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Niche Construction Site Support

Diverse client base of municipalities, mining, commercial and industrial clients!

CASH FLOW
$4,371,872

Specifications

  • Price
    $19,750,000

  • Revenue
    $25,043,020

  • Reason for Sale
    Strategic exit planning

  • Location
    Northern Michigan, upper peninsula

  • Service Area
    Northern Michigan (80%), regional

  • Profit Margin
    17%

  • Lease
    Headquarters: 57,000 sq. ft.: 10,000 sq. ft. maintenance shop, warehouse, corporate offices, conference rooms, parts warehouse, software server, kitchenette, storage

  • Equipment
    20,000,000: Office equipment, furniture, fixtures, tools, heavy equipment and machinery; Transportation Equipment and Vehicles: $10,260,000: heavy haul tractors and trailers

  • Employees
    145: Leadership (12) includes a general manager, 6 project managers, CPA, HR manager, purchasing manager, maintenance manager, safety director supported by 12 administrative staff

With over $20MM in assets, this Michigan based company offers services in trucking, mining, site management, and much more!  Assets include heavy-haul tractors and trailers, heavy earth moving equipment, vehicles, mechanical equipment, tools, as well as office equipment, furniture, and fixtures.  Careful consideration for the acquisition of assets has allowed this company to manage their risk in a responsible and forward-thinking manner.  Customers include government agencies, municipalities, as well as privately owned industrial, energy, and mining companies.  The business has over 145 employees and the owner oversees all of the financial work. With over $20M in assets, this business is fully collateralized and the seller will roll equity or finance 10-15%!

 

Provides Specialized Construction Support

  • Portable water solutions
  • Vacuum truck services
  • Portable power supply
  • Temporary & portable storage units

 

Dust Control Service

  • Chloride Transport
  • Chloride application
  • Road management and maintenance
  • Maintain $3M gallons of chloride pond

 

Construction Material

  • Operates 4 aggregate pits
  • Provide & deliver aggregate and gravel
  • Pit planning and development

 

Trucking and Transportation

  • ·         Mobil mechanics
  • ·         Off road material hauling
  • ·         Large fleet of semi’s and dump trucks

 

Snow Management in Upper Peninsula and Ice Control Materials

Business Highlights

  • Year Established: 2000
  • Location:  Northern Michigan
  • Service Area:  Northern Michigan (80%), regional (20%)
  • Services: Specialized heavy equipment projects and trucking, land development and restoration, construction site services and support
  • Clients: Governments, municipalities, industrial companies, energy and mining companies
  • Lease: Headquarters: 57,000 sq. ft.: 10,000 sq. ft. maintenance shop, warehouse, corporate offices, conference rooms, parts warehouse, software server, kitchenette, storage
  • Reason for Selling: Strategic exit planning
  • Personnel: 145: Leadership (12) includes a general manager, 6 project managers, CPA, HR manager, purchasing manager, maintenance manager, safety director supported by 12 administrative staff
  • Seller Training Period: 2-3 years
  • Growth Opportunities: Continue growth into the energy industry, build heavy hauling revenues
  • Current Owner's Responsibilities: CEO, financial oversight, business development 

Financial Highlights

  • List Price: $19,750,000
  • Gross Sales:
    • 2019: $25,043,020
    • 2018: $23,452,499
    • 2017: $20,684,035
    • 2016: 19,692,205
  • Cash Flow:
    • 2019: $4,371,872
    • 2018: $3,834,482
    • 2017: $3,806,345
    • 2016: $3,301,965
  • Assets Included in Purchase*
    • Equipment: $9,825,000: Office equipment, furniture, fixtures, tools, heavy equipment and machinery
    • Transportation Equipment and Vehicles: $10,260,000: heavy haul tractors and trailers
    • Inventory: $600,000: Materials and parts
    • o   Guaranteed Working capital: $700,000
    • o   Pre-paid Expense: $280,000
    • Backlog:  $19,300,000
    • Intangible Assets: Long-term relationships with customers, diverse services, knowledgeable and trusted team, few direct competitors in the area

