Opportunities
Industrial Cleaning and Maintenance — 88% Collateralized
Over 250 clients for oil, gas, and utility turnaround services!
Specifications
This oil field service company specializes in turnaround and industrial cleaning services for oil, gas and utility companies and is 88% collateralized! Handling all aspects for the disposal of drilling waste in the oil and gas sector, this company currently has 250 clients with 50 of those recurring. 70% of their revenue comes from turnaround and industrial cleaning services; the other 30% is a mixture of maintenance, water delivery, vegetation control, water truck services, mobile steaming, and equipment rentals. Personnel includes 1 Regional Manager, 1 Dispatcher, 1 Safety Officer, 1 Mechanic, 2 Junior Mechanics, 1 Shop Hand/Assistant, and 15-22 Operators/Assistants. The 2 owners work remotely doing general business oversight and accounting & payroll management. Their vast array of high-quality equipment is comprised of hydro vacs, combo vacs, tank trucks, straight vacs, water trucks, mobile steamers, pressure trucks, and maintenance units. The business is COR Certified, Comply Works Certified, and belongs to ISNetworld.
The company’s leased space consists of an 11-acre industrial fully fenced yard site, a 750 sq. ft. office with 4 maintenance bays, and a 5-bedroom crew house.
Promoting their one-stop-shop service, hiring a salesperson, increasing truck utilization, and expanding into neighboring communities would undoubtedly grow the business and increase revenue.
Some key information:
- Tremendous signage, word-of-mouth referrals, and a rock-solid reputation gives this company a firm grasp on the area.
- 70% of the company’s revenue comes from turnaround and industrial cleaning services.
- This company currently has 250 clients with 50 of those recurring.
What You Need to Know
- One Stop Shop: This company is service based, specializing in turnaround services and disposal of oil and gas waste. They pride themselves on offering a full one stop shop service to their clients. From drilling to fracking to well servicing, their specialized fleet and highly trained staff are available 24 hours a day, 7 days a week. Although traditionally an environmental company, they have switched from drilling to production and service. They service all the batteries, spill recovery and clean-up, and turnaround. They handle disposal of oil and gas waste; at this point, it’s more trucking and oilfield services than environmental drilling.
- Remote Ownership: The company was started in 1999 by the current owners as an environmental consulting company handling all aspects of drilling waste sampling and disposal in the oil and gas sector. Since that time, they have focused the company's attention to the trucking side of drilling waste disposal. The owners run the business remotely.
- Complete Turnaround Services: In 2005, they purchased their first vac truck and have been slowly adding to the fleet to our current 24-unit tally. Their latest additions include tank trucks, a pressure truck and 2 single axle combos. These new units help to complete the service package for their clientele. Their combo vacs are equipped with Viking pump and Gamajets for fast and efficient zero entry tank cleaning. Their fully tooled maintenance crews are equipped with light duty pickers facilitating complete turnaround services.
- Emphasis on Safety: Safety is the number one priority. Their employees’ safety is valued above everything else. They are very proud of their safety record and attribute it to their professional fully trained staff.
- Certifications:
- COR Certified
- Comply Works Certified
- ISNetworld Members
- Holding the above certifications keep this company on the vendor list
Business Highlights
- Revenue: $5,645,066
- Cash Flow: $1,002,929
- Year Established: 1999
- Location: 348 km from Edmonton, CAN
- Service Area: Alberta Region
- Services: Disposal of drilling waste in oil and gas sector, turnaround and industrial cleaning services
- Clients: Alberta-based oil and gas companies, local utility companies, municipal and rentals
- Certifications: COR Certified, Comply Works Certified, ISNetworld Member
- Lease: 11-acre industrial fully fenced yard site, 750 sq. ft. office w/ 4 maintenance bays + 5-bedroom crew house
- Reason for Selling: Strategic exit planning
- Personnel: 24-31: 2 owners, 1 regional manager, 1 dispatcher, 1 safety officer, 1 mechanic, 2 junior mechanics, 1 shop hand/assistant + 15-22 operators/assistants
- Seller Training Period: 6-12 months
- Growth Opportunities: Promote one-stop-shop services, increase truck utilization, expansion into neighboring communities
- Current Owners’ Responsibilities: Owner 1: general oversight of business; Owner 2: accounting
Personnel
- Regional Manager
- Employed since September 2017
- Responsibilities:
- Runs operations day-to-day without Owners
- Owners didn’t come to Valleyview at all during COVID. Regional Manager handled everything.
