Opportunities
Third Party Logistics, Order, Fulfillment & Manufacturing Support
Foreign Trade Zone on premises!
Specifications
Foreign Trade Zone on premises! This third-party logistics business has been well-established in Northern California for over 35 years at eight different locations. Providing manufacturing support, warehousing, order fulfillment, transportation management, and customized supply chain solutions, this company has a solid foundation and relationships with government and industry organizations. The team of over 125 highly qualified and experienced personnel includes the leadership team, plus project managers, general managers, forklift operators, packers, material handlers, and warehouse managers. The current owner is retired and lives out of state. The owner is willing to carry a 15% promissory note or equity roll to show invested interested in the business.
Manufacturing support includes raw material kitting, lean production line manufacturing, sequencing, build & test process, and vendor managed inventory. Warehousing capabilities are comprised of customized storage options, customized receiving, digital tracking, and temperature stability. The company prides itself on quality order fulfillment by providing product handling expertise, branded packaging, accurate documentation, and they use EDI (Electronic Data Interchange) software to ensure accurate order processing and fulfillment. They have extensive knowledge of packing, crating, and shipment requirements for different countries. Handling transportation needs, whether local, regional, statewide, national, or global, has been one of many ways this business has built a solid reputation. The company meets the needs of well-known high-tech clients and is in the process of expanding business into Pharma programs and specialized designated warehousing for clients.
A few growth opportunities would be to expand pharmaceutical accounts, more fully utilize the foreign trade zone on premises, cover more needs of current clients, and develop more dedicated specific warehousing for specific clients.
Business Highlights
- Year Established: 2004
- Location: 8 locations in Northern California with nationwide service area
- Services: Manufacturing support, warehousing, order fulfillment, transportation management, supply chain solutions
- Clients: Domestic and international clients ranging from manufacturing to technology to pharmaceutical
- Typical Contract Length: 3-5 years; two major contracts overs 15 years, several over 10 years
- Certifications: Foreign Trade Zone (FTZ), 3PL Provider – Pharam, Western Regional Minority Supplier Development Council – Minority Business Status, Supplier Clearing House—Minority Business Enterprise, ISO 9001:2015 and TSA Certified
- Reason for Selling: Retired out of state 2 years ago
- Personnel: 125+: Includes CEO, COO, VP, Director of Business Development, HR Director, Accounting Director, plus Project Managers, General Managers, forklift operators, packers, material handlers, warehouse managers
- Seller Training Period: 12-18 months, if desired
- Growth Opportunities: Expand pharmaceutical accounts, more fully utilize the foreign trade zone on premises, cover more needs of current clients, and develop more dedicated specific warehousing for specific clients
- Current Owner’s Responsibilities: Retired, lives out of state
Financial Highlights
- List Price: $23,850,000
- Gross Sales:
- 2020: $27,102,334 Annualized
- TTM: $26,471,307
- Cash Flow:
- TTM: $4,773,570
- Assets Included in Purchase*
- Equipment: ~$3.3M Office equipment, furniture, fixtures, computers, medical equipment, trade shows equipment, tractors & trailers, forklift & generator A/R: $3.5M on average
*amounts may vary, assets may be depreciated, replacement cost, or fair market value
Cash Flow Analysis
| Description of Financial Statement | P&L Statement August 2019-July 2020 | P&L Statement 2019 | Tax Return | Tax Return | Tax Return | Notes |
| TTM (excluding December) | Statement | 2018 | 2017 | 2016 | ||
| GROSS SALES | $27,753,003 | $40,175,397 | $68,544,313 | $60,625,391 | $49,788,992 | |
| Net Income Shown on Financial Statement | $4,059,093 | $4,774,639 | $7,415,590 | $3,107,320 | $2,342,983 | |
| ADDBACKS | ||||||
| Compensation to Owner | $0 | $150,000 | $151,040 | $250,771 | $157,572 | Lives out of state; no replacement needed; President in place |
| Depreciation | $27,822 | $0 | $599,994 | $1,823,061 | $2,108,317 | |
| Interest | $0 | $38,229 | $160,860 | $171,511 | $64,848 | |
| Depreciation & Amortization | $0 | $704,353 | $0 | $0 | $0 | |
| 11% Tax on total W2 Salaries | $0 | $16,500 | $16,614 | $27,585 | $17,333 | |
| One-Time Income | $-229,000 | $-229,000 | $0 | $0 | $0 | One-time favorable income as a result of discontinued operations - due to recaptured depreciation and reserve accounts being closed |
| COVID Expense | $200,000 | $0 | $0 | $0 | $0 | April & May contain approximately $100,000 each in one-time COVID related expenses that were not reimbursed by customers |
| Commission | $715,655 | $753,499 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $714,477 | $1,433,581 | $928,508 | $2,272,928 | $2,348,070 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $4,773,570 | $6,208,220 | $8,344,098 | $5,380,248 | $4,691,053 | |
| Profit Margin | 17.20 % | 15.45 % | 12.17 % | 8.86 % | 9.42 % |
- Sellers Cash Flow Analysis: 2018 was an abnormally high revenue year. During the last 2 quarters of 2017 and all of 2018, the company supported one customer’s requirements for a project during a huge ramp-up that required the company to 1. Add 400 employees 2. Add an additional 3rd shifts 3. Purchase and operate 4 VLM (vertical life machines systems) and 2 mobile robots. That project has moved to another providers. The company continues to support the customer.
Clients
- Large international clients ranging from pharmaceutical to manufacturing
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Manufacturing Support
- Warehousing
- Order Fulfillment
- Transportation Management
- Customized supply chain solutions
Personnel
- 125+: includes CEO, COO, Vice President, Director of Business Development, HR Director, Accounting Director, plus Project Managers, General Managers, forklift operators, packers, material handlers, warehouse managers, etc.
Growth Opportunities
- Expand to low-tech industries that don’t require special certifications
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 TTM cash flow was used with a prescribed multiple of 5. With this information, the computation is as follows:
$4,773,570 x 5 = $23,867,850
The fair market value found above positions the business list price at $23,850,000.
Funding Example
Purchase Price: $23,850,000
Seller is willing to carry a 5% Promissory Note or Equity Roll
*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.
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