Vestimate-Pro Business Value Report

December, 2019




Main Street Plumbing
NAICS 238220: Plumbing, Heating, and Air-Conditioning Contractors
Market Area: Harrisburg PA Metro Area
Report Date: December, 2019




Developed by:
Foundation Advisors
717-234-9687
[email protected]

General

Bizminer Vestimate-Pro reports help you understand the value of any firm simply and quickly. No other electronic valuation tool organizes critical information with the level of data integrity and industry detail that results from the integration of Bizminer’s widely-recognized industry financial and market analysis content and its derivative analysis of 30,000 recent business transactions from the DealStats database. Both the Bizminer and DealStats datasets are key components in the analytical toolbox of thousands of certified business valuation professionals.  

Vestimate-Pro data sources are distinct and transparent; our financial analysis is utilized by thousands of accounting, valuation, banking and business assistance professionals; by almost one hundred university libraries and by taxing agencies in multiple countries. You won’t find a lot of jargon and overblown claims in our Vestimate-Pro Business Value Reports —just the hard analysis and clear answers you need.  

Vestimate-Pro analytical content is updated regularly using the same tested protocols applied to our Industry Market Trend reports, which cover over 9000 industry classifications; and to the trusted industry financial analysis we present for more than 5000 lines of business. Uniquely among published electronic value calculations, the Vestimate-Pro analysis integrates traditional financial metrics with market opportunity and growth analyses from Bizminer’s recognized Industry Market dataset.  

Your Vestimate-Pro report includes definitions of every line item and ratio, as well as a simple scoring interface that compares your firm’s performance to the industry peer group.  

When you accessed your Vestimate-Pro Report, you chose a comparison peer group that most closely represents the character of your firm. Your peer group is defined by a series of criteria that reflects your selections of:

  • Industry Segment: 238220: Plumbing, Heating, and Air-Conditioning Contractors
  • Market Analysis Area: Harrisburg PA Metro Area
  • Sales Class: $1m - $2.49m

This report is additionally conditioned by the selection and active integration of 3 of three potential years of firm inputs. While the Vestimate-Pro report offers integrated scoring of 13 financial and market KPIs, only those scored on P4 were selected by the developer for activation.

The Vestimate-Pro report is an informational tool, not a guide to action. Do not use the report in place of a certified valuation, or as the basis of any specific business-related or other financial transaction. For that we recommend obtaining an appraisal from a business broker, a valuation from a certified valuation professional, or both. You should not attempt to use Vestimate-Pro to secure a business or personal loan. Be aware that the Vestimate-Pro report may not consider market or firm idiosyncrasies that can influence the actual value or selling price.

Your Industry in Context: The NAICS Classification System

The industry you selected fits within the official NAICS (North American Industry Classification System) and Bizminer’s proprietary taxonomy, which breaks out more detailed industries classifications than the NAICS by adding up to eight decimal digits after the NAICS-6 code. The selected industry fits into this hierarchy:  

  • 23: Construction
  • 2382: Building Equipment Contractors
  • 238220: Plumbing, Heating, and Air-Conditioning Contractors

Business Value Approaches

Vestimate-Pro reports develop both "asset sale" and "equity sale" values for earnings and revenue approach valuation methods. These approaches are coupled with benchmarks for key financial ratios and market metrics which compare the analyzed firm’s liquidity, profitability, efficiency, debt-risk performance and market opportunity to industry peer group standards. The result is a meaningful analysis and final value estimates that make sense in the real world, providing useful information to valuation professionals, brokers, sellers, entrepreneurs, investors and advisors.

Asset Value Earnings Basis: This approach applies Price/Earnings multiples to actual firm earnings. The applied Price/Earnings multiples are specific to an industry multiple sales bracket (of four). Based on industry and firm financial inputs, a series of core KPIs specific to the industry peer sales class size (of fifteen) is then scored and applied to adjust the base analysis and create a final value or value range. This approach generally assumes that current assets and all liabilities remain with the seller.

Asset Value Revenue Basis: This approach applies Price/Revenue multiples to actual firm income. The application of multiples and KPIs mirrors the protocols used for Asset Value Earnings Basis calculations: The applied Price/Revenue multiples are also specific to an industry multiple sales bracket (of four). Based on industry and firm financial inputs, a series of core KPIs specific to the industry peer sales class size (of fifteen) is then scored and applied to adjust the base analysis and create a final value or value range. This approach generally assumes that liquid assets and all liabilities remain with the seller.

Equity Value Earnings Approach and Equity Value Revenue Basis Approach: Both Equity Value approaches use the same initial calculations as the corresponding Asset Value Earnings Basis and Asset Value Revenue Basis approaches, but adjust the values with the difference between assets and liabilities from the balance sheet. These approaches are generally used for 100% sales of equity (stock) only.

Which to use? Owner-operated businesses are most commonly sold on an asset sale basis. Determination of the most appropriate Approach or Basis should be made in conjunction with a broker or valuation professional acquainted with the detailed specifics of the business and the purpose of the valuation.

