Listing ID: 77241
This light and accessory manufacturer has been established for nearly 30 years. They manufacture exquisite interior, exterior and custom light fixtures – a market segment with high barriers to entry and are listed with the Underwriters Laboratories and is certified for the Canadian sale and distribution. All of their fixtures are hand forged and finished and are LED compatible. Due to their designs, ability to customize products, prompt execution and timely delivery the firm has become a favorite with interior designers, architects, hotels and real estate developers.
Note the finanicals are pro-COVID numbers for year-end 2019. January to July annualized for 2020 puts the firm at approx. $205k on an estimated $730k in annualized revenues. Extenuating circumstances, in addition to COVID, have played a role in what is considered to be a short-term downturn.
- Asking Price: $900,000
- Cash Flow: $650,244
- Gross Revenue: $1,325,949
- EBITDA: $650,244
- FF&E: $33,013
- Inventory: $450,000
- Inventory Included: N/A
- Established: 1991
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:7,000
- Lot Size:N/A
- Total Number of Employees:10
- Furniture, Fixtures and Equipment:N/A
All of the enterprise’s furniture, fixtures, equipment, goodwill and permitting are included in the sale. $450,000 in inventory will be sold at cost at close in addition to the purchase price.
4 Weeks at 20 hrs/wk
While the industry does have a fair amount of competition, high barriers to entry coupled with the years it takes to establish credibility, build a reputation and develop a loyal client following discourages new competition.
Building upon nearly 3 decades of goodwill and customer satisfaction, as well as a formidable product offering and incredible production ability, new management may take this opportunity in any number of directions readily available to it.
The company was established in 1991, making the business 31 years old.
The transaction doesn't include inventory valued at $450,000*, which ins't included in the listing price.
The company has 10 employees and is located in a building with approx. square footage of 7,000 sq ft.
The real estate is leased by the business for $6,000 per Month
Why is the Current Owner Selling The Business?
There are all sorts of reasons why people decide to sell operating businesses. Nevertheless, the true reason vs the one they tell you might be 2 absolutely different things. As an example, they might state "I have a lot of other responsibilities" or "I am retiring". For lots of sellers, these factors are valid. But also, for some, these may simply be justifications to try to conceal the reality of altering demographics, increased competitors, recent reduction in incomes, or an array of various other factors. This is why it is really essential that you not depend entirely on a vendor's word, but instead, make use of the vendor's response combined with your general due diligence. This will paint a much more realistic image of the business's present situation.
Existing Debts and Future Obligations
If the current entity is in debt, which many businesses are, then you will certainly have reason to consider this when valuating/preparing your offer. Lots of companies take out loans in order to cover items such as stock, payroll, accounts payable, and so on. Remember that sometimes this can indicate that earnings margins are too tight. Lots of companies come under a revolving door of taking loans as a way to pay back various other loans. In addition to debts, there may also be future obligations to consider. There might be an outstanding lease on equipment or the structure where the business resides. The business might have existing contracts with vendors that should be met or may lead to charges if canceled early.
Understanding the Customer Base, Competition and Area Demographics
Exactly how do operating businesses in the area attract new customers? Many times, businesses have repeat consumers, which create the core of their day-to-day profits. Certain aspects such as brand-new competitors sprouting up around the area, road building and construction, as well as employee turnover can affect repeat clients and adversely affect future incomes. One essential thing to take into consideration is the placement of the business. Is it in a highly trafficked shopping mall, or is it concealed from the main road? Obviously, the more people that see the business on a regular basis, the greater the opportunity to develop a returning client base. A last thought is the basic location demographics. Is the business situated in a largely populated city, or is it situated on the outskirts of town? Exactly how might the regional median house earnings impact future revenue potential?