mile radius of Omaha; 70% of work in Iowa, 30% in Nebraska
  • Building: 3300 sq. ft, retail location, (2) Omaha metro warehouses: 3,000 and 4,000 sq ft; (1) Des Moines area storage unit
  • Reason for Selling: Retirement
  • Employees: 12: (2) Service Intakes, (1) Warehouse, (1) Service Op Manager/ATP, (1) ATP, (1) Driver/Home Mod
  • Hours: 9am-5:30pm M-F; Saturday mornings
  • Seller Training Period: 2 owners willing to stay on for 5 years
  • Growth Opportunities: Add CPAP, lymphedema pumps, additional home modifications
  • Current Owner’s Responsibilities: Compliance, Payor contracts, bidding and billing.

Financial Highlights

  • List Price: $505,000
  • Gross Sales:
    • 2017: $2,033,285
    • 2016: $2,656,048
    • 2015: $2,502,885
    • 2014: $2,007,289
  • Cash Flow:
    • 136,971
  • Assets Included in Purchase*
    • Equipment: $22,500
    • Inventory & Demo Fleet: $78,200
    • Vehicles: $124,745: 2015 Nissan Passenger Van, 2006 Chevy Equinox, 2006 Chevy Silverado, 2007 Chevy Express, 2008 Ford E150, (2) 2010 Dodge Caravans, (2) 2010 Town & Country Vans, Trailer
    • Intangible Assets: Contracts, advertising campaign, strong relationships with referral base
    • Build-out: $78,948 in building improvements

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$2,033,285$2,656,048$2,502,885$2,007,289
Net Income Shown on Financial Statement$-53,639$206,108$199,817$129,276
ADDBACKS
Compensation to Owner$167,321$148,411$61,308$56,127
11% Tax on W2 Salaries$18,405$16,325$6,744$6,174
Interest$7,720$5,960$11,500$15,472
Depreciation$28,144$22,281$28,596$46,061
Amortization$383$0$383$383
Meals & Entertainment$3,617$0$5,169$3,827Personal expense
Office Admin$-40,000$-40,000$-40,000$-40,000To replace office manager
IRA$5,020$4,452$1,839$1,6843% IRA match to seller
TOTAL ADDBACKS$190,610$157,429$75,539$89,728
Seller's Cash Flow = Total Addbacks + Net Income$136,971$363,537$275,356$219,004
Profit Margin6.74 %13.69 %11.00 %10.91 %
.

Typical Clients

  • Clients needing home modifications, wheelchairs, mobility scooters, chair lifts
  • Contracts with several payors
  • Referrals from physical and occupational therapists and doctors offices

Services

  • Wheelchair fit testing
  • Home modifications: door widening, ramp additions

Employees

  • (2) Service Intakes
  • (1) Warehouse
  • (1) Service Operations Manager/ATP
  • (1) ATP – Assistive Technology Professional
  • (1) Driver/Home Modifications Specialist

Growth Opportunities

  • Expand Product Offerings
    • CPAP Machines
    • Lymphedema Pumps
  • Expand Home Services
    • Add additional Home Modifications

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

$136,971         x          3.69     =          $505,423

The Fair Market Value found above positions the business List Price at $505,000.

Funding Example

Purchase Price:                       $505,000

10% Buyer Down Payment:     $50,500

10% Seller Financing:               $50,500

80% Bank Loan:                      $404,000

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $941.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $5,309.

After business expenses and loan payments, a buyer with a 10% down payment of $50,500 would retain a profit of $61,964, which results in a 123% 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 $505,000 with the terms listed above, the coverage ratio is 1.83. 

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:

$505,000

$
%
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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