Ratio Categories

The Vestimate-Pro Business Value Report benchmarks pivotal industry peer group financial ratio values against the performance of your firm, then integrates the results into the overall analysis and calculations. These ratios (also known as KPIs or Key Performance Indicators) fall into five categories:

Cash Flow/Solvency: Cash Flow ratios indicate a company’s ability to meet various levels of demand on cash and easily obtainable cash resources against current and anticipated near-term payments due.  

Profitability: Profitability ratios compare levels of return against various expense and balance sheet components to measure your performance against reasonable industry peer group standards, indicating bottom line performance.  

Efficiency: Efficiency ratios measure your success in marshalling resources-at-hand to effectively manage various components of your business operations. These indicators often point toward specific actions that could enhance your bottom line.  

Debt-Risk: Debt-Risk ratios assess the appropriateness of a firm’s level of debt against the ability to pay, as well as the risk of insolvency.  

Market Opportunity: These non-traditional financial metrics assess overall market vitality and opportunity.

Depending on subject firm inputs you make, the ratios will be scored against industry values for up to three recent calendar years.

Financial ratios are calculated for the subject firm when you submit the necessary inputs. Firm ratio benchmarks are scored on a 1-5 scale based on their variance from industry peer group standards. While the report presents starred scores for ease of display, final value calculations are more finely calibrated and applied based on each percentage point of variance from the industry norm. For more details, see About the Data—Our Approach to Scoring.

Key Performance Indicators—Financial Ratios

To better understand your company’s operations, the Vestimate-Pro Report calculates Key Performance Indicators (KPIs) for review and comparison to industry benchmarks.  

KPIs (also known as financial ratios) are calculated on the basis of company-specific data linked to the corresponding values of the selected industry peer group. These and other derivative metrics that form the basis of our analysis are developed from a variety of raw data sources detailed in the Methodology section of this report.  

KPls are useful measures of the overall financial and operational health and growth of your business. These same measures are commonly utilized by business coaches, financial professionals and potential business acquirers in a variety of real world settings. The Vestimate-Pro report applies KPI scoring to the calculation of business worth as variance-based values to which various weights are assigned based on the specific metric, years of inputs and variance.  

In addition to detailing KPI variances and applying a calibrated weight to each percent of difference from industry peer group standards, we use an intuitive five-star scoring system to communicate firm performance against industry peer group standards. Except for Days Payable and Days Receivable, KPIs are scored on a “higher is better” basis. The scoring approach is also detailed in the Methodology section (VII) of this report.

Valuation Drivers

While a broad range of factors affects every valuation, the core analysis often relies on three yardsticks: sales volume, sales growth and owner earnings. The larger these factors and the higher their growth, the higher the ultimate business value tends to be.  

Revenue volume is itself a differentiating factor in determining price multiples, whether Price/Sales or Price/Earnings. In general, multiples tend to increase with firm size on an industry-specific basis. In this case, the subject firm falls into the revenue class A bracket of $<2.5m. (Multiples are divided into four revenue brackets.) Other key factors include not only Sales and Owner Earnings as current multiples, but also the growth of each, as displayed in the chart:

2017-2019 Valuation Drivers ($)

These factors are analyzed along with a scored set of financial metrics to develop final Vestimate-Pro business values. Firm financial data is benchmarked against industry peer group values for up to three years, depending on inputs. While all three years of industry data are displayed, only those years for which firm inputs were developed are shown and used in Vestimate-Pro calculations.

Main Street Plumbing VALUES:
Income approach values are rarely applied to firms with revenue of less than $2.5 million.
Asset Sale Value:
Earnings Approach: $591,079
Income Approach: $781,309

Equity Sale Value:
Earnings Approach: $740,196 
Income Approach: $930,426

Key Value Drivers:

Sales: $1,752,441

Sales Growth 2017-2019: 0.89%

Discretionary Owner Earnings: 15.52%

Discretionary Owner Earnings Growth 2017-2019: 13.59%

Tabulated results from these KPIs are integrated into Vestimate-Pro value calculations. Detailed tables and charts supporting these scores can be found in sections IV and V.

Current Ratio: 3.0
Days Payable: 3.0

Owner Earnings: 3.0
Owner Earnings Growth: 5.0
Sales Growth: 5.0
Return on Assets: 4.6
Days Receivable: 4.6
Efficiency Index: 5.0

Modified Z-Score: 3.8
Interest Coverage: 5.0
Total Liabilities: Net Worth: 1.0

Market Opportunity Index: 3.0
Industry Market Growth: 1.0

Other Value Indicators

Assess the age, loyalty, training, experience and motivation of the workforce. Higher is better.

Key Employees: 3.0

Is customer stability seasonal with low repeat sales or year round with high repeat levels? Higher is better: not seasonal/more repeat sales.

Customer Base: 3.0

Are technology practices up to date? How do they compare with competitors? Higher is better.