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnTax ReturnNotes
2019201820172016
GROSS SALES$25,043,020$23,452,499$20,684,035$19,692,205
Net Income Shown on Financial Statement$265,206$-454,734$-40,557$621,587
ADDBACKS
Compensation to Owner$381,374$378,848$378,037$354,511
11% Tax on total W2 Salaries$41,951$41,673$41,584$38,996
Depreciation$2,912,098$3,141,546$3,003,204$1,915,316
Amortization$18,399$21,119$19,306$16,300
Interest$534,616$481,953$402,822$230,611
Promotional$20,000$20,000$20,000$20,000Hockey suite
Discretionary Travel/Office$22,908$50,822$20,876$21,395Personal Travel, business travel is in COGS
Replacement Salary$-200,000$-200,000$-200,000$-200,000To retain/replace owner
Rent$-18,000$-18,000$-18,000$-18,000Onward rent is $225k
Auto Lease$15,000$15,000$15,000$15,000Personal Lease
Pension for Owner$73,387$67,502$80,726$201,56635% owners
Owner's Life Insurance$26,302$26,302$26,978$26,000
Consulting Fee$192,720$192,720$0$0Non-onward going amount of $16,060/month - for purchased business in 2018
Owner Family Fuel$18,000$18,000$18,000$18,000$1,500/month
Meals/Entertainment$28,236$30,866$18,369$20,68350%
Ransomware$18,000$0$0$0One Time Expense
Owner's Health & Wellness$21,675$20,865$20,000$20,000Owner's Personal Trainer
TOTAL ADDBACKS$4,106,666$4,289,216$3,846,902$2,680,378
Seller's Cash Flow = Total Addbacks + Net Income$4,371,872$3,834,482$3,806,345$3,301,965
Profit Margin17.46 %16.35 %18.40 %16.77 %
  • Earning over $3.9MM in cash flow for 2019
  • Over 70% of 2020 has been contracted!

Clients

  • Governments
  • Municipalities
  • Industrial companies
  • Energy companies
  • Mining companies

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Specialized heavy civil projects
  • Specialized trucking
  • Land development
  • Land restoration
  • Construction site services
  • Construction support services

Personnel

Total Employees: 145

  • Leadership
    • General manager
    • 6 Project managers
    • CPA
    • HR manager
    • Purchasing manager
    • Maintenance manager
    • Safety director
  • 12 Administrative staff
  • Mechanics, non-union
  • Drivers, union
  • Operators, union
  • Laborers, non-union

Growth Opportunities

  • Continue growth into the energy industry
  • Build heavy hauling revenues
  • Expand service area

Valuation Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.

For this business, the 2019 cash flow was used with a prescribed multiple of 4.9.  With this information, the computation is as follows:

$4,371,872      x          4.5       =          $19,673,424

The fair market value found above positions the business list price at $19,750,000.

Justification of the multiple:

  • Equipment and Vehicles: $10,000,000: Office equipment, furniture, fixtures, heavy equipment and machinery, tools, heavy haul tractors and trailers
  • Inventory: $600,000: Materials and parts
  • Working capital: $2,870,000
  • Pipeline: $15,000,000
  • 60% of 2020 is contracted!
  • Long-term relationships with customers
  • Diversified services that are in-demand in the region
  • Plenty of growth opportunities in the area
  • Few direct competitors in the region

Funding Example

Purchase Price:                           $19,750,000

12.5%Buyer Down Payment:       $2,468,750

12.5%Seller Financing:                $2,468,750

75%Bank Loan:                           $14,812,500

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $46,025.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $164,657.

After business expenses and loan payments, a buyer with a 12.5% down payment of $2,468,750 would retain a profit of $1,098,254, which results in a 44% return on investment in the first year.

A lender is required to have a minimum 1.3 coverage ratio for any business loans extended. At a proposed purchase price of $19,750,000 with the terms listed above, the coverage ratio is 1.38. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$19,750,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

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: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.