Structural Engineering Firm in PA
Growing year-over-year, this structural engineering company is well-positioned for continued increase in sales for 2019. Primarily providing design services for commercial properties, less than 10% of revenue can be attributed to residential projects. With over 100 consistent customers, this firm works with architects and building owners alike, producing meticulous and thoughtful designs for universities, hospitals, schools, churches, health clinics, corporations, theaters, hotels, parking structures, and much more! Typically, work is done throughout the Northeast and Mid-Atlantic regions, but due to client variety, many projects have been completed across the US and internationally as well.
The well-diversified customer base and wide-ranging project requests keep this team of twelve at the top of their game. This efficient crew includes CAD designers, seven engineers, a senior designer, and support staff. The owner currently provides daily oversight and business development as well as minimal billable hours. Working from a spacious 3,200 square foot office, there is plenty of room to expand the team without investing in unnecessary office renovations.
Growth opportunities can be found in expanding advertising and marketing efforts to recruit new business relationships. Additional resources can be invested in growing the team if a buyer would like to take advantage of the plentiful work available in this industry.
- Year Established: 2013
- Location: Western Pennsylvania
- Service Area: Local and regional, with some client projects across the US and internationally
- Clients: Architects with some direct customers
- Services: Structural engineering services for (non-residential buildings: 90%; residential 10%), expert witness, restoration, etc.
- Equipment: $23,000: Equipment, furniture and fixtures
- Intangible Assets: Worldwide experience, long-term customer relationships, wide diversity of projects, diversified customer base, efficient well-trained team
- Lease: 3,200 sq. ft.: Offices (3), conference room, work stations (11), storage in the basement
- Reason for Selling: Divestment
- Employees: 13: 1 Office, 1 office manager, 2 CAD designers, 1 senior designer, 7 engineers
- Hours: M-F 8-5
- Seller Training Period: 6 – 18 months, as negotiated
- Growth Opportunities: Invest time into marketing efforts, grow the team to increase capacity, manage resources to maximize profitability
- Current Owner’s Responsibilities: Oversight, 5-10 billable hours weekly
- List Price: $1,383,000
- Gross Sales:
- 2018: $1,896,253 Annualized
- 2017: $1,763,101
- 2016: $1,609,322
- 2015: $1,440,151
- Cash Flow:
- 2018: $334,311 Annualized
- 2017: $415,499
- 2016: $325,213
- 2015: $339,911
- Work in progress and secured work: $670,000+
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Jan. - Nov.
|Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$221,640||$235,461||$230,732||$247,710|
|Compensation to Owner||$110,000||$120,000||$120,000||$120,000|
|11% Tax on total W2 Salaries||$12,100||$13,200||$13,200||$13,200|
|Simple IRA||$3,300||$3,600||$3,600||$3,600||3% match paid to owner|
|Ongoing Salary||$-82,500||$-90,000||$-90,000||$-90,000||To keep owner on|
|Seller's Cash Flow = Total Addbacks + Net Income||$306,452||$415,499||$325,213||$339,911|
|Profit Margin||17.62 %||23.57 %||20.21 %||23.60 %|
- Increasing sales year-over-year!
Typical Clients and Services
- Direct customers (less frequently)
- Business owners
- Home owners
- Corporate boards
- Structural engineering
- Non-residential buildings 90%
- Residential 10%
- Expert witness testimony
- And more!
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Total employees: 12
- 1 Office
- 1 Office manager
- 2 CAD designers
- 1 Senior designer
- 7 Engineers
- Invest additional time into marketing efforts
- Grow the team to increase capacity
- Manage resources to maximize profitability
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 4-year average cash flow was used with a prescribed multiple is 4. With this information, the computation is as follows:
$345,943 x 4 = $1,383,772
The fair market value found above positions the business list price at $1,383,000.
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