Technology Level: 3.0

Do the top 5 customers account for >25% of revenue; or does any one customer account for >10%? Higher (less concentration) is better.

Customer Concentration: 3.0

Company Content: History

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Company Content: Products and Customers

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Company Content: Operations

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Market Population Demographics:

The Main Street Plumbing competitive industry market area analysis is based on the Harrisburg PA Metro Area. Total population in the market area is 567,872 in 228,652 households with a median age of 40. The adult age breakdown is: Millennials (20-34): 19.55%; Gen Xers (35-54): 25.15%; Boomers (55-74): 23.59%.

31.87% of the population boasts a bachelor’s degree or higher; another 24.81% holds an associate degree.  

Median housing value in the market area is $179,500, while the median rent level is $933 per month. Per capita income in the market area is $33,795, while average (mean) household income is $63,597 and median household income is $63,381. 27.84% of market area households earn over one hundred thousand dollars per year.

Industry Market Context:

In this market area, the Plumbing, Heating, and Air-Conditioning Contractors industry includes 251 operations; 228 independent firms and 23 branch establishments. Among the independent firms, 212 fall within the small business definition of single site firms with fewer than twenty-five employees. Total industry employment is 2,164; Of these, 1,062 are employed in small business operations of fewer than 25 employees. The average industry operation has 9 employees.

In 2019, industry operations in the market area accounted for a total market volume of $452,563,812. Of that, the industry market small business segment accounts for $222,099,246 in sales. The small business share of the total market has decreased from 49.08% to 47.19% since 2017.

 

Most recent annual Main Street Plumbing sales are $1,752,441. By contrast, average annual industry site sales are $1,803,043. Median site sales are $836,532. Market area small business sales average $1,047,638. Average annual industry site sales have decreased by 1.17% in the three calendar years 2017 to 2019; market area average small business sales increased by 1.48% during the same period.

Main Street Plumbing sales rank 77 of 252 industry operations in the market area—a percentile rating of 69. Main Street Plumbing holds a 0.38% share of market sales, which increased 0.03 percentage points since 2017.

The Plumbing, Heating, and Air-Conditioning Contractors industry captures $789 in sales per person at the national level, while market area sales per person is $801.00. US industry sales per household are $1,871. By contrast, market area sales per household are calculated at $1,823.00. This and related indicators (e.g., Sales per Person or Sales per Business Establishment) may suggest whether the local industry market is saturated or under‐served, reflecting opportunities for firm expansion or growth. Only one or two of these metrics may be relevant to the specific industry or firm, depending on its customer target. This valuation does not include a calculated Sales per Household score in the case of most B-to-B industries. Where a local market has been selected, the sales per household variance is applied as a Market Opportunity Index metric to value calculations.

3 independent industry startups and new branch operations were identified in the market area at the end of 2019, creating a new operation rate of 2.39% in the most recent analysis year , lower than the national industry rate of 6.75%. Unusually low new operation rates can indicate market saturation or lack of perceived opportunity, while high rates suggest both opportunity and the recognition of it.  

Over 2018-2019, 12.55% of industry establishments in this market area ceased operation. US industry cessation rates were 0.00%.

Industry Market Analysis

INDUSTRY FIRM
Industry Market Benchmarks 2017 2018 2019 2017 2018 2019
FTE Employees 8 8 9 9 9 9
Sales per Employee 209,133 209,133 199,922 192,991 194,383 194,716
FTE Average Wage 64,408 64,408 63,985 43,256 43,856 44,100
Industry Peer Group Firms Analyzed 15,946 16,222 20,278      
Industry Market Average Site Sales 1,803,043 1,803,043 1,824,380 1,736,918 1,749,451 1,752,441
Industry Market Gross Volume 452,563,812 452,563,812 494,407,106      
Market Sales/Household 1,823 1,823 2,017      
US Sales/Household 1,871 1,871 1,878      

Introduction

The three tables in this section display selected Profit-Loss and Balance Sheet line items which are applied to the Vestimate-Pro Business Value analysis. The tables present line items in dollar values; as a per cent of total Revenue or Assets; and as percentage of the firm’s variance from industry peer group averages based on your selections:  

NAICS 238220 Plumbing, Heating, and Air-Conditioning Contractors
Sales Class: $1m - $2.49m

In addition to metrics from the traditional financial statement, the tables display values for full-time equivalent employees (for the calculation of Sales per Employee); full-time equivalent Average Annual Wage (for the calculation of the Efficiency Ratio, i.e., Sales per Employee/Average Annual Wage); and Owner Replacement Compensation and 1x Expense Addbacks for the accurate calculation of Owner Earnings.

Financial Line Item Definitions

Revenue: Business revenue includes receipts from core business operations. Interest Income and Other income (such as rents and royalties) are detailed separately for most operations.  

Officers Compensation: Salary, wages stock bonuses and other compensation paid to officers for personal services rendered.  

Depreciation: Non-cash expenses allocated to the current portion of depreciated, amortized and depleted property.  

