Listing ID: 73358
This $1 million offering includes two healthy businesses and their owner-occupied commercial buildings – available together as a package from the same seller or each piece is available individually. While there are synergies between the two companies, both can stand alone on their own. The commercial real estate offerings are attractive investments themselves, priced at a 9.5-cap in a market commanding 10-12 capitalization rates. The offering includes equipment and vehicles valued at $350,000. The seller spends about 50 hours per week, splitting his time between the two businesses responsible for finance and human resources for a talented staff of 10. It would be a great advantage for the buyer to have expertise in engineering and manufacturing management to augment the general managers in place at each business.
- Asking Price: $870,960
- Cash Flow: $184,861
- Gross Revenue: $1,471,490
- EBITDA: N/A
- FF&E: $350,000
- Inventory: N/A
- Inventory Included: Yes
- Established: 1976
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:4,400
- Lot Size:N/A
- Total Number of Employees:10
- Furniture, Fixtures and Equipment:N/A
The buildings occupied by the two businesses can be purchased on their own as an investment, priced at a 9.5-capitalization rate in an industrial market commanding 10-12 cap rates, or as part of the overall package. Both buildings provide a buyer with the ability to expand within, and provide healthy cash flows for an independent real estate-only buyer. Long-term leases are in place or can be put in place for both businesses.
The seller’s responsibilities focus on accounting and human resources, and he is willing to provide adequate training and transition to a buyer.
The seller started the industrial design firm in 1976, growing it to approximately $700,000 in annual revenue, with the largest customer representing less than 15 percent of the firm’s revenue. The business operates on gross margins above 75 percent, with adjusted cash flow reaching nearly $100,000 in a COVID-challenged year. With every additional industrial designer the firm hires, another $125,000 in revenue and $40,000 could be added to the company’s bottom line. The machine shop operation, acquired by the seller out of bankruptcy in 2002, successfully competes against about 10 direct competitors, and is on track to post nearly $800,000 in annual revenue, a 25 percent increase over 2020’s COVID-19-depressed results and about 6 percent higher than 2019’s normal revenue. The two businesses together require a minimal $25,000 investment in annual capital expenditures – financed through cash flow.
The business was started in 1976, making the business 46 years old.
The company has 10.5 employees and is situated in a building with estimated square footage of 4,400 sq ft.
The building is leased by the company for $4,945 per Month
Why is the Current Owner Selling The Business?
There are all types of reasons why people resolve to sell companies. Nonetheless, the real factor vs the one they say to you might be 2 completely different things. For instance, they may claim "I have a lot of various commitments" or "I am retiring". For numerous sellers, these factors stand. However, for some, these may simply be excuses to attempt to hide the reality of changing demographics, increased competitors, recent reduction in earnings, or a range of various other reasons. This is why it is really crucial that you not count completely on a vendor's word, but instead, utilize the vendor's answer together with your general due diligence. This will repaint a much more reasonable image of the business's present circumstance.
Existing Debts and Future Obligations
If the existing business is in debt, which many companies are, then you will certainly need to consider this when valuating/preparing your deal. Many operating businesses finance loans so as to cover points like supplies, payroll, accounts payable, so on and so forth. Keep in mind that in some cases this can mean that revenue margins are too small. Lots of companies fall under a revolving door of taking on debt as a way to pay back various other loans. Along with debts, there may also be future commitments to consider. There might be an outstanding lease on tools or the structure where the business resides. The business may have existing contracts with vendors that need to be met or may cause penalties if canceled early.
Understanding the Customer Base, Competition and Area Demographics
Exactly how do companies in the location draw in brand-new clients? Most times, companies have repeat consumers, which form the core of their daily earnings. Specific variables such as new competition sprouting up around the location, road construction, as well as staff turn over can influence repeat consumers as well as negatively influence future revenues. One vital thing to take into consideration is the location of the business. Is it in a very trafficked shopping mall, or is it concealed from the highway? Clearly, the more people that see the business often, the higher the chance to construct a returning customer base. A final idea is the general location demographics. Is the business located in a densely inhabited city, or is it located on the outside border of town? Exactly how might the neighborhood average household earnings influence future earnings potential?