This in-home SENIOR CARE business (caregivers go to clients’ homes) is part of one of THE nation’s top franchise brands for this industry… the equivalent dominance of McDonald's for restaurants!
In fact, you’ve likely seen their TV campaigns this week! The point is, this is a very good location/brand with a great reputation and hundreds of locations around the world.
This particular location was hit a bit hard during COVID, and the sellers wanted to retire just prior to COVID, but like so many businesses, they needed to make sure the company survived, which kept them from selling until now.
Honestly, and the financials will bear this out, it was a struggle for them to keep things going, and consequently, sales and earnings took a bit of drop these last few years, but the ship was saved, and the company is now back on a better track and doing much better.
The business is dropping a very good margin from sales to earnings at about 22%, meaning the overall discretionary earnings are 22% of current sales. Anything over 18% is good, and there is a lot more room to increase this as we have locations currently selling at 40% of sales to earnings!
Just a couple of years ago (2020), this company was doing $1.5 with a 26% margin, and if you used the same multiple that is currently being used at 2.91 and applied that to the 2020 earnings, you’d have an appraisal price of $1,108,710.
This can be done, but not likely with sellers who wanted to retire 3 to 4 years ago. You’re going to want to roll up your sleeves on this one for a year or so.
Finally, as we’ve sold so many of these locations around the country, we have the financials to bear on how these locations really should be operating and how you can turn this into a company that you can retire from yourself.
We sold another one in this same area just a couple of years ago for millions (doing the same work), and that brand wasn't or isn't near as recognized as this one is!! The point is that this could be you in 2 to 5 years.
NOTE TO BUYERS: YOU MUST HAVE A MINIMUM OF $140,000 to $150,000 for your down payment to be considered for bank financing, we’ve checked.
POSSIBLE DEAL STRUCTURE AND RETURN ON YOUR INVESTMENT
• Total Purchase Price: $625,000 (*Appraised price, not an asking price)
• Down payment: $150,000
• Current SDE (cash flow of the business, weighted): $215,000.
• Amount financed: $475,000.
• Debt service per year (annual note payment): $77,713 (10 year at 10.75% approx.)
• SDE less debt service (annual note payment): $137,287
• Assume new owner wages a year: $85,000
• Remaining SDE (cash flow) after owner wages and paying annual debt service: $52,287.
• So even after paying your debt service each year and taking out $85,000 in a wage, you should still have $52,287to do with as you wish, pay down debt early, take it out in additional wages or go to Vegas!
• Return on Investment: 35% of the annual return of investment on your injected capital/down payment each year. A great year in the stock market would be 15% to 20% and the average is about 7%. The assumption is that you do actually work in the business, similar to the way the current owner does now.
• This scenario does not include working capital, and DOES assumes you take over a key position in the business that will require you to be there around 30 to 40hrs a week. You can normally secure the working capital as a line of credit from the bank as part of your loan structure. No working capital will be left in the business.
• Important: Do not take our word for it on the investment information, call and meet with your accountant and make sure he/she agrees with the outline above. Do not make any financial investment into this business where your money could be at risk until you agree with your financial advisors opinion and are comfortable with the presented numbers from the seller.
APPRAISED PRICE:
The owner had a WALL STREET LEVEL APPRAISAL completed on the business. Wells Fargo, US Bank, Radius Bank, CIBIC Bank and about 10-20 other major banks use this valuation firm to do their own internal appraisals for their underwriter teams. The point is, this is a solid appraisal number.
Contact us for the NDA. We will contact you and email the online form shortly after your inquiry. Please be sure to check your spam folder as well. Non-Disclosure Agreement (NDA) is required. The sale is confidential.
