Listing ID: 83955
Business Overview
During the 17 years that Praxis Business Brokers has been selling businesses, we rarely offer for sale a small business with all these attributes:
1. $1.0 (+) million in revenues
2. SDE (four year average) exceeding 35% of revenues
3. No customer concentration
4. Non-Union
5. Unparalleled barriers to entry
6. Proprietary product line
7. Impressive facility in great location
8. Offered at an attractive listing price of 3.75x SDE
9. Clean CPA prepared financials (without silly addbacks on SDE calculations)
10. A balance sheet with less than $5,000 of total liabilities
The listed company is a 26 year old engineering business with its core competency in design and manufacturing of state-of-the-art engineered industrial electronics products. The company supports customers with technical expertise and fast turn-around repair of both its own and competitors’ products.
The company has an outstanding website which gives customers insight in the business’s capabilities which include its standard lines of proprietary industrial electronics products, engineered and custom-made products as well as applications insights in different industries.
Located in a desirable West Michigan suburb at a busy intersection of two well-traveled city streets and minutes from two interstate highways, the business occupies a modern, attractive 7,000 square foot space (in a center for businesses) with a highly favorable lease at less than 4.0% of revenues. In addition to the owner, the company employs an office manager and several engineers/technicians. The least senior employee has four years of experience. Average annual employee compensation exceeds $50,000.
During the past four years, the business has had average annual revenues of $1,055,000. During the same four year period, SDE (seller’s discretionary earnings – the historical normalized cash flow available to pay an owner-operator and service debt) has averaged $440,000 annually with 2021’s SDE tracking at a remarkable $500,000 annual clip.
The business is being offered for $1.65 million which is 3.75x average annual SDE. The price includes $150,000 of inventory and all fixed assets. The seller envisions a cash-free, debt-free transaction in which he retains cash and A/R while retiring all liabilities.
A typical SBA deal for this business would include 10.0% buyer cash ($165,000), a matching amount for a seller note, and a $1,320,000 SBA term loan. The deal would result in a four year average annual free cash flow (after both bank and seller note debt service and after paying the buyer a $100,000 annual salary) of $150,000, with 2021 tracking impressively at more than $200,000 of after debt service free cash flow.
The owner/seller plans to retire after an orderly transition period for the buyer who should have experience and/or be comfortable in the industrial electronics product space. For more information on this established, attractive, cash flowing, niche manufacturing business, please contact Mike Greengard (mgreengard@praxisbusinessbrokers.com or 616-450-0707).
Financial
- Asking Price: $1,650,000
- Cash Flow: $440,000
- Gross Revenue: $1,055,000
- EBITDA: N/A
- FF&E: N/A
- Inventory: $150,000
- Inventory Included: Yes
- Established: 1995
Detailed Information
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:7,000
- Lot Size:N/A
- Total Number of Employees:N/A
- Furniture, Fixtures and Equipment:N/A
Located in a desirable West Michigan suburb at a busy intersection of two well-traveled city streets and minutes from two interstate highways.
Transition support will be provided.
Retirement
Additional Info
The business was started in 1995, making the business 27 years old.
The sale shall include inventory valued at $150,000, which is included in the asking price.
The real estate is leased by the company for $0.00
Why is the Current Owner Selling The Business?
There are all sorts of reasons why people decide to sell businesses. However, the true reason vs the one they say to you may be 2 completely different things. For instance, they may say "I have way too many various commitments" or "I am retiring". For lots of sellers, these reasons are valid. But, for some, these may just be reasons to attempt to conceal the reality of altering demographics, increased competition, current decrease in earnings, or a variety of other reasons. This is why it is very essential that you not count totally on a vendor's word, yet rather, make use of the seller's solution combined with your overall due diligence. This will repaint a much more sensible image of the business's present circumstance.
Existing Debts and Future Obligations
If the current company is in debt, which numerous businesses are, then you will have reason to consider this when valuating/preparing your offer. Many companies take out loans in order to cover things like stock, payroll, accounts payable, so on and so forth. Bear in mind that in some cases this can mean that earnings margins are too tight. Numerous organisations fall under a revolving door of taking loans as a way to pay back other loans. Along with debts, there may also be future commitments to take into consideration. There may be an outstanding lease on equipment or the building where the business resides. The business may have existing contracts with suppliers that must be satisfied or might cause fines if terminated early.
Understanding the Customer Base, Competition and Area Demographics
Exactly how do businesses in the area bring in brand-new customers? Most times, operating businesses have repeat customers, which create the core of their day-to-day profits. Particular aspects such as brand-new competitors growing up around the location, road construction, and staff turn over can affect repeat clients as well as adversely affect future earnings. One crucial point to consider is the placement of the business. Is it in a highly trafficked shopping center, or is it concealed from the highway? Clearly, the more individuals that see the business often, the higher the opportunity to construct a returning client base. A last thought is the general area demographics. Is the business situated in a densely inhabited city, or is it located on the outside border of town? How might the regional mean household earnings influence future revenue potential?
