Opportunities
Commercial Roofing Services throughout New York & Connecticut
With over 70 employees in place and over $12M in sales in 2020!
Specifications
This roofing & sheet metal company has over 70 employees in place and has had year-over-year growth in sales since 2018! Specializing in commercial roofing in the western half of Connecticut, the lower Hudson Valley, and the five boroughs of NYC and Long Island, they install new roofing as well as replace existing roofs. The breakdown varies from year to year; in 2020, 75% of sales came from new construction, while 25% was reroofing services. With expertise in membrane roofing, metal roofing, custom sheet metal work, shingle, slate, and tile steep slope roofing, below grade waterproofing, plaza pavers, and ornamental sheet metal work, this business has considerable repeat business with general contractors, construction managers, and owners in the area. Their diversified client base includes national retail, hospitals, pharmaceuticals, military, universities, private schools, government (schools, town halls, police, fire, etc.), and NYC government agencies. The team of 70 includes the owner, who handles sales, banking, insurance, and bonding, as well as a Director of Operations, Director of Business Development, Chief Estimator, HR Manager, Accounting Manager, Field Manager, Project Manager, and 60 full-time field employees.
The roofing & sheet metal division is 100% union; they started a solar division in 2020, which is 100% non-union. The business landed a national account servicing approximately 200 stores, strip malls, and shopping centers from Buffalo, New York to Baltimore, Maryland. The solar division was started to be more competitive for this account. Although they have not completed any solar installations, this division has taken on service work since June 2020 and did $500k in sales with a profit of nearly $225k. The national account has approximately 20M sq. ft. of roof; the non-union solar division will provide reroofing services for 10-12% of their stores. They expect to do 2-3 times the 2020 sales amount in 2021 with similar margins.
Priced at $8,500,000, this company is poised for large growth. Expanding the solar division will boost sales and increase profit margins tremendously. They grew by 20%+ in 2020, with the expectation to be at that same rate or higher in 2021. A new owner could take their well-trained workforce and established relationships with private customers to the next level.
Business Highlights
Year Established: 2014
Location: Fairfield County, Connecticut
Service Area: Western Connecticut, lower Hudson Valley, and the 5 boroughs of NYC & Long Island
Services: Commercial roofing services (new construction & re-roofing): membrane roofing, metal roofing, custom sheet metal work, shingle, slate & tile steep slope roofing, below grade waterproofing, plaza pavers and ornamental sheet metal work
Clients: National retail, hospitals, pharmaceuticals, military, universities, private schools, Government (schools, town halls, police, fire), NYC Government agencies
Lease: 16,000 sq. ft.: 4,000 sq. ft. office space, 12,000 sq. ft. shop & warehouse
Reason for Selling: Approaching retirement
Personnel: 71: 11 office staff (9 FT, 2 PT) + 60 FT field employees
Seller Training Period: 1-2 years
Growth Opportunities: Expand the solar side of the business
Current Owner’s Responsibilities: Coordination of field operations w/ Director of Operations, sales, banking, insurance
Employees
- Owner (President)
- Corporate Secretary / Human Resources
- Controller
- Director of Business Development
- Director of Operations
- Chief Estimator
- Accounting
- Compliance Administrator
- Safety Manager
- Project Manager
- CT Foreman
- NY Foreman
- Field Employees
Financial Highlights
- List Price: $8,500,000
- 3-Year Average Cash Flow: $1,576,733
*amounts may vary
Assets of Business
- Assets: $3,610,291
- Equipment: $543,217: Numerous jobsite forklifts, all trade equipment
- Vehicles: $250,500: 20 vehicles including (2) 2021 GMC Sierras 2500 HD’s
- A/R: $1,958,956
- Retainage Receivables: $803,022
- Inventory: $54,596
- Intangible: Well-established relationships with private customers, word-of-mouth referrals, extremely diversified client base, considerable repeat business with general contractors, construction managers, and owner
*Over 40% collateralized*
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Jan-Sept 2020 | P&L Statement | P&L Statement | Notes |
| 2020 | 2019 | 2018 | ||
| GROSS SALES | $9,076,375 | $10,962,924 | $8,896,652 | |
| Annualized | $12,101,833 | |||
| Net Income Shown on Financial Statement | $332,725 | $1,194,886 | $-896,529 | |
| ADDBACKS | ||||
| Compensation to Owner | $322,500 | $430,000 | $430,000 | Will need to prove w/ W2; includes 401k & repayment from funds contributed to start the company |
| Other unrelated Salaries | $21,169 | $28,225 | $28,225 | Wife's salary - not active |
| 11% Tax on total W2 Salaries | $37,804 | $50,405 | $50,405 | |
| Direct Depreciation | $25,956 | $0 | $0 | Shown in COGS in 2020 |
| Interest | $49,333 | $99,776 | $101,803 | |
| Personal Expenses | $45,525 | $60,700 | $60,700 | |
| Contributions/Donations | $10,124 | $320 | $535 | |
| Depreciation | $55,513 | $45,500 | $49,121 | |
| Amortization | $0 | $1,260 | $945 | |
| TOTAL ADDBACKS | $567,924 | $716,186 | $721,734 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $900,649 | $1,911,072 | $-174,795 | |
| Annualized | ||||
| Profit Margin | 9.92 % | 17.43 % | -1.96 % |
Valuation
The Firm Advisors used a cash flow valuation methodology to determine the purchase price of the business.
Cash flow is the sum of business net income plus any owner perks and any non-onward expenses. Then we prescribe a multiple based on 20 parameter which valuate the health of the business. For this valuation, we used the 3-year average cash flow value making the business price much more favorable to the buyer.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$1,576,733 x 5.4 = $8,514,358
Funding Example
Purchase Price: $8,500,000
| 12.5%Buyer Down Payment | $1,062,500 | Must be unborrowed funds |
| 12.5%Seller Financing or Equity | $1,062,500 | 5-year term at a rate of 4.50% = a monthly loan payment of $19,808 |
| 75%Bank Loan | $6,375,000 | 10-year term at a rate of 6% = a monthly loan payment of $70,776 |
- Cash Flow: $1,576,733
- Annual Payment:
- To Seller: $237,698
- To Bank: $849,307
- Net Profit (after expenses and loan payment): $489,728
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