Plumbing, HVAC, Electric with Retail Appliance Niche
One-stop-shop for all home appliances and installation! With nearly $1MM in sales and over $500,000 in assets, this shop offers comprehensive retail and service offerings. Established in 1929, this business has a retail location that sells all major home appliances and parts in addition to on-site repair. They also sell, install, and service plumbing, electrical, HVAC, water heaters, water filtration and more.
Currently, the largest sales are in HVAC installation and home appliance retail sales. Five full-time staff with a crew of licensed HVAC technicians, electricians, and plumbers add value to this operation for installation and service contracts in a 35-mile radius of their location. The owner is willing to assist with a 90-day transition period and would be willing to consider further employment to aid in the transition.
The $1,824/month lease includes 2 buildings: a 2,000 sq. ft. showroom, 1,600 sq. ft. service/parts, 2,000 sq. ft showroom with. second-floor storage, and a separate 4,000 sq. ft. warehouse. The installation and service team have an entire fleet of specialized vehicles. The business is currently completely collateralized.
- Year Established:1929
- Location and Service Area: Iowa City, IA area
- Demographics: Several large communities with a 35-mile service area
- Services: Retail home appliances, parts (36%), Installation and service of plumbing/ water heaters, filtration (15%), electrical (6%), HVAC (39%), misc. (5%)
- Lease: $1,824/mo. Building 1: 2,000 sq. ft. showroom, 1,600 sq. ft. service/parts, 2,000 sq. ft. 2nd-floor storage; Building 2: 4,000 sq. ft. warehouse
- Reason for Selling: Divestment
- Employees: 7: Full-time (5), part-time (2), includes licensed plumbers, HVAC, and electrician
- Hours: 8AM-5PM M-Th, 8-12 Sat
- Seller Training Period: 90 Days, Owner willing to negotiate longer to assist
- Growth Opportunities: Open Sunday for retail
- Current Owner’s Responsibilities: Owner/operator
- List Price: $400,000
- Gross Sales
- 2018: $973,913 Annualized
- 2017: $1,019,321
- 2016: $1,053,905
- 2015: $1,342,551
- Owner Profit/Cash Flow
- 2018: $67,095 Annualized
- 2017: $111,027
- 2016: $142,650
- 2015: $68,935
- Assets Included in Purchase* $544,174
- Equipment: $31,275
- Vehicles: $179,718 10 Service vans & trucks
- Inventory: $129,181*
- A/R Work in Progress: A/R: $85,000 Pipeline: $30,000, Backlog $89,000
- Intangible Assets: Solid reputation, long history
*amounts may vary
- Appliances 36%
- HVAC 30%
- Plumbing 15%
- Electrical 6%
- Other 5%
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Retail home appliances
- Retail parts
- Installation and service of plumbing,
- Installation and service of electrical
- Installation and service of HVAC
- Installation and service of water heaters
- Installation and service of water filtration
Total Employees: 7
- Full time (5)
- Licensed plumbers
- Licensed HVAC
- Licensed electrician
- Part-time (2)
- Open Sunday for retail
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 3.6. With this information, the computation is as follows:
$111,027 x 3.6 = $399,697
The fair market value found above positions the business list price at $400,000
Purchase Price: $400,000
15%Buyer Down Payment: $60,000
10%Seller Financing: $40,000
75%Bank Loan: $300,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $746.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $3,942.
After business expenses and loan payments, a buyer with a 15% down payment of $60,000 would retain a profit of $54,769, which results in a 91.28% 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 $400,000 with the terms listed above, the coverage ratio is 1.97.
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.
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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