Excavation & Underground Utilities
Working mostly in Texas, this company has over $5MM in assets including heavy equipment, $8MM in the pipeline, and $12MM in backlog ready for completion. Clients are often contractors building multi-family housing, big box retailers, and fulfilling municipal contracts. Everyone will always need utilities, so the business is essentially recession-proof as well.
Specializing in site preparation and underground utility work, this company completes most projects with their well-trained 120-member staff This Texas company has completed projects across the Lone Star State as well as in Arkansas, Oklahoma, and Louisiana and maintains a long record of safety and quality workmanship.
Offering superior customer service as well as wrap-around services including field supervision, scheduling, and project management, this team operates with extensive knowledge of project requirements and procedures. They excel in assessing a client’s needs, building detailed proposals, and completing complex projects in a timely and accountable manner.
Operating from a leased 5,600 sq. ft. facility, this company has all the necessary space to operate unencumbered and owns all the heavy equipment used for projects. The current ownership group has responsibility over various tasks including financial management, lead project management, lead estimation development, and resource management.
- Years Established: 20 Years
- Location: Dallas Fort Worth, Texas
- Service Area: Texas (95%); Louisiana, Oklahoma, and Arkansas (5%)
- Clients: Multi-family housing, commercial, single family
- Services: Excavation (20%), Underground utility (80%)
- Lease: 5,600 sq. ft.: Office 17 offices (4 under construction), conference room, open workspace; Shop (800 sq. ft.) and large yard (25,000 sq. ft.)
- Reason for Selling: Majority owner is retiring
- Employees: 120 FT: Project managers, foremen, superintendents, laborers, accounting, administrative
- Hours: M-F 8-5
- Seller Training Period: Three minority owners will stay on under new owner as a partner or employee
- Growth Opportunities: Replicated the current model in other markets, maximize new technology, capitalize on joint trenching
- List Price: $14,500,000
- Gross Sales:
- 2018: $35,295,633
- 2017: $30,722,692
- 2016: $34,433,488
- 2015: $32,901,475
- Cash Flow:
- 2018: $3,457,641
- 2017: $3,321,529
- 2016: $3,204,860
- 2015: $3,476,379
- All continuing salaries have been accounted for in the cash flow
- Assets Included in Purchase*
- Equipment: ~$5MM: 80+ pieces, track loaders, wheel loaders, backhoes, compactors, trailers, etc.
- Vehicles: 17: $500k
- A/R: $5.2MM (Retainage kept by sellers)
- Secured Work: $12MM
- Backlog: $14MM
- Intangible Assets: Well-regarded name, large and populated service areas, values-focused team, long-term relationships, repeat customers
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$1,761,194||$1,950,436||$2,361,630||$2,587,762|
|Other unrelated Salaries||$0||$8,186||$0||$0||Owner 1- Not Active|
|Meals & Entertainment||$43,186||$33,402||$20,874||$12,418|
|Employee Benefit Program||$0||$14,000||$11,000||$5,700||Health Insurance|
|11% Tax on total W2 Salaries||$0||$900||$0||$0|
|Seller's Cash Flow = Total Addbacks + Net Income||$3,457,641||$3,321,529||$3,204,860||$3,476,379|
|Profit Margin||9.80 %||10.81 %||9.31 %||10.57 %|
- Multi-family housing: 80%
- Commercial properties: 20%
- Big box retailers
- Municipal contract work
- Single-family housing
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Underground utility work: 80%
General services can include:
- Project budgeting
- Cost effective designs
- Navigating City processes and requirements
- Consultation with engineers and architects
- Project management
- Water utilities
- Sanitary and storm sewers
- And more!
- 120 employees
- All employees are full-time
- Number of employees responsible for sales: 6
- Replicate the current model in additional markets
- Maximize the use and integration of new technology
- Capitalize on joint trenching
- Consider any additional complimentary services that could be tied to existing services to increase revenue
The Firm used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.
For this business, a 2018 cash flow was used with a prescribed multiple is 4.2. With this information, the computation is as follows:
$3,457,641 x 4.2 = $14,522,092
The fair market value found above positions the business list price at $14,500,000.
Purchase Price: $14,500,000
15% Buyer Down Payment: $2,175,000
30% Seller Financing: $4,350,000
55% Bank Loan: $7,975,000
Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $69,052.
Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $88,539.
After business expenses and loan payments, a buyer with a 15% down payment of $2,175,000 would retain a profit of $1,566,550, which results in a 72% 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 $14,500,000 with the terms listed above, the coverage ratio is 1.83.
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.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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