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Established Custom Signage Manufacturer with $354K Cash Flow

Post-COVID Sales $748K with 47% Profit Margin for TTM Ending 3/31/2022

Specifications

 Price:
$570,000
Revenue:
$747,827
Cash Flow:
$354,149
Location:
Santa Clara County, CA
Service Area:
All of California
 Profit Margin:
47%
 Employees:
4 FTE (Includes 2 Owners)
Reason for Sale:
The Sellers are Retiring
Goodwill: 42 Yr Reputation
4.5 Star Reviews
Year Established:  1980
Services:  Full-service sign company providing a range of services from project management, custom sign packages, exterior monumentation (full & simple replacements), window graphics, A-frames and banners.
Equipment/Inventory:  $30,000 valued equipment and inventory included in the sale price
License Requirement:  C-61/D-42 non-electrical sign contractor license required
Sales Mix:  70% new construction; 30% refurbishment
Facility:  2,520 sq. ft. including 80% manufacturing & 20% office
Lease:  Lease ends 7/31/2025 @ $2985/month
Personnel:  2 FT Employees & 2 FT Owner
Customer Profile:  Majority of contracted works are for property management companies, home building contractors and developers; the company also provides vehicle graphics, banners, A-frames and other customized signs to retail customers.

This 42-year established signage manufacturer comes with a pristine operating history and a large roster of customers across the entire state of California. The company’s expertise includes specialized, custom signage to comply with local, state and federal government building codes and ADA requirements. The company also has the reputation of being one of the leaders in Architectural Signage.

The company works with many large developers on new multifamily building projects as well as refurbishment. Often architects, builders or developers will assign projects to the company as a “design-build project,” meaning that the company is hired to interpret the building code requirements and identify and specify all the required signs needed to pass building inspections. Additional areas of growth potential include corporate campus and facilities departments, educational facilities, hospitals, libraries, government buildings, and public works. Services also cover retail customers for internal and external custom signs.

The business remained steady and profitable during COVID. The seller is retiring but willing to provide support and training as much as needed for a smooth transition. The business is driven primarily by word of mouth and repeating clients. In addition, the company also obtains customers through its Instagram account and its website. The key employee is willing to stay with the company after sale to support the new owner. The buyer for this business must have a C-61/D-42 license to continue offering the same level of signage service.

This business has been pre-approved for an SBA loan to a qualified buyer.

Value Proposition

  • 42 years of established reputation
  • Excellent good will with 4.5-star customer reviews
  • Expert in architectural signage with limited competition
  • Consistent profit margin of 35% -51%
  • Pre-approved for SBA loan with 10% down payment
  • COVID/disaster-resistant business
  • C-61/D-42 contractor license required

Revenue Breakdown

Financial Highlights

  • Listing Price: $570,000
  • TTM ending 3/31/2022 cashflow (SDE): $354,149
  • Fiscal year ending 6/30/2021 (SDE): $349,281
  • 2021 sales increased 30% compared to 2019
  • Consistent historical profit margin 35%-51%
  • $30,000 worth of FF&E included in the sale

Cashflow Analysis

Asking Price

The asking price is determined using a cash flow methodology. Cash flow is the sum of net income from the business plus any non-cash expenses, non-recurring items and any seller’s personal expenses. A multi-factor multiplier is applied to the cash flow based on the condition of the business.

For this business, the listing price is $570,000. Based on the cash flow from TTM ending 3/31/2022, the resulting multiplier is 1.6x, which is below market average in favor of buyer.

Funding Example

Purchase Price: $570,000

10% Buyer Down Payment

$57,000

Buyer’s Equity

90% Bank Loan

$513,000

10-Yearterm at a rate of 5.50% = Monthly loan payment of $6,295

  • Cash Flow (SDE in 2021 Calendar Year): $354,149
  • Annual Payment to Bank: $68,344
  • Buyer’s Cost of Living: $50,000
  • Net Profit (After buyer’s cost of living and loan payment): $235,805

* 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.

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