Opportunities
Commercial & Residential Asphalt Paving
Sold
Over 30 years in business – year-over-year sales growth since 2016!
Specifications
In business for over 30 years, this asphalt paving company has seen over 20% year-over-year sales growth since 2016! Specializing in asphalt paving, seal coating, patching/repairs, overlay, line marking, and concrete paving, this business provides services for a large portion of Northeast Ohio. A team of 35 employees includes 5 foremen leading 25 crew members, 3 salespeople, and 2 administrative assistants. The owner manages the sales representatives and handles financial oversight of the company. Their clientele includes both commercial (90%) and residential (10%), with a typical range of 600-750 clients per year.
The company is housed in a 15,000 square foot shop area, with an 8,000 square foot office area and three acres of yard space. Their assets include a road mill, bobcat mills, dump trucks, rigs, pavers, asphalt rollers, and concrete trucks, valued at $2.1MM. With $2.5MM in the pipeline, this company is rock-solid with their steady stream of client referrals and word-of-mouth advertising.
Expanding services to include snow removal in the winter time, as well as increasing their marketing efforts would undoubtedly elevate the sales and profit of the business.
Business Highlights
- Year Established: 1990
- Location: Akron, Ohio
- Service Area: Northeast Ohio
- Services: Milling & paving, concrete work, seal coating/line striping
- Clients: Commercial (90%) & Residential (10%): 600-750 clients/year
- Lease: 15,000 sq. ft. shop area, 8,000 sq. ft. office area, 3 acres of yard space
- Reason for Selling: New Ventures
- Personnel: 35: 1 owner + 5 foremen, 25 crew members, 3 salespeople, 2 administrative assistants
- Seller Training Period: 6-12 months
- Growth Opportunities: Expand services to include snow removal, increase advertising
- Current Owner’s Responsibilities: Financial oversight, general management of sales division
Financial Highlights
- List Price: $3,365,000
- Gross Sales:
- 2019: $7,494,070
- 2018: $5,678,906
- 2017: $4,537,797
- 2016: $3,343,535
- Cash Flow:
- 2019: $693,564
- 2018: $1,164,130
- 2017: $910,346
- 2016: $596,284
- Assets Included in Purchase*
- Equipment: Road mill, bobcat mills, tools
- Vehicles: Dump trucks, rigs, 3 pavers, asphalt rollers, concrete trucks
- Inventory: $$4,748
- A/R: $1,258,445
- Intangible Assets: Well-established name, solid word-of-mouth advertising
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | Tax Return | Tax Return | Tax Return | Notes |
| 2019 | 2018 | 2017 | 2016 | ||
| GROSS SALES | $7,494,070 | $5,678,906 | $4,537,797 | $3,343,535 | |
| Net Income Shown on Financial Statement | $609,160 | $305,909 | $344,679 | $11,370 | |
| ADDBACKS | |||||
| Compensation to Owner | $109,764 | $115,942 | $109,080 | $100,000 | |
| Compensation to Owner | $0 | $100,164 | $107,138 | $100,000 | |
| 11% Tax on total W2 Salaries | $12,074 | $23,772 | $23,784 | $22,000 | |
| Depreciation | $0 | $5,700 | $3,560 | $0 | |
| Interest | $9,810 | $17,737 | $21,902 | $18,476 | |
| Cell Phone | $2,756 | $2,756 | $2,756 | $2,756 | |
| Replacement | $-90,000 | $-90,000 | $-90,000 | $-90,000 | |
| Cash Balance Plan | $40,000 | $40,000 | $40,000 | $40,000 | Administrative Costs |
| Retirement Plan Safe Harbor | $0 | $6,483 | $6,486 | $6,000 | |
| Retirement Plan Profit Sharing | $0 | $37,529 | $37,548 | $36,923 | |
| Retirement Plan Cash Plan | $0 | $592,353 | $298,694 | $341,362 | |
| Retirement Plan | $0 | $5,785 | $4,719 | $7,397 | Administrative Costs |
| TOTAL ADDBACKS | $84,404 | $858,221 | $565,667 | $584,914 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $693,564 | $1,164,130 | $910,346 | $596,284 | |
| Profit Margin | 9.25 % | 20.50 % | 20.06 % | 17.83 % |
- Year-over-year sales growth since 2016
Clients
- Commercial (parking lots, walkways, etc.)
- Residential (driveways)
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Asphalt paving
- Seal coating
- Patching & repairs
- Overlay & repairs
- Line marking
- Concrete
Personnel
- 1 owner
- Financial oversight, general management of sales division
- 5 foremen
- 25 crew members
- 3 sales representatives
- 2 administrative assistants
Growth Opportunities
- Expand services to include snow removal
- Increase marketing efforts
Valuation Details
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 prescribed multiple is determined 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 multiplier.
For this business, the 4-year average cash flow was used with a prescribed multiple of 4. With this information, the computation is as follows:
$841,081 x 4 = $3,364,324
The fair market value found above positions the business list price at $3,365,000.
Funding Example
Purchase Price: $3,365,000
12.5%Buyer Down Payment: $420,625
12.5%Seller Financing: $420,625
75%Bank Loan: $2,253,750
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $7,842.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $33,166.
After business expenses and loan payments, a buyer with a 12.5% down payment of $420,625 would retain a profit of $348,992, which results in an 83% 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 $3,365,000 with the terms listed above, the coverage ratio is 1.71.
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.
*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857