Opportunities
Concrete Pumping for Diverse Customer Base in Chicago Area
With $3.3M in assets - over 85% collateralized!
Specifications
Priced at $3,805,000 and with over $3.3M in assets, this loan is over 85% collateralized! The General Manager and Office Manager carry 90% of the day-to-day business for this Chicago concrete pumping company. Boasting a 38% profit margin, their diverse customer base consists of both commercial and residential customers with projects ranging from single family homes to slab foundations, bridges to treatment plants, and roadways to pilings. Equipment includes seven pumps, a placing boom, a Line Dragon as well as a shop full of any necessary equipment, inventory, and tools required to complete the job. There is also an additional $20,000 in vehicles including trucks, trailers, and a forklift. The current owner is part-time and does oversight only – no labor. With processes and procedures in place, the business can operate seamlessly with minimal owner oversight.
They have a sophisticated 24-7dispatch system, which provides excellent communication to customers. Each year they serve 180-200 clients with 400 in the database. Work is completed within 100 miles of the headquarters and encompasses Northern Indiana, Southern Michigan, Northern Illinois, and the Chicago Metropolitan area.
There is tremendous potential for future growth. Investing in a larger pump would open opportunities in highway, infrastructure, and large industrial projects; it would also help with the whole fleet utilization and overall finances of the company. Operators and customer lists already exist – having the right machine to be able to perform more/bigger jobs would boost revenue.
Business Highlights
Year Established: 2004
Location: Chicago
Service Area: Primarily Northern Indiana (80%), Southern Michigan, Northern Illinois including Chicagoland
Clients: Residential, commercial, industrial, oil refineries, health care, schools, stadiums
Services: Concrete pumping and truck rentals
Building: 10,500 sq. ft.: 1,500sq. ft. office, 7,000sq. ft. inside parking, 2,000 sq. ft. storage (rack and open)
Reason for Selling: Owns a large printing business that he wants to focus on
Employees: 10: 1 Operations Manager, 7 operators, 1 PT bookkeeper, 1 shop labor
Seller Training Period: 8 months
Growth Opportunities: Increase exposure and networking in Chicagoland to acquire more business in this area, extend service area south to include a greater number of agricultural projects, invest in a large pump truck to increase job opportunities
Current Owner’s Responsibilities: Oversight only, no labor; 15 hours a week or less
Financial Highlights
List Price: $3,805,000
- 2019 Revenue: $3,082,161
- 2020 Annualized Cash Flow: $1,688,098
- Profit Margin: 38%
Assets of Business
Assets: $3,339,017
- Vehicles/Equipment: $3,100,000: Pumps, placing boom, Line Dragons, parts, lubricants, tools, shop equipment, Hotsy, clamps, vehicles, forklift, trailers
- A/R: $239,017 (There is no retainage)
- Intangible Assets: Smooth processes and organization within the business, reputation for reliability, well-trained and tenured staff, committed customer base
* Over 85% Collateralized *
Clients & Services
- Commercial and industrial
- Clients
- Contractors
- Hospitals and medical centers
- Retail
- Factories
- Offices
- Project examples
- Site pads
- Slabs
- Floors
- Footings
- Hospitals
- Schools
- Airports
- Heavy industry
- Agricultural
- Clients
- Municipal and Infrastructure
- Project examples
- Tunnels
- Waste water treatment
- Roadways and highways
- Bridges
- Slabs
- Plants
- Pilings
- Project examples
- Residential
- Clients
- Single-family home owners
- Multi-family living building owners
- Homebuilders
- Contractors
- Project examples
- Footings
- Pads
- Poured walls
- Floors
- Large outdoor concrete areas (patio)
- Clients
Employees
Total Employees: 10
- 1 Operations Manager
- 7 Operators
- 1 Part-time bookkeeper
- 1 Shop labor
Growth Opportunities
- Increase exposure and networking in Chicagoland to acquire more business in this area
- Extend service area south to include a greater number of agricultural projects
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 2019 Cash Flow 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:
$937,016 x 4.1 = $3,841,766
Funding Example
Purchase Price: $3,805,000
| 12%Buyer Down Payment | $456,600 | Must be unborrowed funds |
| 20%Performance-Based Seller Note | $761,000 | 5-year term at a rate of 4.50% = a monthly loan payment of $10,578 |
| 68%Bank Loan | $2,587,400 | 10-year term at a rate of 6% = a monthly loan payment of $28,725 |
- Cash Flow: $937,016
- Annual Payment:
- To Seller: $126,936
- To Bank: $344,705
- Net Profit (after expenses and loan payment): $465,374
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: 2019 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2019 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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