Update on Deal Structure for the $1M Carpet Cleaning Company
After getting on a call with the two owners of the carpet cleaning company over the weekend, they now have more clarity on the deal structure. However, there was some initial confusion after the call prior with just one of the owners…
Refined Deal Structure & New Offer
-$1M purchase price
-We pay $100k as an initial down payment (non-refundable).
-Owners hold the note for the balloon payment of $900k (remaining of the purchase price) for up to 1 year.
-50/50 split on net new profits above and beyond current profits of $350k. We get phantom equity of 10% (100k of the 1M purchase price) of the current profits to help with our efforts we will inject for marketing, finding resources, etc.
-The goal is to get owners transitioned out of the day to day in the business.
Further Breakdown Example
-$350k is the baseline profit for owners which breaks down to $29,166k/monthly
-Our phantom equity is 10% which breaks down to $2,916k/month out of the $29,166k monthly profits
-Owners will dissolve 2/3 of the marketing costs and we will inject our marketing efforts
-We will identify a manager and possibly another resource to handle managing the team, schedules, intake calls, invoicing, payroll, and all back office duties
Waiting For a Response
We provided a detailed explanation that includes the above details plus a whiteboard drawing so they’re able to visually see our thinking. Let’s see what happens next!