- Dispatch
- Phone calls
- Business Development
- Sales
- Runs operations day-to-day without Owners
- Expecting an employment agreement and would be interested in the option of ownership through sweat equity in the future
- Dispatcher
- Safety Officer
- Mechanic
- Employed for a year
- 2 Junior Mechanics
- Shop Hand/Assistant (Swamper)
- 15-22 Operators/Assistants (Swampers)
Owners & Transition
- 2 Owners
- Both hold 50% of the company
- Absentee
- Responsibilities:
- Owner 1: General oversight & management
- Oversees operations, makes large decisions for the direction of the company, purchases additional vehicles for the fleet if the need arises and is affordable, and helps with payroll and some administration - mainly allocation of costs.
- Owner 2: Accounting
- All the bookkeeping, part of payroll, accounts payable, and supervises accounts receivables
- Owners operate remotely and have been relying on those in the field more and more to take over the operating role. They only spend 7-10 days a month in the area. They are 100% confident in Regional Manager and the local operators in place.
- Upon sale, the company would only need to hire someone in an administrative role to take over Owner 2's role, but this would be an easy role to fill.
Services
This company classifies themselves as a Production Service Company. They handle the disposal of oil and gas waste, with a majority of their services being trucking and oilfield services. Oilfield waste disposal is their main service, with actual drilling being only around 10% of what they do.
Their service include:
- Disposal of drilling waste
- Turnaround and Industrial Cleaning Services
- Dust Suppression
- Culvert Thawing & Flushing
- Heavy Equipment Washing
- Rig Cleaning
- Vegetation Control
- Hydro Testing
- Earthmoving & Snow Removal
Financial Highlights
- List Price: $2,925,000 CAD
- Gross Sales:
- 2020: $4,726,867
- 2019: $5,645,066
- 2018: $4,613,028
- 2017: $3,524,145
- Cash Flow:
- 2020: $688,566
- 2019: $1,002,929
- 2018: $818,665
- Assets Included in Purchase*
- Equipment/Vehicles: $1,780,985: Hydro vacs, combo vacs, tank trucks, straight vacs, water trucks, mobile steamers, pressure trucks, maintenance units
- A/R: $800,000
- AP: $300,000
- Working Capital Included: ~$500,000
- Intangible Assets: Solid reputation in the region, recurring client base
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement FYE Sept 30, 2020 | P&L Statement FYE Sept 30, 2019 | P&L Statement FYE Sept 30, 2018 | P&L Statement FYE Sept 30, 2017 | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $4,726,867 | $5,645,066 | $4,613,028 | $3,524,145 | |
| Net Income Shown on Financial Statement | $382,296 | $204,072 | $250,442 | $241,804 | |
| ADDBACKS | |||||
| Management Salaries | $90,000 | $33,000 | $44,000 | $21,000 | absentee owner |
| Meals & Entertainment | $0 | $0 | $0 | $293 | |
| Interest | $8,795 | $20,988 | $13,067 | $0 | |
| Amortization | $495,746 | $656,664 | $487,801 | $259,064 | |
| Interest on Long Term Debt | $22,646 | $2,885 | $50,535 | $26,715 | |
| Personal Fuel | $7,200 | $7,200 | $7,200 | $7,200 | $600/month |
| Personal Travel | $18,000 | $18,000 | $18,000 | $18,000 | $1,500/month |
| Owners Employee Benefit Program | $2,820 | $2,820 | $2,820 | $2,820 | $235/month |
| Cell Phone | $4,800 | $4,800 | $4,800 | $4,800 | $400/month |
| Health Spending | $34,267 | $0 | $0 | $0 | |
| Wage Subsidy | $-378,004 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $306,270 | $746,357 | $628,223 | $339,892 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $688,566 | $950,429 | $878,665 | $581,696 | |
| Profit Margin | 14.57 % | 16.84 % | 19.05 % | 16.51 % |
- Profit Margin: 17%
- Backlog is up and very healthy.
- The current year is slightly down due to COVID, but by looking at 2020’s monthly revenues compared to 2019’s, we can see that if it were not for COVID-19 the company would be up $132,000 in profits. In the months of July and August, their revenues have returned to higher than in 2019.
Clients
- Alberta-based oil and gas companies
- Local utility companies
- Municipalities
Their client base is loyal. Their main clients do not sign contracts with any oilfield service company for that may complicate and delay their needs. Occasionally contacts arise on a short term, job by job basis.
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Funding Example
Valuation
Differentiators
Growth Opportunities
- Promote one-stop-shop service offerings
- Increase truck utilization
- Hire sales staff
- Expand into neighboring communities
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: 4 Year Average |
$ |
| Annual Debt Service: | $ |
| RATIO: |
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
|
Cash Flow: 4 Year Average |
$ |
| 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
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