Operating Income: Gross Margin minus Operating Expenses defined as the sum of individual expense line items.  

Interest Expense: Interest paid on loans and equivalents during the year.  

After Tax Net Profit: Represents net profit after income taxes.

Discretionary Owner Earnings: Sums Officer Compensation, Depreciation and related non-cash expenses and Net Profit before business taxes to represent a practical measure of total return to owners.  

Owner Replacement Compensation: In cases of owner operation, the projected cost to replace owner labor with a non-owner/operator wage-compensated executive.  

1x Expense Addbacks: Non-repetitive annual expenses which could reasonably be normalized as profit.  

Accounts Receivable: A short-term asset (collected within one year) in the form of accounts or notes receivable, and usually representing a credit for a completed sale or loan.  

Total Current Assets: The sum of a firm's cash, accounts and notes receivable, inventory, prepaid expenses and marketable securities convertible to cash within a single operating cycle.  

Totals Assets: The sum of current assets and fixed assets such as plant and equipment.  

Accounts Payable: Invoices due to suppliers within the current business cycle.  

Current Liabilities: Measurable debt owed within one year, including accounts, loans and notes payable, accrued liabilities and taxes due.  

Net Worth: Current assets plus fixed assets minus current and long-term liabilities.  

FTE Employees: Full-time equivalent employees.  

FTE Average Wage: Average wage of full-time equivalent employees.  

Industry Peer Group Firms Analyzed: Number of firms in the industry peer group data pool.

Financial Analysis ($)

  INDUSTRY FIRM
Income-Expense 2017 2018 2019 2017 2018 2019
Revenue 1,840,458 1,885,795 1,469,930 1,736,918 1,749,451 1,752,441
Officers Compensation 137,114 138,795 116,712 110,225 116,091 98,334
Depreciation 23,006 23,384 21,608 19,760 20,652 24,189
Operating Income 99,569 118,051 112,891 111,015 103,428 146,811
Interest Expense 7,178 7,355 6,762 7,055 7,401 6,902
Pre Tax Net Profit 97,360 116,165 111,274 109,441 101,442 144,430
1x Expense Addbacks       0 0 5,000
Owner Replacement Compensation       0 0 0
Owner Earnings 257,480 278,344 249,594 239,426 238,185 271,953
Balance Sheet 2017 2018 2019 2017 2018 2019
Accounts Receivable 135,495 139,734 120,649 101,697 125,244 96,277
Total Current Assets 300,762 310,141 265,671 230,479 282,766 216,496
Total Assets 482,534 488,411 418,774 355,407 444,036 343,598
Accounts Payable 70,595 69,306 60,680 57,646 69,943 55,898
Current Liabilities 153,784 154,827 132,793 124,685 151,828 118,480
Total Liabilities 246,623 239,615 206,707 201,164 245,319 194,481
Net Worth 235,911 248,796 212,067 154,243 198,717 149,117

Financial Analysis (%)

  INDUSTRY FIRM
Income-Expense 2017 2018 2019 2017 2018 2019
Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Officers Compensation 7.45% 7.36% 7.94% 6.35% 6.64% 5.61%
Depreciation 1.25% 1.24% 1.47% 1.14% 1.18% 1.38%
Operating Income 5.41% 6.26% 7.68% 6.39% 5.91% 8.38%
Interest Expense 0.39% 0.39% 0.46% 0.41% 0.42% 0.39%
Pre Tax Net Profit 5.29% 6.16% 7.57% 6.30% 5.80% 8.24%
Owner Earnings 13.99% 14.76% 16.98% 13.78% 13.61% 15.52%
Balance Sheet 2017 2018 2019 2017 2018 2019
Accounts Receivable 28.08% 28.61% 28.81% 28.61% 28.21% 28.02%
Total Current Assets 62.33% 63.50% 63.44% 64.85% 63.68% 63.01%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Accounts Payable 14.63% 14.19% 14.49% 16.22% 15.75% 16.27%
Current Liabilities 31.87% 31.70% 31.71% 35.08% 34.19% 34.48%
Total Liabilities 51.11% 49.06% 49.36% 56.60% 55.25% 56.60%
Net Worth 48.89% 50.94% 50.64% 43.40% 44.75% 43.40%

Financial Analysis (Variance)

  VARIANCE
Income-Expense 2017 2018 2019
Revenue 0.00% 0.00% 0.00%
Officers Compensation -14.77% -9.79% -29.33%
Depreciation -9.32% -4.52% -6.10%
Operating Income 18.14% -5.56% 9.08%
Interest Expense 5.15% 9.14% -14.38%
Pre Tax Net Profit 19.11% -5.87% 8.87%
Owner Earnings -1.47% -7.76% -8.61%
Balance Sheet 2017 2018 2019
Accounts Receivable 1.90% -1.41% -2.74%
Total Current Assets 4.04% 0.28% -0.68%
Total Assets 0.00% 0.00% 0.00%
Accounts Payable 10.87% 11.01% 12.27%
Current Liabilities 10.08% 7.86% 8.74%
Total Liabilities 10.74% 12.61% 14.67%
Net Worth -11.23% -12.15% -14.30%

Introduction

To better understand your company’s operations, the Vestimate-Pro Report calculates Key Performance Indicators (KPIs) for review and comparison to industry benchmarks.

