Specialized Trucking, Civil, and Mining Support
Over $20,000,000 in assets with $19,000,000 in backlog!
A leading player in the specialized trucking and construction support industry in Michigan, this company earned over $23,000,000 in 2018 with over $3,500,000 in cash flow and 70% of 2020 has already been contracted! Over twenty million in 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. Growth has been purposeful, and services have gradually expanded in scope to include specialized heavy hauling, heavy civil, land development, industrial reclamation, construction materials, and construction site support services. Customers include government agencies, municipalities, as well as privately owned industrial, energy, and mining companies. Operations are primarily completed in Northern Michigan, but growth could be found in expanding the existing territory.
A team of 145 work together to achieve the mission of this transportation and construction company. In addition to the owners, the leadership team of twelve includes a general manager, six project managers, a CPA, an HR manager, a purchasing manager, a maintenance manager, and a safety director. Twelve administrative staff support daily office operations while in the field, non-union mechanics and laborers as well as union drivers and operators round out the team. The owners currently work full-time in the business with one managing financial oversight while the other owner has assumed the role of CEO. They are offering an extended transition period to ensure seamless and successful operations.
- 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: 12-24 months
- Growth Opportunities: Continue growth into the energy industry, build heavy hauling revenues
- Current Owners’ Responsibilities: Owner 1: CEO, financial oversight, business development; Owner 2: Financial oversight
- List Price: $17,800,000
- Gross Sales:
- 2019: $25,715,942 Annualized
- 2018: $23,452,499
- 2017: $20,684,035
- Cash Flow:
- 2019: $3,758,932 Annualized
- 2018: $3,530,405
- 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
- Guaranteed Working capital: $1,200,000
- Backlog: $19,000,000
- 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 Statement||P&L Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$748,385||$-454,734||$-40,557||$621,587|
|Compensation to Owner||$256,179||$378,848||$378,037||$354,511|
|11% Tax on total W2 Salaries||$28,180||$41,673||$41,584||$38,996|
|Discretionary Travel/Office||$16,667||$20,000||$20,000||$20,000||Non-onward going expense|
|Replacement Salary||$-100,000||$-120,000||$-120,000||$-120,000||To retain/replace owner|
|Seller's Cash Flow = Total Addbacks + Net Income||$3,132,444||$3,530,405||$3,754,396||$3,097,321|
|Profit Margin||14.62 %||15.05 %||18.15 %||15.73 %|
- Earning over $3.5MM in cash flow for 2018
- Over 70% of 2020 has been contracted!
- Industrial companies
- Energy companies
- Mining companies
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
- Specialized heavy civil projects
- Specialized trucking
- Land development
- Land restoration
- Construction site services
- Construction support services
Total Employees: 145
- General manager
- 6 Project managers
- HR manager
- Purchasing manager
- Maintenance manager
- Safety director
- 12 Administrative staff
- Mechanics, non-union
- Drivers, union
- Operators, union
- Laborers, non-union
- Continue growth into the energy industry
- Build heavy hauling revenues
- Expand service area
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, a 2018 cash flow was used with a prescribed multiple is 5. With this information, the computation is as follows:
$3,530,405 x 5 = $17,652,025
The fair market value found above positions the business list price at $17,800,000.
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: $60,000: 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
Purchase Price: $17,800,000
12.5% Buyer Down Payment: $2,225,000
12.5% Seller Financing: $2,225,000
75% Bank Loan: $13,350,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $41,481.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $175,438.
After business expenses and loan payments, a buyer with a 12.5% down payment of $2,225,000 would retain a profit of $927,379, which results in a 42% return on investment in the first year.
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $17,800,000 with the terms listed above, the coverage ratio is 1.36.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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