18 y/o Architecture & Interior Design Practice

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Expand into New York City and grow your footprint
Asking Price:
$1,050,000

Gross Revenue:
$1,809,184
Cash Flow:
$520,840
EBITDA:
$520,840
Inventory:
 Not Disclosed
included in asking price

FF&E:
 Not Disclosed
included in asking price

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Business Description

**Architecture license NOT required**

**Pre-qualified for Small Business Administration loan with possibility of 10% down payment

OVERVIEW - The firm represents a unique opportunity to merge with or acquire an established architectural practice in the heart of New York City. The firm's portfolio includes residential, commercial, and retail, with a focus on residential projects. Founded in 2000, the Company is on pace to achieve total income of $1,809,184 in 2018 (as of 10-31-18), with owner’s discretionary earnings of $520,840 for the year.

TRACK RECORD OF SUCCES - The firm had a 16% cumumulative annual growth rate (CAGR) in gross revenue from 2010 through May 2018. The Company’s designs have featured in publications such as Architectural Digest, Bathroom Trends, Kitchen Trends and New York Magazine. Since 2000, the Company has completed over 450 projects.

NEW $7.5M FEE 5-YEAR PROJECT - The firm recently received a LOI for a partially state-funded project with a budget of $900 million. The project is expected to generate revenues in excess of $7.5 million for the firm.

LOW MARKETING COSTS - The firm has achieved its growth with relatively low marketing costs. There would seem to be significant potential to increase the profile, and thus growth, of the Company through increasing the marketing spend. In the last year, its marketing spend was $9,000, representing 0.5% of gross revenue. For most small US firms, marketing expenditure as a component of gross revenue is approximately 4%.

CLIENT SOURCES - Approximately 37% of the Company’s clients are repeat clients, while 48% are referrals, indicating reliable sources of revenue

SYNERGIES - There are a number of potential synergies that could emerge from acquiring the firm: Access to a new geographical market, relative stability of revenues when compared to other locations in the US, exposure to clients in a higher income bracket as well as benefits of scale and scope.

STRONG TEAM - The founder is committed to a smooth transition of of the business to the buyer and is willing to work with the acquirer for 30 hours per week for at least 3-4 years to facilitate this. He established the business in 2000 and has put together a strong team of architects, technicians and interior designers. The company currently has 11 employees in total, excluding the founder.

DIVERSE DESIGN PORTFOLIO - The firm has completed over 450 projects since 2000. The annual quantity of projects has grown by approximately 40% in the past five years. In terms of revenue, most of its projects are residential.

DEAL STRUCTURE - Seller is open to retaining up to 49% ownership in his business. For a full-company acquisition, in addition to the $1.05m listed asking price, the seller will require an earn-out (based on a percentage of revenue) for about 4 years.

The firm is free of debt.

About the Business

Year Established:
2000
Number of Employees:
14
Real Estate:
Leased
Building Sq. Ft.:
1,300
Lease Rate/Sq. Ft./Mo.:
$8.33
Lease Expiration:
5/31/2022
Facilities:
The firm has two leases for two separate floors. Both leases are five-year leases with a six-month termination clause. The lease for the 1st floor architecture department space runs through May 31, 2022. The lease for the 2nd floor interior design space runs through February 13, 2022.

All of the furniture, hardware, software licenses, and other equipment used in the operation of the business will be included.
Market Outlook/
Competition:
The firm has carved somewhat of a niche for itself in its particular neighborhood, earning itself some local name recognition. This recognition is partially due to the firm's street-level visibility.
Growth & Expansion:
Being part of a larger firm will allow the seller's firm to win larger projects. Also, additional marketing investment will allow the firm to expand its residential practice.
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About the Sale

Reason For Selling:
Owner wants to reduce his hours to 30/wk to focus on real estate investing.
Training/Support:
The owner is willing to continue working with the firm for up to 4 years.
Seller Financing:
Seller is open to receiving cash, equity, a revenue/profit earnout, and a note.

Listing Info

ID:
1368269
Ad Detail Views:
1048

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Business Listed by
Ashish Bhatt

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Source: Decennial Census (2010), United States Census Bureau.

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Source: American Community Survey (2010-2014), United States Census Bureau.

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