KPIs (also known as financial ratios) are calculated on the basis of company-specific data linked to the corresponding values of the selected industry peer group. These and other derivative metrics that form the basis of our analysis are developed from a variety of raw data sources detailed in the Methodology section of this report.

KPls are useful measures of the overall financial and operational health and growth of your business. These same measures are commonly utilized by business coaches, financial professionals and potential business acquirers in a variety of real world settings. The Vestimate-Pro report applies KPI scoring to the calculation of business worth as variance-based values to which various weights are assigned based on the specific metric, years of inputs and variance.

In addition to detailing KPI variances and applying a calibrated weight to each percent of difference from industry peer group standards, we use an intuitive five-star scoring system to communicate firm performance against industry peer group standards. Except for Days Payable and Days Receivable, KPIs are scored on a “higher is better” basis. The scoring approach is also detailed in the About the Data>Methodology section (VII) of this report.

Financial Ratios

Weighted KPI values are applied to the value analysis to assure representation in each category. Scores are derived from the variance and growth percentages displayed in the table below and charts on the following pages. KPI charts follow.

This report reflects the developer selection of calendar year values which are weighted as follows:

1-year Option: 2019: 100%
  INDUSTRY FIRM VARIANCE
Cash Flow 2017 2018 2019 2017 2018 2019 2017 2018 2019
Current Ratio 1.96 2.00 2.00 1.85 1.86 1.83 -5.69% -6.88% -8.64%
Days Payable 24.64 23.78 26.91 20.71 25.35 19.94 -15.96% 6.60% -25.90%
Profitability  
Discretionary Owner Earnings 13.99% 14.76% 16.98% 13.78% 13.61% 15.52% -1.47% -7.76% -8.61%
Return on Assets 20.18 23.78 26.57 30.79 22.85 42.03 52.59% -3.93% 58.20%
Growth   2017-19   2017-19   2017-19
DOE Growth     -3.06%     13.59%     543.57%
Average Annual Sales Growth     -1.17%     0.89%     176.41%
Efficiency  
Days Receivable 26.87 27.05 29.96 21.37 26.13 20.05 -20.47% -3.40% -33.07%
Efficiency Index 3.22 3.27 3.30 4.46 4.43 4.42 38.37% 35.68% 33.69%
Debt-Risk  
Modified Z-Score 6.11 6.64 6.89 7.04 6.08 8.11 15.13% -8.41% 17.65%
Interest Coverage 17.08 19.23 19.89 36.74 34.97 42.91 115.14% 81.87% 115.72%
Total Liabilities: Net Worth 1.05 0.96 0.97 1.30 1.23 1.30 24.21% 28.60% 34.46%
Market Opportunity   US   Local  
Industry Market Growth (2017-19)     10.36%     -8.46%
Market Opportunity Index 1.03 1.03 0.93

Cash Flow-Liquidity KPIs

Current Ratio (2017-2019):

3.0
Current Assets/Current Liabilities: Measures current assets available to cover current liabilities, a test of near-term solvency. The Current Ratio indicates the extent to which cash on hand and disposable assets can pay off near term liabilities. Higher is better unless it constrains necessary investment.

Days Payable (2017-2019):

3.0
365/(Cost of Sales/Accounts Payable ratio). Reflects the average number of days for each payable before payment is made. High ratios may indicate cash flow difficulties.

Profitability KPIs

Owner Earnings % (2017-2019)

3.0
Owner Earnings equals [Officer Compensation+Pre-Tax Net Profit+Depreciation+1x Addbacks]/Revenue.

Owner Earnings Growth (2017-2019)

5.0
Compares change in Owner Earnings at the firm and industry levels. Higher multi-year growth in firm-specific owner earnings revenue relative to the US industry average growth is an indicator of accelerated performance.

Annual Sales Growth (2017-2019)

5.0
Compares change in annual sales at the firm and industry levels. Higher multi-year growth in firm sales relative to national industry annual average growth is an indicator of firm momentum.

Return on Assets (2017-2019):

4.6
Pre-Tax Net Profit/Total Assets. A critical indicator of profitability. Companies which use their assets efficiently tend to show a ratio higher than the industry norm. This ratio can be used as a predictor of the company's ability to withstand changes in prices or market conditions. The ratio may appear higher for small businesses due to owner compensation draws accounted as net profit.

Efficiency KPIs

Days Receivables (2017-2019):

4.6
365/(Business Revenue/Receivables). Reflects the number of days that receivables are outstanding. Higher than average ratios may indicate a problem in the collection process. Target average or lower.

