Opportunities
Pittsburgh Area Roofing Services w/ over $9M in Assets – 100% Commercial
Project sale size ranges from $75k to over $3.75M!
Specifications
Project sale size for this Pittsburgh area roofing company ranges from $75k to over $3.75M! With 100% commercial clients, their focus is on larger industrial and institutional projects. Offering reroofing (50% of their revenue) new construction (40%) and repair & maintenance (10%), this team of 90 employees is comprised of 75 craftsmen and sheet metal workers, along with 15 salaried support staff. They self-perform 95% of their work, subbing out only as needed based on project size and ancillary services in the contract. Their clientele is a diverse assortment of consultants, general contractors, and private owners; this business is highly sought after in the greater Pittsburgh region. They currently have 28 jobs that are in various stages of progress. With over $9M in assets, the bank loan is nearly 70% collateralized.
The company is a mixture of union and non-union, with the union side making up 80% of their total sales and 60% of their current projects. Generally, they are the largest employer on a month-to-month basis in the union, they employ an average of 44 roofers and 15 sheet metal workers per day with a fairly even split of new construction vs. renovation, and mostly in the public sector. There are a large number of institutions in the area that require union members to perform their projects. The non-union side is more in the private sector, with 80% of their revenue comprised of new construction.
With year-over-year growth since 2017, this business did over $18M in sales in 2019 and is in a prime position for growth. Pursuing more maintenance work and roofing-related sheet metal projects would certainly increase revenue. With already long-standing client relationships in place, organic growth is inevitable if services are expanded.
Business Highlights
Year Established: 1999
Location: Pittsburgh, Pennsylvania
Service Area: Within 75-mile radius of Pittsburgh
Services: 50% reroofing, 40% new construction, 10% repair & maintenance
Clients: 100% commercial: Consultants, General Contractors, private owners
Building: 12,500 sq. ft. building, 5,800 of which is office space, all on 3.4 acres
Reason for Selling: Other endeavors
Personnel: 90 W2 Employees: 15 salaried support staff + 75 hourly craftsmen & sheet metal workers; subcontractors used as needed for ancillary work (95% is self-performed)
Seller Training Period: 6-12 months
Growth Opportunities: Pursue more roof maintenance projects as well roofing-related sheet metal projects (coping, gutters, downspouts, etc.)
Current Owners’ Responsibilities: Owner 1: Operations Management, Estimating, Accounting; Owner 2: day-to-day operations; Owner 3: Absentee
Cash Flow Analysis
| Description of Financial Statement | P&L Statement Combined Profit & Loss Jan-Sept 2020 | P&L Statement Combined Financial Statements | P&L Statement Combined Financial Statements | P&L Statement Combined Financial Statements | Notes |
| 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $10,742,752 | $18,610,635 | $14,762,162 | $11,126,607 | |
| Net Income Shown on Financial Statement | $1,642,132 | $2,319,579 | $572,373 | $-262,952 | |
| ADDBACKS | |||||
| Depreciation | $228,924 | $49,964 | $45,282 | $65,036 | |
| Interest | $-297 | $9,643 | $41,724 | $0 | |
| Auto Expense | $45,000 | $60,000 | $60,000 | $60,000 | $5,000/month |
| Pension | $32,429 | $54,719 | $49,840 | $39,648 | 401k matching at $17,238/year and bonus of $26k/year |
| Dues | $22,500 | $23,439 | $22,401 | $27,880 | $2,500/month - golf |
| Life Insurance | $3,975 | $15,900 | $15,900 | $15,900 | $5,300/year for 3 Life & Disability policies |
| Meals & Entertainment | $34,657 | $96,078 | $109,258 | $118,161 | |
| Rent | $1,300 | $3,152 | $1,133 | $8,125 | $13,500/month onward going - owns real estate |
| Donations | $1,300 | $910 | $1,473 | $4,440 | |
| Amortization | $352 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $370,140 | $313,805 | $347,011 | $339,190 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $2,012,272 | $2,633,384 | $919,384 | $76,238 | |
| Profit Margin | 18.73 % | 14.15 % | 6.23 % | 0.69 % |
Financial Highlights
- List Price: $13,125,000
Owner Profit / Cash Flows
Profit Margins
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 <INSERT> cash flow average value 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:
$2,683,029 x 4.9 = $13,146,842
Funding Example
Purchase Price: $13,125,000
| 15%Buyer Down Payment | $1,968,750 | Must be unborrowed funds |
| 15%Seller Financing or Equity | $1,968,750 | 5-year term at a rate of 4.50% = a monthly loan payment of $36,703 |
| 70%Bank Loan | $9,187,500 | 10-year term at a rate of 6% = a monthly loan payment of $102,000 |
- Cash Flow: $2,683,029
- Annual Payment:
- To Seller: $440,441
- To Bank: $1,224,001
- Net Profit (after expenses and loan payment): $1,018,587
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 Annualized 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 Annualized 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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