Opportunities
Contracted Transportation Business
Sold
Specifications
3 locations and virtually no competition in northeast Nebraska make this absentee transportation and taxi company with contracts an ideal investment. Purchased by the current owner in 1997, the business has a cash flow of over $70,000. Contracts are in place for regular service, and only 20% of sales come from call-in cab rides. On staff is a manager to oversee the 14 drivers, who are paid a minimum wage with commissions.
Virtually no competition exists in the area, as city transportation is inflexible, and there are no other taxi companies in town. Even so, growth exists by offering services to other nearby towns within a 2-hour radius. A buyer could also advertise services to rural areas. Furthermore, a buyer purchasing as owner-operator would see an immediate increase of nearly $40,000 in cash flow with the removal of the manager.
Priced at $182,000, a buyer paying 10% down would profit $44,431in the first year after debts.
Business Highlights
- Years in Business: 1997, under current owner
- Location and Service Area: Northeastern Nebraska
- Competition: Virtually no competition; city transportation does not compete well due to inflexibility
- Building: 250 sq. ft.
- Reason for Selling: Retirement
- Employees: 14 drivers, 1 Manager; drivers are paid a minimum wage plus commissions
- Seller Training Period: 90-days transition
- Growth Opportunities: Expand services to other towns in Northeast Nebraska
- Current Owner’s Responsibilities: Absentee
Financial Highlights
- List Price: $182,000
- Gross Sales:
- 2017 - $535,846
- 2016 - $459,938
- 2015 - $459,211
- Cash Flow
- 2017 - $74,564
- 2016 - $72,472
- 14% Profit Margin
- Assets Included in Purchase:
- Equipment - $9,000 in furniture, fixtures, computers, refrigerator
- Vehicles - $25,000 in 9 vehicles
- A/R - $96,771
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2017 | 2016 | 2015 | 2014 | ||
| GROSS SALES | $535,846 | $459,938 | $459,211 | $529,001 | |
| Net Income Shown on Financial Statement | $29,074 | $26,566 | $41,722 | $14,208 | |
| ADDBACKS | |||||
| Compensation to Owner | $2,400 | $3,600 | $3,600 | $16,050 | |
| 11% Tax on total W2 Salaries | $264 | $396 | $396 | $1,766 | |
| Depreciation | $0 | $821 | $178 | $247 | Non-cash item |
| Meals & Entertainment | $230 | $15 | $293 | $214 | Non-onward going expenses |
| Travel | $0 | $0 | $194 | $2,221 | Non-onward going expenses |
| General Manager Salary | $38,244 | $36,716 | $36,302 | $33,092 | Non-onward going if owner/operator |
| General Manager 401K | $1,292 | $1,298 | $1,600 | $1,208 | |
| GM Cell Phone | $1,260 | $1,260 | $1,260 | $1,260 | $105/month reimbursement for Cell Phone |
| GM Health Insurance Stipend | $1,800 | $1,800 | $1,800 | $1,800 | $150/month stipend for health Insurance |
| TOTAL ADDBACKS | $45,490 | $45,906 | $45,623 | $57,858 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $74,564 | $72,472 | $87,345 | $72,066 | |
| Profit Margin | 13.92 % | 15.76 % | 19.02 % | 13.62 % |
- General Manager’s salary added back to reflect Cash Flow for an Owner/Operator
- 2015 saw an 18% margin, and a new owner actively operating the business would take the place of the manager and see an immediate increase in cash flow
Growth Opportunities
- Expand into areas within a 2-hour radius
- Advertising services to rural areas could increase more sales and contracts with rural agencies to assist with elderly transportation to medical and other appointments
- Add contracts with local schools for event transportation
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 Multiplier = Price
Cash Flow is the sum of net income plus any owner perks and non-onward going expenses.
Multiplier is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2017 is $74,564 with a prescribed multiple of 2.45.
With this information, the computation result follows:
$74,564 x 2.45 = $182,681
The List Price for the business is set at $182,000.
Funding Example
Purchase Price: $182,000
10%Buyer Down Payment: $18,200
20%Seller Financing: $36,400
70%Bank Loan: $127,400
Seller Financing 7-year term at a rate of 4.50% equals a monthly loan payment of $506.
Bank Loan 7-year term at a rate of 5.50% equals a monthly loan payment of $1,831.
After business expenses and loan payments, a buyer with a 10% down payment of $18,200 would retain a profit of $44,431, which results in a 244% 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 $182,000 with the terms listed above, the coverage ratio is 2.58.
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.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857