Psych Evaluations for Seniors, Adults, and Children
With a unique focus on the psychological evaluations of women looking to donate their eggs, this Arizona based psychology practice has been operating for over 20 years. This business has an emphasis on providing evaluations for children, adults, and seniors alike. The owner is currently doing minimal patient work as this practice has many accomplished and knowledgeable team members, both full-time and contracted employees. There is a full-time psychotherapist, a full-time neuropsychologist working with adults, a psychometrist to assist with testing, and a part-time contracted psychologist to work on egg donor cases. Many clients are evaluated via phone, so some employees work remotely.
Evaluations include neurological disability assessment and diagnosis, intellectual testing, medical procedure screening, civil and criminal testimony, alcohol/drug recovery center reports, and psychological assessment of women looking to donate their eggs. This practice is also known for providing excellent patient care through individual psychology services. These services are offered to those of all ages and includes, but is not limited to, general individual counseling, adjustment for traumatic brain injuries, and those living with chronic pain or disabilities.
Due to the unique focus of the work done by this practice, a new owner many not need to be a working therapist as long as those with appropriate credentials were hired to replace the owner’s billable hours.
- Year Established: 1991
- Service Area: Within a 90-mile radius of Phoenix, Arizona
- Services: Psychological testing; clinical psychology for children, adults, and families; egg donor screenings; forensic psychology
- Clients: Children through seniors, companies who contract for screenings
- Lease: Co-shared space: 3 offices on lease, lobby, conference room, full bathroom with kitchen, guest restroom, beautiful outdoor space
- Reason for Selling: Retirement planning
- Employees: 7: Psychotherapist (1), Neuropsychologist (1),PT 1099 Psychometrist (1), PT donor screening psychologist (1),PT Office Manager 1099 (1), PT 1099 Psychologist (1), Transcriptionist 1099 (1)
- Hours: M-F 9-5
- Seller Training Period: Flexible
- Growth Opportunities: Increase relationships for additional referrals, add staff to increase capacity, increase distance contract work
- List Price: $478,000
- Gross Sales:
- 2017/18: $464,689 (TTM)
- 2016: $448,698
- 2015: $359,344
- Cash Flow:
- 2017/18: $183,230 (TTM)
- 2016: $217,398
- 2015: $194,727
- Assets Included in Purchase*
- Equipment: $50,000: Furniture, equipment, materials
- Intangible Assets: Excellent reputation, little competition, secured contracts, positive relationships that result in many referrals, cooperative relationships with professionals in the field
*amounts may vary
- Children through seniors of any gender
- Those seeking individual therapy
- Companies who contract for screenings
- Drug and alcohol treatment centers
- Egg donor facility
- School districts
- Referred clients include:
- Those needing an evaluation for gastric bypass
- Those needing an evaluation for long-term pain management
- Those needing an evaluation of intellectual skills
- Those needing an evaluation of symptoms and a diagnosis
- Those who experience a disability
- Those who live with the effects of a traumatic brain injury
- Clinical psychology services for children, adults, and families
- Psychological Testing
- Medical procedure screenings
- Forensic psychology
- Psychotherapist (1)
- Neuropsychologist (1)
- Psychometrist (1)
- PT donor screening psychologist 1099 (1)
- Office Manager 1099 (1)
- PT Psychologist 1099 (1)
- Transcriptionist 1099 (1)
- Increase relationships for additional referrals
- Increase evaluation work with drug and alcohol treatment centers
- Add staff to increase capacity
- Increase distance contract work
- Increase egg donor evaluations
- Decrease individual psychotherapy services and focus on testing and evaluations
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 2016/2017 cash flow was used with a prescribed multiple is 2.61. With this information, the computation is as follows:
$183,320 x 2.61 = $478,230
The fair market value found above positions the business list price at $478,000.
Purchase Price: $478,000
10% Buyer Down Payment: $47,800
25% Seller Financing: $119,500
65% Bank Loan: $310,700
Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $1,897.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $4,083.
After business expenses and loan payments, a buyer with a 10% down payment of $47,800 would retain a profit of $111,470, which results in a 233% 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 $478,000 with the terms listed above, the coverage ratio is 2.55.
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.
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
TTM November - October
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$44,785||$38,974||$719||$719||$1,470||$1,470|
|Compensation to Owner||$108,333||$195,099||$120,694||$120,694||$124,476||$124,476||Operator/owner|
|Other Unrelated Salaries||$0||$36,000||$38,783||$38,783||$38,601||$38,601||Owner's Wife|
|11% Tax on total W2 Salaries||$0||$25,421||$17,542||$17,542||$17,938||$17,938|
|Meals & Entertainment||$5,958||$6,621||$4,074||$4,074||$3,791||$3,791|
|Cell Phone||$4,800||$2,400||$2,400||$2,400||$2,400||$2,400||2 lines at $200/month|
|Auto-Personal Use||$9,087||$3,232||$7,445||$7,445||$1,177||$1,177||Personal expense|
|Line Item 23||$0||$0||$35,625||$35,625||$14,462||$14,462||To Owner|
|Line Item 24||$0||$16,766||$36,233||$36,233||$36,358||$36,358||To Owner|
|Medical Reimbursement||$7,678||$8,746||$0||$0||$0||$0||To Owner|
|Onward Going Salary||$0||$-50,000||$-50,000||$-50,000||$-50,000||$-50,000||Replacement of Wife|
|Seller's Cash Flow = Total Addbacks + Net Income||$183,230||$288,267||$217,398||$217,398||$194,727||$194,727|
|Profit Margin||39.43 %||58.98 %||48.45 %||48.45 %||54.18 %||54.18 %|
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.
2017/2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017/2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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