Efficiency Index (2017-2019):

5.0
This index calculates the firm’s efficiency as measured by a Sales per Employee/Average Annual Wage calculation. The result is compared to the selected market average, providing a more sophisticated efficiency indicator than a stand-alone Sales per Employee metric. Higher is better.

Debt-Risk KPIs

Modified Z-Score (2017-2019):

3.8
A modified form of the Altman Z-Score which evaluates default risk. The modified Z-Score substitutes Discretionary Owner Earnings for Net Profit and Net Worth for Retained Earnings to better capture small business operations. In all cases higher (at or above the industry level) is desired. Modified Z-Score calculations for this industry are:
([Operating Income/Total Assets]*6.72) + ([Net Worth/Total Liabilities]*1.05) + ([Working Capital/Total Assets]*6.5) + ([Discretionary Owner Earnings/Total Assets]*3.26)

Interest Coverage (2017-2019):

5.0
[Earnings before Interest, Income Taxes due, Depreciation-Amortization]/Interest expense. Assesses financial stability by examining whether a company is profitable enough to pay interest expense. A ratio >1.00 is desirable.

Total Liabilities: Net Worth (2017-2019):

1.0
Total liabilities/Net Worth. This ratio helps to clarify the total risk impact of debt. Total liability levels should be comfortably less than Net Worth except in special circumstances. The most advantageous ratios are around or somewhat below industry norms, balancing current and long term liability values.

Market Opportunity KPIs

Market Opportunity Index (2017-2019)

3.0
A calculated index which compares local market and US Sales per Household, indicating the level of market saturation where balance between Market and US levels where equilibrium=1.00. The metric is most relevant in retail and service industries, and is not calculated where the selected market is national. A higher index indicates more opportunity.

Industry Market Growth (2017-19):

1.0
Higher multi-year higher growth in market industry revenue volume (not firm-specific) relative to the US industry is often an opportunity indicator.

HISTORICAL VESTIMATE-PRO BUSINESS VALUES

Because the absence of legacy year growth analysis, growth metrics are not included in the value trend analysis for prior years. Current year value may reflect additional active year values and integrated KPIs selected by the developer. As a result, the historical values here may not represent a 100% apples-to-apples comparison.

Main Street Plumbing VALUES:
Income approach values are rarely applied to firms with revenue of less than $2.5 million.
Final Vestimate-Pro Values:
Asset Sale Value: Earnings Approach: $591,079
Asset Sale Value: Income Approach: $781,309

Historical Trend Values (excludes growth KPIs):

2017 Asset Sale Value: Earnings Approach: $481,421
2018 Asset Sale Value: Earnings Approach: $452,194
2019 Asset Sale Value: Earnings Approach: $591,079

2017 Asset Sale Value: Income Approach: $752,945
2018 Asset Sale Value: Income Approach: $726,209
2019 Asset Sale Value: Income Approach: $781,309

2017-2019 HISTORICAL VALUE TREND ($)

Vestimate-Pro Methodology

Vestimate-Pro business values are based on transactional multiples, industry financial and market trend analysis applied to our proprietary calculation protocols.

Bizminer develops and publishes financial statement averages for about five thousand US industry classifications. Industry and sales class-specific data from Bizminer's industry financial analysis content is integrated into final Vestimate-Pro calculations. That content has been accepted in US Tax Court and is utilized by thousands of accounting, valuation, banking and business assistance professionals; by almost one hundred university libraries and by taxing agencies in multiple countries.

This core Bizminer content is integrated with Price/Earnings and Price/Sales multiples derived from almost 30,000 business transactions collected by DealStats. Bizminer conducts intensive cleaning for outliers in the DealStats transaction database at the NAICS-6 level after segregating the data by industry and size, scouring for outliers and creating four sized tiers (<$2.5m; $2.5m-$25m; $25m-plus and industry-wide) to develop multipliers used with our own enterprise sales and average industry performance content. Price/Earnings and Price/Revenue multiples are derived for five intervals: [Low]-[Quartile 1]-[Median]-[Quartile 2]-[High]. A series of core KPIs representing all five critical KPI categories (Cash Flow/Liquidity; Profitability; Efficiency; Debt-Risk; Market Opportunity) are then scored and applied using Bizminer’s proprietary algorithms to calculate a final business values or value range.

KPI variances for all selected years are applied to determine the KPI score. With two exceptions, all scored KPIs used for this value report are calculated using our Standard Scoring methodology, that is, higher is generally better: 

  • +/-10% from average= 3
  • +11% to +20% above average= 4
  • >20% above average= 5
  • +11% to +20% below average= 2
  • >20% below average= 1 

Days Payable uses a Balanced Scoring framework, that is, closer to the industry standard is best, so that no variance from industry values would receive 5 stars. Days Receivable uses Reverse Scoring, where lower than the industry standard is better; 20% below the industry standard, for example, would receive 5 stars.

Displayed scoring is based on a scale of 1-5, with 5 being "best" and 1 being "worst". All percentages are shown as a variance from the industry peer group average.

Variances are also applied with more finely calibrated and weighted differentials to the final Vestimate-Pro business value calculations; weight values are assigned for each percentage point of variance for each KPI. 

