Business Overview

25-year history of success and profitability

• Consistent, recurring revenue streams
• Many loyal, repeat customers
• 2020 revenue = $2.5M
• 2020 cash flow = $663,500
• Business is about 60/40 residential to commercial jobs
• Uses well established subcontracting crews
• Well trained and highly capable employees
• Many leads generated by outside salesman
• Does a lot of work for large management companies
• Will transition for longer than average time
• 2020 was a strong year and 2021 is even stronger
• Established more than 25 years ago
• A+ rating with the Better Business Bureau
• Asking price = $1.5M
• Value at 2.5x SDE = $1,658,750

Financial

  • Asking Price: $1,500,000
  • Cash Flow: $663,495
  • Gross Revenue: $2,575,414
  • EBITDA: N/A
  • FF&E: N/A
  • Inventory: N/A
  • Inventory Included: N/A
  • Established: N/A

Why is the Current Owner Selling The Business?

There are all types of reasons people choose to sell operating businesses. Nonetheless, the true factor vs the one they tell you might be 2 entirely different things. As an example, they may claim "I have way too many other commitments" or "I am retiring". For lots of sellers, these factors are valid. However, for some, these might just be justifications to attempt to hide the reality of altering demographics, increased competitors, current decrease in profits, or a variety of other factors. This is why it is really important that you not count completely on a seller's word, yet rather, utilize the seller's solution along with your general due diligence. This will paint an extra sensible image of the business's present situation.

Existing Debts and Future Obligations

If the existing business is in debt, which lots of companies are, then you will certainly need to consider this when valuating/preparing your offer. Numerous operating businesses take out loans in order to cover things like supplies, payroll, accounts payable, so on and so forth. Bear in mind that sometimes this can suggest that earnings margins are too small. Many businesses fall under a revolving door of taking on debt as a way to pay back various other loans. Along with debts, there may likewise be future obligations to think about. There might be an outstanding lease on tools or the structure where the business resides. The business may have existing contracts with vendors that must be fulfilled or might lead to penalties if terminated early.

Understanding the Customer Base, Competition and Area Demographics

How do businesses in the area bring in brand-new customers? Most times, businesses have repeat consumers, which develop the core of their day-to-day earnings. Specific elements such as brand-new competition growing up around the location, road construction, and also employee turnover can impact repeat customers as well as adversely impact future revenues. One crucial thing to consider is the placement of the business. Is it in a very trafficked shopping center, or is it hidden from the highway? Certainly, the more people that see the business regularly, the better the opportunity to build a returning customer base. A final thought is the basic location demographics. Is the business situated in a largely populated city, or is it located on the edge of town? How might the local median family income impact future income prospects?