Hospitality Design & Procurement w/Burgeoning Client Base & Robust Activity!
Hungtington Beach, CA
NDA & Profile
Executive Summary
Asking: $3,000,000
Gross Revenue: $5,560,053
Potential Cash Flow: $995,655
This well-established commercial hospitality design and front of house procurement company is one of California’s incum bent market leaders. The design firm, which specializes in interior design, food facilities design, branding and front-of-house procurement, has worked with many of the biggest food service names in California, Nevada and beyond. Incumbent officers will remain with the firm if desired. The financials do not include the officer’s replacment salaries, which amount to an estimated $380k.
Accounts Receivable Included In Asking? No
Facilities
The seller-owned 8,000 square foot office / warehouse leases for $18,150 per month. A new short or long-term lease may be entered into or although not preferred, the property may be acquired together with the business at an established fair market value price. All of the company’s furniture, fixture, equipment and enormous historic goodwill related to the design and procurement operations will transfer in the sale.
Competition
While competition exists, this 55-year-old firm is an industry incumbent and boasts a blue-chip name in the hospitality industry. Their staff’s skill set and the company’s reputation place them in a select category, providing the firm a unique competitive advantage that industry entrants cannot replicate, which includes ‘last look’ opportunities that others don’t enjoy access to. Hospitality client’s typical 5-6 year facility ‘refresh’ and 10-12 year location remodel cycles provide the firm a somewhat predictable recurring revenue base. It is estimated that 60% of revenues are from new tenant improvements with 40% derived from remodels.
Growth & Expansion
Fortunately for a buyer, the firm has no shortage of client demand and is positioned to expand beyond its existing geographic footprint and service offering. Since this company is often contacted before an architect is selected, it is estimated that an architectural firm that hopes to establish or grow their hospitality practice could benefit the most in an acquisition, as they would not only enjoy the first look at projects that they may not otherwise have access to, but they would stand to walk into a revenue stream that has historically been up to twice the interior design fees. Stated another way, if this opportunity generates $3.5M in design fees, a buyer that’s an architect may have access to up to $7.0M in potential new billings.
The hospitality procurement business does not engage in any form of marketing or outreach to attract stand-alone clients. Rather, they solely cater to design client work. An opportunity exists for management to dramatically expand the front of front of house purchasing and supply company.
Support & Training
Sellers will train as negotiated, or incumbent officers will remain with the firm if desired.
Reason For Selling: Personal
Mergers & Acquisitions, Valuation & Exit Planning for the Lower Middle Market.