Final business values also incorporate one time income-expense addbacks noted by the report developer, which may not be visible in formal financial statements.

By default, the report applies 100% of the value calculations to the most recent year of inputs (including sales and market growth values if that data is available). If the developer chooses to integrate KPIs and other metrics into the final value calculation, values are weighted in the final calculations like this:

3-year Option: 2017: 20%; 2018: 20%; 2019: 60%
2-year Option: 2018: 33.3%; 2019: 67.7%
1-year Option: 2019: 100%  

Market Analysis Values

The analysis integrates industry market volume trends, an industry site sales growth yardstick and a market penetration index developed at national and local levels in Bizminer’s Industry Market Trend report series. That content integrates the industry and custom market area selection with firm performance and scores the results.  

Sales-related calculations are developed with firm‐level data which is integrated with BizMiner’s internally generated Sales per Employee projections. SPE data is both industry‐ and location‐specific; values are updated monthly by the application of US Census data and five industry and consumer price and productivity indices from the Bureau of Labor Statistics and other federal agencies.  

The Sales per Household metric integrates Census data with Bizminer’s industry market sales calculations to produce Sales per Household values applied to the Market Opportunity Index. Although it is displayed in tables, the Market Opportunity Index is not applied to scoring or business value calculations where the selected market is US (due to lack of a market comparison), or where the industry is overwhelmingly B-to-B, including these parent NAICS and their offspring: 11; 21; 31-32-33 (except 3118; 311991; 323111; 323113); 33; 42; 481; 482; 483111; 483211; 486; 493; 512; 533; 55; 5611; 5612.  

Cessation rates track the experience of business establishments, firms, small businesses, branches and startups doing business at the start of the time series, and still in operation today. Firms which relocate but maintain independent operations are considered survivors if they do not move out of the jurisdiction being analyzed. Firms which become subsidiary locations, or whose location is terminated, are grouped with others which ceased operation. Any business entity which does not evidence ongoing operations (for example, by registering with government agencies, credit reporting services or business directories) is considered to have ceased viable operations and is classified in the "ceased operation" category.

Data Sources

BizMiner data is widely accepted for industry analytical work, benchmarking, valuations, forensics and litigation. BizMiner content is accepted in US Tax Court (Bauer vs. IRS: T.C. Memo. 2012-156) and is utilized by state, provincial and national taxing agencies in the US and Canada.

Raw data analyzed for BizMiner reports is sourced from an array of the nation's government and private statistical sources. None of these raw data sources creates the final measures reflected in BizMiner industry profiles. In total, BizMiner accesses over a billion sourced data points from 15 million business operations for each of its twice annual updates covering a 3-5 year time series. Historical data and BizMiner algorithms are used to inform and test projections for non-reporting firms. Data elements are sourced specifically from:

  • IRS SOI Corporation Tax Book
  • IRS Statistics of Income
  • US Economic Census
  • US Census Quarterly Financial Reports
  • US Census County Business Patterns
  • Bureau of Labor Statistics Monthly Employment Reports
  • Bureau of Labor Statistics Monthly Unemployment Reports
  • Bureau of Labor Statistics Annual Wage Survey
  • Bureau of Labor Statistics Industry Productivity Reports
  • Bureau of Labor Statistics Price Indices
  • National Agricultural Statistical Service
  • US Census Quarterly Financial Reports
  • US Census Retail Trade Report
  • InfoGroup, Inc.
  • DealStats
  • Credit Reporting Agencies
  • American Community Survey

While 100% firm coverage is desirable for analysis purposes, the greatest value of BizMiner reports rests in discerning patterns of activity, which are reflected in the large samples used to develop our reports. The overall current coverage of the databases surpasses 13 million active business operations at any point in time.

Contact Bizminer at: 2601 Market Street, Camp Hill PA 17011: www.bizminer.com.

KPI Scoring

In most cases, the variance for each metric measures the percentage difference between input firm ratios and the industry average. The Sales per Household Market Opportunity Index and Location Quotient compare local and national market data to determine the variance between the two.

Each variance results in a Score of 1-5 (5 being best) for each year of each selected ratio. The application of the Variances to the Score depends on the specific metric; in most cases higher is better (Standard Scoring); in some, lower (Reverse Scoring) is better; in a few, closest to the industry average (Balanced Scoring) is best.

