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Pittsburgh Area Roofing Services w/ over $9M in Assets – 100% Commercial

Project sale size ranges from $75k to over $3.75M!

CASH FLOW
$2,683,029

Specifications

  • Price
    $13,125,000

  • Revenue
    $18,610,635

  • Cash Flow
    $2,683,029

  • Location
    Pittsburgh, Pennsylvania

  • Service Area
    Within 75-mile radius of Pittsburgh

  • Profit Margin
    19%

  • Employees
    90 W2 Employees: 15 salaried support staff + 75 hourly craftsmen & sheet metal workers; subcontractors used as needed for ancillary work (95% is self-performed)

  • Reason for Sale
    Other endeavors

  • Intangible Assets
    Word-of-mouth referrals, strong foothold in the greater Pittsburgh area, long-standing client relationships

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 StatementP&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
2020201920182017
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$39,648401k 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 Margin18.73 %14.15 %6.23 %0.69 %
Profit Margin: 19%

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

Purchase Price:

$13,125,000

$
%
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:
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: %

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210 N 78th St. 2nd Floor
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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.