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Wireless Communication Installation and Maintenance

CASH FLOW
$2,118,260

Specifications

  • Price
    $9,900,000

  • Revenue
    $6,089,904

  • Down Payment
    15%

  • Inventory
    Ordered per project

  • Location
    St. Louis area and Kansas City area

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

  • Reason for Sale
    New ventures

  • Profit Margin
    35%

  • Account Receivable
    $782,332

  • Employees
    21: Operations Manager (1), DAS Manager (1), Small Cell Specialist (1), Kansas City Specialty Projects Manager (1), Installers (17)

  • Equipment
    Pin-testers, tools, forklift, analyzer, 4 trucks, 1 van

  • Intangible Assets
    Highly regarded for quality workmanship, reliable, responsive, long-term relationships with large clients

As a national contractor for the largest wireless companies in the United States, this experienced and knowledgeable company is a leader in wireless communication installation and maintenance.  With a concentration on cell tower facilities, this business offers high-quality maintenance and service for everything from repairing a broken hinge to upgrading technology.  Maintenance can include repairing facilities, lighting, or controlling pests, while service includes technology fixes, upgrades, installations, and service solutions.  Projects include installing and maintaining DAS for stadiums and upgrading LTE so that wireless services work better.

 

With an efficient, well-trained, and dedicated workforce, this company has its main location in the St. Louis area, as well as a secondary warehouse in the Kansas City area.  While able to provide national service, this company currently focuses on projects located in Missouri, Kansas, and Illinois.

 

This company is well-positioned to grow as large as one’s vision allows for.  With wireless technology ever expanding, this company could acquire additional staff to expand current operations or could focus on expanding into new areas such as civil projects.  There are two current owners whose duties can be replaced by current staff or one additional resource.  

Business Highlights

  • Year Established: 2005
  • Location:  St. Louis area with a secondary location in Kansas City
  • Service Area: National with a focus on Missouri, Kansas, Illinois 
  • Clients:  Large Telecom Companies i.e. Verizon, AT&T
  • Services:  Wireless communication installation and maintenance of cell sites, not cell towers
  • Building:  Co-occupied space: 10,000 sq. ft., 9 offices, break room, meeting room, warehouse (rack and open storage), lease through 4.2022
  • Reason for Selling:  New ventures
  • Employees:  21: Operations Manager (1), DAS Manager (1), Small Cell Specialist (1), Kansas City Specialty Projects Manager (1), Installers (17)
  • Seller Training Period:  90 days transition
  • Growth Opportunities:  Add employees to increase capacity, expand into civil projects
  • Current Owner’s Responsibilities:  Owner 1: Business development, financial management, HR   Owner 2: Project and inventory oversight

Financial Highlights

  • List Price: $9,900,000
  • Gross Sales:
    • 2017: $6,089,904
    • 2016: $3,988,327
    • 2015: $4,437,715
  • Cash Flow:
    • 2017: $2,118,260
    • 2016: $644,180
    • 2015: $1,814,036
  • Assets Included in Purchase*
    • Equipment: Pin-testers, tools, forklift
    • Vehicles: 4 trucks, 1 van
    • Inventory:  Ordered per project with little kept on hand
    • A/R:  $782,332
    • Intangible Assets: Highly regarded for quality workmanship, reliable, responsive, long-term relationships with large clients

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$6,089,904$3,988,327$4,437,715$8,039,014
Net Income Shown on Financial Statement$1,470,731$25,109$1,220,995$3,237,872
ADDBACKS
Compensation to Owner$280,678$265,000$255,333$260,000Owner 1
Other unrelated Salaries$275,431$264,991$252,208$260,000Owner 2
11% Tax on total W2 Salaries$61,172$58,299$55,830$57,200
Meals & Entertainment$4,317$4,850$3,739$2,080
Personal Cell Phone$2,880$2,880$2,880$2,8803 lines at $240/month
Insurance Premiums for Owners: Life$300$300$300$300$25/month
Insurance Premiums for Owners: Health & Dental$22,751$22,751$22,751$22,751$1,895.92/month
TOTAL ADDBACKS$647,529$619,071$593,041$605,211
Seller's Cash Flow = Total Addbacks + Net Income$2,118,260$644,180$1,814,036$3,843,083
Profit Margin34.78 %16.14 %40.88 %47.81 %
Cash Flow Analysis

Services and Clients

Clients include:

  • Large telecommunications companies 

Services include:

  • Maintenance
    • Fixing the physical appearance of cell sites
      • Fixing doors, hinges, compartments, covers
    • Fixing the facilities
      • Lighting, electrical
  • Service
    • Installation, repair, and maintenance of technology related to wireless communication
    • DAS (Distributive Antenna Solutions)
      • Arenas
    • LTE servicing
    • This company does not do work that includes climbing cell towers.

Employees

Employees: 21

  • Operations Manager (1)
  • DAS Manager (1)
  • Small Cell Specialist (1)
  • Kansas City Specialty Projects Manager (1)
  • Installers (17)

Growth Opportunities

  • Add employees to increase capacity 
  • Expand areas of operation 
  • Increase capacity in Kansas City area 
  • Expand into civil projects 
  • Expand into government agencies/projects

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

$2,118,260      x          4.68     =          $9,913,457

The Fair Market Value found above positions the business List Price at $9,900,000.

Funding Example

Purchase Price:                          $9,900,000

15% Buyer Down Payment:       $1,485,000

20% Seller Financing:                $1,980,000

65% Bank Loan:                          $6,435,000

Seller Financing 6-year term at a rate of 5% equals a monthly loan payment of $31,888.

Bank Loan 8-year term at a rate of 6% equals a monthly loan payment of $84,565.

After business expenses and loan payments, a buyer with a 15% down payment of $1,485,000 would retain a profit of $720,826, which results in a 49% 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 $9,900,000 with the terms listed above, the coverage ratio is 1.52. 

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:

$9,900,000

$
%
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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