Approach to Scored KPIs:
Owner Earnings (%)-Standard
Annual Sales Growth Sales-Standard
Industry Market Volume-Standard
Sales per Household Market Opportunity Index-Standard
Efficiency Index-Standard
Days Receivable-Reverse
Current Ratio-Standard
Current Liabilities:Net Worth-Reverse
Total Liabilities:Net Worth-Reverse
Modified Z‐Score-Standard
Interest Coverage: Standard

Scoring Calculations:
Standard (basically higher is better)

+/-10% from average= 3
+11% to +20% above average= 4
>20% above average= 5
+11% to +20% below average= 2
>20% below average= 1
Reverse (lower is better)
+/-10% from average= 3
+11% to +20% above average= 2
>20% above average= 1
+11% to +20% below average= 4
>20% below average= 5

Vestimate Use: Terms and Conditions

This report is authorized for in-house use by the purchaser and other individuals licensed or authorized by Bizminer. No other persons in the licensing organization or its contractors may access, analyze, utilize or review Licensed Content. Licensees are permitted to utilize the content with bona fide third-party end-user clients as part of significantly value-added reports or projects. For example, content may be included as part of a custom business plan, broker communications with prospective buyers, custom valuation report individually developed and integrated by professional licensees for bona fide end user clients, or as part of a personalized financial review with counseling conducted by an accountant or consultant. The number of clients or client entities to which permitted uses apply is not limited.  

Limitations on Use: If you use Licensed Content in a manner that exceeds any of the limitations below, you are in breach of these Terms. If your needs exceed these limitations, you may qualify for a separate Extended Electronic License with Bizminer. Any such use without a separately negotiated Extended Commercial Subscription constitutes a breach of this License Agreement.  

Access to Licensed Content is subject to the following restrictions:  

The creation of files or databases which aggregate Licensed Content for in-house use is limited to part or all of 25 Licensed Content reports.  

Content can NOT be harvested for integration into either Subscriber or third-party end user databases. "Harvested" content includes data which is loaded without a current due diligence need or immediate, active client engagement.

Use or integration of Licensed Content in any electronic database or engine for either front end or back-end use with third party clients, or for any online use or integration, displayed or otherwise, is strictly prohibited unless such use or display is confined to authorized Users.  

Distribution of any Licensed Content beyond bona fide third party end-user clients as described above is prohibited, including distribution at educational, marketing or other quasi-public or by-invitation public events; any electronic or other posting on a web site or in any other electronic format aside from bona fide end user clients as detailed above; distribution of Licensed Content reports or data in whole or part without the addition of significant value-added materials or delivery of significant value-added services in addition to the licensed report or content. Otherwise, data re-sale or re-engineering, web or electronic-based commerce or distribution or re-sale to anyone outside your organization is not permitted.

As is the case with any databases this large, some errors are inevitable. Some firms are missed and specific information on others is lacking from the database. Not all information received is uniform or complete, resulting in the need to develop projection algorithms for specific industry segments and metrics in some report series. No representation is made as to the accuracy of the databases utilized or the results of subsequent analyses. Neither the Bizminer nor its resellers have undertaken independent primary research to confirm the accuracy of the data utilized in the Profile analyses. Neither the Bizminer nor its resellers are responsible for conclusions drawn or decisions made based upon this data or analysis. In no event will Bizminer or its resellers be liable for any damages, direct, indirect, incidental or consequential resulting from the use of the information contained in Bizminer reports.

Configure Display

Check to Integrate Content Years
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Check to Integrate Other Value Indicators
Key Employees

Assess the age, loyalty, training, experience and motivation of the workforce. Low=<5; High=>5

Customer Base

Is customer stability seasonal with low repeat sales (<5) or year round with high repeat levels (>5)?

Technology Level

Are technology practices up to date? How do they compare with competitors? Low=<5; High=>5

Customer Concentration

Do the top 5 customers account for >25% of revenue; or does any one customer account for >10%?

Developer-Client Display (optional)
Company Name:
Company Logo: Client logo image

(maximum dimensions of 800px x 800px): PNG, JEG, JEPG, GIF)

Developer Name:
Developer Phone:
Developer Email:
Developer Logo: Developer logo image

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Input Firm Benchmark Data

Data Input Upload:

  1. Download the BizMiner Vestimate Pro Input Template and save it offline as a CSV file.
  2. Populate the template offline.
  3. Select the Choose File or Browse button to find the populated CSV file on your device.
  4. Use the Upload Inputs button to complete the process.
  5. Generate the report. Your financials will be integrated; percentages, summary line items and ratios will auto-calculate.

Manual Inputs:

* Please do not use periods, dollar signs, or characters. Commas are automatically added.
** Inputting as many metrics as possible will result in a more robust report. However, you must input at least one active year of Business revenue and a Discretionary Owner Earnings component (Officers’ Compensation, Pre-Tax Net Profit, 1x Expense Addbacks or Depreciation-Other Non-Cash Expenses) to generate the value report. We do not use, access, sell or distribute any data you might input.
Income Statement Line Items
2017
2018
2019
Business Revenue *(Required)
Gross Margin
Officers Compensation
Pre-tax Net Profit
1x Expense Addbacks
Depreciation-Other Non-Cash Expenses
Owner Replacement Compensation
Operating Expenses
Interest Expense
Balance Sheet Line Items
2017
2018
2019
Accounts Receivable
Total Current Assets
Total Assets
Accounts Payable
Total Current Liabilities
Long Term Liabilities
Employment Data
2017
2018
2019
Employment
Average Annual Wage