Opportunities
Contract Manufacturer of Custom Corporate & Collegiate Apparel
With nearly $60M in sales in 2020 & full management staff already in place!
Specifications
With nearly $60M in sales in 2020, this contract manufacturing company has a full management staff already in place! Their Des Moines, Iowa office handles all sales, design, and order management; their office in Vietnam is used solely for the production/manufacturing side of the business. The U.S. team of 32 is spread among several departments, including Design & Graphics, Marketing & Graphics, Web Development, Order Admin, Warehouse, Logistics, Accounting, HR, and Sales & Customer Service. The full-time team of 85 employees in Vietnam includes a Manager for each of their Cap, Bag, and Garment Departments, along with merchandisers, embroidery & graphic staff, Quality Control, pattern makers, design techs, accounting, warehouse, sourcing & procurement, and logistics personnel. Using a proprietary web platform to process and track all projects, this company’s client base consists primarily of corporate identity and specialty product distributors. With their own brand already established, they have been able to solidify themselves in the market, acting as an official outfitter/sponsor for clients. They are currently licensed with 18 colleges/universities in the U.S., enabling them to manufacture their brand with the university’s logo. This portion of the business accounts for approximately 10% of their revenue, while the other 90% is essentially through large specialty product distributors.
The design team in the US office works with each client to customize their order based on their specific requests. They create an image and load it into their proprietary website program, at which point the Vietnam team creates the sample and the US team makes sure it meets the customer’s requests. The order then moves on to the production phase in Vietnam; the logistics teams from both offices coordinate the shipping phase (by air or by sea) and makes sure the product goes to the correct port and is distributed to the customer in a timely manner. The average length of time from an order being placed to being delivered is 55-65 days.
Priced at $16,250,000, this company has the potential to grow ten-fold. A buyer already in logistics and/or manufacturing could expand what they are already doing. The brand is already established, so a buyer with marketing knowledge and abilities could expand that brand within their own customer base and truly take this business to the next level.
Business Highlights
Year Established: 1984
Location: Des Moines, Iowa (design & sales) and Vietnam (production/manufacturing)
Service Area: 90% National, 10% Regional (for licensed collegiate products)
Services: Design & Manufacturing of custom corporate apparel and collegiate apparel
Products: PPE, headwear, bags, shirts, sweatshirts, jackets, vests, pants, shorts, promotional products, etc.
Clients: Corporate Identity & Specialty Product Distributors
Average Sale Size: $3k-$4k; Extremely Diversified
Lease: Iowa: 30k sq. ft. including 24k sq. ft. warehouse; Vietnam: 24k sq. ft. including 15k sq. ft. warehouse
Reason for Selling: Huge growth potential; the business needs someone who has the ambition to grow it
Personnel: Iowa: 32 (30 FT, 2 PT); Vietnam: 85 FT
Seller Training Period: 1-2 years
Growth Opportunities: Increase brand awareness among existing customers, expand client base, pursue more collegiate partnerships, create relationships with other sponsors, supply stores with their brand
Current Owners’ Responsibilities: Management support
Service Area
- 90% National (Corporate Identity & Specialty Product Distributors)
- 10% Regional (for licensed collegiate products)
Financial Highlights
- List Price: $16,250,000
- 2020 Cash Flow: $4,161,997
- 2019 Cash Flow $2,139,976
*amounts may vary
Assets of Business
- Assets: $7,252,741
- Equipment: US: $42,088; VN: $45,595: Furniture, fixtures, computers, racking, shelving
- U.S. Inventory: $5,081,211
- VN Inventory: $2,082,947
- U.S. A/R: $1,242,192
- VN A/R: $910,783
- Intangible: Long-term loyal customer base, with some customers having 20-year tenure, strong word-of-mouth advertising
*See additional asset information in the attachments
Cash Flow Analysis
| Description of Financial Statement | P&L Statement | P&L Statement | P&L Statement | P&L Statement | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $59,990,006 | $17,873,317 | $15,499,210 | $10,005,915 | |
| Net Income Shown on Financial Statement | $3,669,527 | $967,169 | $561,961 | $110,511 | |
| ADDBACKS | |||||
| Interest | $632,759 | $1,098,606 | $275,433 | $152,961 | |
| Factoring Fees | $25,367 | $0 | $0 | $0 | |
| Late Payment Fees | $3,096 | $0 | $0 | $0 | |
| Meals & Entertainment | $5,698 | $469 | $274 | $1,525 | |
| Compensation to Owner | $110,000 | $108,335 | $110,000 | $110,000 | |
| Travel Expense | $33,797 | $17,677 | $7,669 | $8,838 | 15% personal/non-onward going |
| Cell Phone | $3,600 | $3,600 | $3,600 | $3,600 | 4 lines at $300/month |
| Pension/Profit Sharing | $3,300 | $3,150 | $3,300 | $3,300 | 3% match to owner |
| Finance Charge | $0 | $0 | $42,349 | $0 | |
| Donations | $15,611 | $0 | $0 | $0 | |
| Replacement | $-70,000 | $-70,000 | $-70,000 | $-70,000 | To replace owner roles |
| Life Insurance | $3,255 | $0 | $0 | $0 | |
| Federal Tax Expense | $2,219 | $0 | $0 | $0 | |
| Pension/Profit Sharing 2 | $3,470 | $3,470 | $3,470 | $3,470 | |
| Retirement Plan | $7,500 | $7,500 | $7,500 | $7,500 | |
| Obsolete Inventory | $1,350,000 | $0 | $0 | $0 | One-time expense: clean-up of duplicated inventory |
| Legal/Professional Fees | $62,798 | $0 | $0 | $0 | |
| Anomaly Income | $-1,700,000 | $0 | $0 | $0 | $17M in sales from face masks @ 10% profit |
| TOTAL ADDBACKS | $492,470 | $1,172,807 | $383,595 | $221,194 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $4,161,997 | $2,139,976 | $945,556 | $331,705 | |
| Profit Margin | 6.94 % | 11.97 % | 6.10 % | 3.32 % |
- $1,700,000 was factored in as income that would not be onward going, as such a large portion of sales from 2020 was from face masks.
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: 2020 Cash Flow |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 2020 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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