Listing ID: 77476
Located in the Silicon Valley vicinity of the San Francisco Bay Area, this business repairs, services, distributes, and manufactures electric motors, pumps, and related products and replacement parts, serving northern California for five decades.
The business is profitable and highly-respected, serving hundreds of regular recurring industrial and governmental customers, with over 1,000 customers in the database. One of the many intangible but valuable assets is the very favorable market exposure to several hundreds of loyal, highly-satisfied commercial and industrial customers who would be premier prospects for additional products and services.
The staff has many decades of experience and expertise. The principal owner/CEO of the business is available for a smooth and orderly transition for several months or more, at the option of the new owner. The employees and managers do not know that a sale is contemplated, and the seller has every reason to believe that all would stay on at the new owner’s option. The owner-manager works approximately three days per week and is open to staying on for a structured transition, short- or long-term.
The business operates from a leased 6,000+/- sq ft building with another 1,000 sq. ft. outside, plus parking. Total rent is $9,900 plus CAM-NNN of about $550. The lease has over one year remaining.
Services include repair, rewinding, and rebalancing, and rebuilding of motors and pumps up to 1000 HP. Scores of prominent product lines are offered (to be disclosed on signing an NDA).
The owners of this business want to keep the potential sale highly confidential. They are willing to share complete financial data for several years tax returns, bank statements, P&L, balance sheet, customer records, etc. but only after obtaining an NDA and basic evidence of financial resources from a prospective buyer, engaging in a discussion with the seller and the broker, and the buyer showing positive evidence of serious interest in an acquisition.
Gross Sales Revenues: 2020 see below; 2019 $1,716,675 (29.5% increase over 2018); 2018 $1,325,852; 2017 $1,846,980; 2016 $1,727,517. While 2018 sales were uncustomarily low, 2019 recovered with the resumption of on-the-road sales representation. In late 2019, policies were implemented to change contract pricing procedures to increase gross revenues on same-customer sales by about 7% and net profit by over 30%.
In 2020, sales were approximately $1.2MM, down only 30%, despite the Covid-19 pandemic. This reflects the impact the virus had on industrial operations in general, but also reflects the sustainability of the business, staying open as an essential service and still preserving 70% of prior year sales. P&L for 2020 and SDE for 2020 are still being prepared. In 2021, sales are returning to previous levels.
Customary Seller’s Discretionary Earnings (‘SDE’) for one owner-operator was calculated by the Seller to be about $265,000 (2019); the SDE is earned by the owner-operator while working 60% of full-time, which suggests an SDE for a full-time owner-operator of over $400K.
The Transaction: The business is offered for a total asking price of $1,200,000, subject to negotiation and terms. This is for the entire business: tangible assets, e.g. equipment, machinery, furniture, fixtures, etc.; and intangible assets, e.g. website, trademark, logo, trade name, telephone number, methods of operation, vendor/supplier resources, customer lists, etc.; and goodwill. It does not include cash, accounts payable, accounts receivable, or corporate entity. Inventory (approx. $20,000-$30,000) is extra at actual cost. Some seller financing may be available for a qualified buyer with adequate collateral. The business should be qualified for SBA financing.
Exclusive Broker: Tim Cunha, J.D., Calif. DRE#01919755
Note: All data on this business are provided by the Seller for information purposes only, and no representations are made by the Broker as to accuracy. The Broker has made no independent verification of the data contained herein. The Broker represents the Seller and does not represent the Buyer. The Buyer is advised to perform independent due diligence and seek the advice of qualified professionals prior to purchasing the Business.
- Asking Price: $1,200,000
- Cash Flow: $265,000
- Gross Revenue: $1,200,000
- EBITDA: N/A
- FF&E: N/A
- Inventory: N/A
- Inventory Included: N/A
- Established: 1968
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:6,000
- Lot Size:N/A
- Total Number of Employees:10
- Furniture, Fixtures and Equipment:N/A
Leased 6,000+/- sq ft building with another 1,000 sq. ft. outside, plus parking. Total rent is $10,500. The current lease has over one year remaining.
The venture was founded in 1968, making the business 54 years old.
The company has 10 employees and resides in a building with approx. square footage of 6,000 sq ft.
The building is leased by the company for $10,500 per Month
Why is the Current Owner Selling The Business?
There are all sorts of reasons individuals decide to sell companies. However, the genuine factor vs the one they tell you might be 2 totally different things. For instance, they may state "I have way too many various commitments" or "I am retiring". For numerous sellers, these reasons are valid. But, for some, these may simply be excuses to attempt to hide the reality of transforming demographics, increased competitors, current reduction in revenues, or a variety 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 solution in conjunction with your general due diligence. This will repaint a more practical picture of the business's existing circumstance.
Existing Debts and Future Obligations
If the current entity is in debt, which numerous companies are, then you will need to consider this when valuating/preparing your offer. Lots of companies finance loans so as to cover things such as supplies, payroll, accounts payable, and so on. Remember that occasionally this can mean that profit margins are too thin. Numerous companies come 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 think about. There might be an outstanding lease on equipment or the structure where the business resides. The business might have existing agreements with vendors that have to be satisfied or might cause penalties if canceled early.
Understanding the Customer Base, Competition and Area Demographics
Exactly how do companies in the area bring in brand-new consumers? Most times, businesses have repeat consumers, which develop the core of their day-to-day profits. Particular variables such as brand-new competitors growing up around the area, roadway building, as well as personnel turn over can affect repeat clients and negatively affect future earnings. One crucial thing to consider is the placement of the business. Is it in a very trafficked shopping mall, or is it concealed from the highway? Undoubtedly, the more people that see the business on a regular basis, the better the possibility to build a returning customer base. A last idea is the basic area demographics. Is the business placed in a densely populated city, or is it situated on the outside border of town? Exactly how might the local typical home earnings influence future revenue potential?