Opportunities
Commercial Roofing with 70+ Employees
Year-over-year growth in sales – over $13.5M in 2020!
Specifications
This commercial roofing & sheet metal company has seen year-over-year growth in sales, with over $13.5M in 2020! They have a diverse client base that includes national retail, hospitals, pharmaceuticals, military, universities, private schools, government (schools, town halls, police, fire, etc.), and NYC government agencies. With 70 employees in place, the company has considerable repeat business with GC’s, Construction Managers, and Owners. 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. Their expertise includes 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. 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. The solar division recently landed a $2.7M private job that the roofing division will profit $1.2M from – this is in addition to all the national chain retail work that will be profitable.
Priced at $6,650,000, 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: $6,650,000
- 2-Year Average Cash Flow: $1,517,716
*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 55% collateralized*
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | P&L Statement | P&L Statement | Notes |
| 2020 | 2019 | 2018 | ||
| GROSS SALES | $13,668,838 | $10,962,924 | $8,896,652 | |
| Net Income Shown on Financial Statement | $1,268,049 | $1,194,886 | $-896,529 | |
| ADDBACKS | ||||
| Compensation to Owner | $430,000 | $430,000 | $430,000 | Will need to prove w/ W2; includes 401k & repayment from funds contributed to start the company |
| Other unrelated Salaries | $28,225 | $28,225 | $28,225 | Wife's salary - not active |
| 11% Tax on total W2 Salaries | $50,405 | $50,405 | $50,405 | |
| Direct Depreciation | $0 | $0 | $0 | Shown in COGS in 2020 |
| Interest | $101,281 | $99,776 | $101,803 | |
| Personal Expenses | $60,700 | $60,700 | $60,700 | |
| Contributions/Donations | $0 | $320 | $535 | |
| Depreciation | $0 | $45,500 | $49,121 | |
| Amortization | $0 | $1,260 | $945 | |
| PPP Loan | $-814,300 | $0 | $0 | One-time Income |
| TOTAL ADDBACKS | $-143,689 | $716,186 | $721,734 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $1,124,360 | $1,911,072 | $-174,795 | |
| Profit Margin | 8.23 % | 17.43 % | -1.96 % |
- The jump in net profit from 2018 to 2019 is attributed to 3 highly profitable projects that summer.
- The company began in December of 2014. The real first year of business was 2015, which was a loss, as well as 2016; this is common for roofing & construction companies.
- 2017 was profitable, 2018 was a loss, and 2019 & 2020 were both highly profitable.
- There was some employee turnover in the first years, which resulted in projects not being performed in the way they should have.
- Now, the business has a seasoned, well-established group of professionals dedicated to their work.
- They would bid work cheaper than they should have to get work in the door and to get the company established. They had to find their niche. It took a few years – now, they have an established invite-only bid list with repeat business.
Valuation
Funding Example
Funding Details
Business:
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: $
Loan Payments
| Monthly Payment to Bank: | $ |
| Yearly Payment to Bank: | $ |
| Monthly Payment to Seller: | $ |
| Yearly Payment to Seller: | $ |
| Total Monthly Debt Service: | $ |
| Total Yearly Debt Service: | $ |
Conclusions
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
|
Cash Flow: 2-year average cash flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2-year average cash flow |
$ |
| Annual Debt Service: | -$ |
| NOI: |
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
| Down Payment: | $ |
| NOI: | |
| ROI: | % |
Attachments
| Document Title / Description |
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