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Opportunities

Only Daycare in Bedroom Community

CASH FLOW

Specifications

  • Price
    $89,000

  • Cash Flow

  • Revenue
    $277,374

  • Location
    Western Douglas County Nebraska

  • Inventory
    $2,000

  • Equipment
    $8,000

  • Lease
    $1,050/mo – 6 rooms, 2 bathrooms, storage room

  • Reason for Sale
    Retirement

  • Employees
    9 – 3 FT Lead Teachers, 6 PT Assistant Teachers

 

This is the only public daycare center in a beautiful bedroom community just outside of Omaha.  There are currently 68 children enrolled, including both part time and full time.  The seller simply overseas the business as there are plenty of teachers to go around.  Public schools provide all transportation for older kids, so there would be no driver required.  A quick and easy relocation would allow for exponential growth as well.

With minimal to no competition, growth is dependent only on the buyer’s desire. Caring for children from 6 weeks to 13-years-old are 9 employees, 3 of whom are Lead Teachers.

Included in the purchase is $10,000 worth of assets, from tables, chairs, and cribs, to toys and curriculum books. Conveniently located, the school buses are able to pick up and drop off school-aged children in the parking lot.  Children are also able to use a nearby playground when weather permits. Assisting the Lead Teachers in caring for the children are 6 part-time assistants.

Growth exists in advertising and utilizing social media. As the community is smaller, a buyer should consider reaching out to locals and businesses more to help boost enrollment.

 

Business Highlights

  • Years in Business: 26
  • Location and Service Area: Western Douglas County
  • Enrollment: 68 (FT & PT) – licensed for 60 per day
    • 6 weeks to 13-years-old
    • 27% of enrollees qualify for Title XX
  • Services: School bus picks up school-age children in the parking lot.
  • Lease: $1,050/mo – 6 rooms, 2 bathrooms, storage room
  • Reason for Selling: Retirement
  • Employees: 9 – 3 FT Lead Teachers, 6 PT Assistant Teachers
  • Hours: Mon – Fri 6:30am to 6pm
  • Seller Training Period: 90 days
  • Growth Opportunities: Participate more in the community. Social media. Advertise.
  • Current Owner’s Responsibilities: Seller oversees employees and operations (less than 10 hours per week).

Financial Highlights

  • List Price: $89,000
  • 2016 Gross Sales: $277,374
  • Profit Margin: 12%
  • $10,000 in Assets included in the purchase:
    • Equipment: $8,000 – tables, chairs, shelves, cribs, freezer, refrigerator
    • Inventory: $2,000 – toys, curriculum books

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$224,001$277,000$280,269$185,495
Net Income Shown on Financial Statement$18,206$32,350$50,283$20,829
ADDBACKS
Interest$31$64$209$0Non-onward going expense
Non-Business Telephone$1,800$1,800$1,800$1,800Personal expenses
Meals & Entertainment$998$1,091$1,367$398Personal expenses
Auto-Personal Use$4,800$4,800$4,800$4,800Owner's auto expense
TOTAL ADDBACKS$7,629$7,755$8,176$6,998
Seller's Cash Flow = Total Addbacks + Net Income$25,835$40,105$58,459$27,827
Profit Margin11.53 %14.48 %20.86 %15.00 %

 

  • 2016 gross sales were 50% higher than in 2014

Employees

  • 3 FT Lead Teachers
  • 6 PT Assistant Teachers

Staff are paid hourly wages.

Enrollment

  • 68 FT & PT enrollees
    • 25 are infants/toddlers attending full-time
  • Daycare is licensed for 60 per day
  • Title XX is offered
    • About 27% of the children enrolled qualify

Rates

  • $150/week for infants
  • $140/week for toddlers
  • $125/week for children 3 and up

Full-time families are eligible for 5 days of vacation.

Families are still charged for no-shows.

Leased Space

  • 2 toddler rooms
  • 1 large preschool room
  • 1 preschool room
  • 1 school-aged room

Children are able to use a nearby playground when weather permits.

There are 2 bathrooms in the facility, as well as a storage room.

Growth Opportunities

  • Social media and advertising
    • This is currently not being done
    • The demographic is there, but not engaged
  • More community involvement
    • The town is smaller and has a strong community feeling that can be tapped into
    • A buyer working to build relationships through community events should see enrollment reflect that effort

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 of 3.44.  With this information, the computation is as follows:

$25,835           x          3.44     =          $88,872

The Fair Market Value found above positions the business List Price at $89,000.

Funding Example

Purchase Price:                         $89,000

20%Buyer Down Payment:     $17,800

20%Seller Financing:               $17,800

60%Bank Loan:                        $53,400

Seller Financing 5-year term at a rate of 4.50% equals a monthly loan payment of $332.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $702.

After business expenses and loan payments, a buyer with a 20% down payment of $17,800 would retain a profit of $13,432, which results in a 13,432% 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 $89,000 with the terms listed above, the coverage ratio is 2.08. 

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:

$89,000

$
%
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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