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Telecommunications Cell Tower Service

CASH FLOW
$586,550

Specifications

  • Price
    $2,490,000

  • Revenue
    $3,749,575

  • Equipment
    $318,000

  • Inventory
    Ordered per project

  • Location
    St. Louis area and Kansas City area

  • Service Area
    National with a focus on Missouri, Kansas, Illinois

  • Account Receivable
    $971,714

  • Employees
    24: Project Manager (2), Foremen (6), field employees (14), Administrative Assistants (2)

  • Intangible Assets
    Well-regarded company with diverse client base, knowledgeable staff, long-term relationships with clients

Working with all major telecom carries, this wireless maintenance and installation company can address the needs of its clients from replacing antennas to troubleshooting issues that arise.  This company has the ability to work on cell towers from top to bottom and is a reliable and informed resource for its clients.  Providing premier services on new construction projects, modifications to existing sites, as well as repairs and maintenance, this full-service company can even respond to 24-hour service calls.  Areas of expertise includes power plant batteries, low voltage electrical work, new and replacement antennas, and power line replacement or installation.  With specialties high in the sky, these tower climbers are OSHA certified and very knowledgeable. 

 

Employees working for this company are highly-trained and have all safety qualifications necessary for this type of work.  Certified electricians are also a part of this dynamic team and are able to address the complex electrical needs surrounding telecommunications work.  With an office in the St. Louis area, the space has 9 offices, a meeting room, break room, and warehouse with rack and open storage. 

 

Growth for this business is promising, as work in the telecommunications industry is ever-expanding.  Adding a base location in the Kansas City area could potentially increase business rapidly as would branching into civil work.

Business Highlights

  • Year Established: 2012
  • Location:  St. Louis area and Kansas City area
  • Service Area: National with a focus on Missouri, Kansas, Illinois 
  • Services: Wireless communication installation and maintenance, new construction, modifications, repairs, maintenance, and cell tower work
  • Clients: Large Telecom Companies i.e. Verizon, AT&T
  • Building: Co-occupied space: 21,000 sq. ft., 9 offices (2,500 sq. ft.), break room, meeting room, warehouse, lease through 4.2022
  • Reason for Selling: New ventures
  • Employees: 24: Project Manager (2), Foremen (6), field employees (14), Administrative Assistants (2)
  • Hours: M-F 8-5
  • Seller Training Period: 90 days transition
  • Growth Opportunities: Expand capacity by increasing the team, increase tower crews, Expand into electrical or civil work
  • Current Owner’s Responsibilities:  Owner 1: Oversight, Owner 2: Daily operations and project management

Financial Highlights

  • List Price: $2,490,000
  • Gross Sales:
    • 2017: $3,479,575
    • 2016: $2,796,192
    • 2015: $3,276,404
    • 2014: $2,212,160
  • Cash Flow:
    • 2017: $586,550
    • 2016: $53,211
    • 2015: $741,567
    • 2014: $337,960
  • Assets Included in Purchase*
    • Equipment: $109,000: Tools, hoists, ropes, testers
    • Vehicles: $209,000:  6 vehicles, 6 trailers
    • Inventory: Ordered per project
    • A/R:  $971,714
    • Intangible Assets: Well-regarded company with diverse client base, knowledgeable staff, long-term relationships with clients

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$3,749,575$2,796,192$3,276,404$2,212,160
Net Income Shown on Financial Statement$465,294$-50,888$599,004$183,102
ADDBACKS
Compensation to Owner$152,729$136,500$168,288$177,000
11% Tax on total W2 Salaries$16,800$15,015$18,512$19,470
Depreciation$3,666$4,915$7,680$12,798
Meals & Entertainment$2,760$2,368$2,782$289Personal expense
Licensee Holder Salary$-75,000$-75,000$-75,000$-75,000To replace one of the officers
401K & Health/Dental$13,867$13,867$13,867$13,867Personal expense
Life Insurance$6,434$6,434$6,434$6,434Personal expense
TOTAL ADDBACKS$121,256$104,099$142,563$154,858
Seller's Cash Flow = Total Addbacks + Net Income$586,550$53,211$741,567$337,960
Profit Margin15.64 %1.90 %22.63 %15.28 %
  • Fluctuation in sales can be attributed to changing workloads for the carriers as well as reduced RFPs.  There were also lags in available equipment that impacted sales. 

Services and Clients

Clients include:

  • Large telecommunications companies

 

Services include:

  • Installation, repair, and maintenance of technology related to wireless communication
  • Antenna and line repair (new and replacement)
  • Work on new build cell towers and facilities (This business does not build cell towers.)
  • Maintain, repair, or replace macro equipment on the ground
  • Power plant batteries
  • Low voltage electrical work
  • Install and upgrade conduits
  • Custom equipment
  • 24-hour trouble shooting and emergency services

Employees

Employees: 24

  • Project Manager (2)
  • Foremen (6)
  • Field Employees (14)
  • Administrative Assistants (2)

Growth Opportunities

  • Expand capacity by increasing the team 
  • Increase tower crews 
  • Expand into electrical or civil work 
  • Add base location in Kansas City to increase work there

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

$586,550         x          4.25     =          $2,490,000

The Fair Market Value found above positions the business List Price at $2,490,000.

Funding Example

Purchase Price:                          $2,490,000

10% Buyer Down Payment:          $249,000

15% Seller Financing:                   $373,500

75% Bank Loan:                          $1,867,500

Seller Financing 5-year term at a rate of 5% equals a monthly loan payment of $7,048.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $24,542.

After business expenses and loan payments, a buyer with a 10% down payment of $249,000 would retain a profit of $207,470, which results in an 83% 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 $2,490,000 with the terms listed above, the coverage ratio is 1.55. 

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. 

**The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.**

Purchase Price:

$2,490,000

$
%
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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210 N 78th St. 2nd Floor
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The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.