Listing ID: 83958
Business Overview
We are pleased to offer an attractive, nicely profitable, B to B fastener distribution business in a highly desirable Northern Michigan suburban location. This 20 year old business is located in a late model 6,000 square foot business on a one acre parcel, both of which can be leased from the seller under favorable terms or be purchased in a separate transaction. The business is adjacent to a busy commercial thoroughfare offering both high visibility and easy access.
The business has five loyal non-union employees and three commission salesmen (with an average tenure of over 10 years). The business is customer focused, reliable and dedicated to providing quality products and services to the industrial, retail, construction and consumer markets.
Customers range from small builders to large, industrial manufacturers. There is no customer concentration. The company stocks over 3,000 sku’s of high quality fasteners and tools including screws, nuts, bolts, washers, rivets, automotive clips, electrical and cable ties, to name several. Additional offerings include auto-body products and tools/safety products. Orders are packed and shipped generally the day they are received. The company has an attractive website that offers both online ordering and timely responses to customer inquiries.
Additional profit centers include light assembly and custom packaging, both to customer specifications. There is even a small retail space which offers the company’s full line of products to local do-it-yourself customers.
Over the past four years, the business has had average annual sales of nearly $800,000. In 2021 revenues hit an all-time high surpassing $850,000. SDE (seller’s discretionary earnings – the historical, normalized cash flow for an owner-operator to pay himself and service debt) has averaged $155,000 annually over the same four year period.
The business is being offered at $496,000 comprised of:
• Enterprise Value = 2.75x SDE of $155,000 = $426,000
• On-hand salable inventory = $70,000
A typical SBA deal with 12.5% buyer cash ($60,000), a matching amount for a seller note (to a qualified buyer) and a $376,000 SBA term loan would result in a four year average annual free cash flow in low five figures (after both bank and seller note debt service and after paying the buyer a $100,000 annual salary).
The founder/owner/seller plans to retire after an orderly transition period for the buyer. For more information on this established, attractive, cash flowing distribution business, please contact Mike Greengard (mgreengard@praxisbusinessbrokers.com or 616-450-0707).
Financial
- Asking Price: $496,000
- Cash Flow: $155,000
- Gross Revenue: $800,000
- EBITDA: N/A
- FF&E: N/A
- Inventory: $70,000
- Inventory Included: Yes
- Established: 2001
Detailed Information
- Property Owned or Leased:Own
- Property Included:N/A
- Building Square Footage:6,000
- Lot Size:N/A
- Total Number of Employees:5
- Furniture, Fixtures and Equipment:N/A
A late model 6,000 square foot building on a one acre parcel. The business is adjacent to a busy commercial thoroughfare with high visibility and easy access.
An orderly transition will be provided by the seller.
Retirement
Additional Info
The company was started in 2001, making the business 21 years old.
The deal does include inventory valued at $70,000, which is included in the suggested price.
The business has 5 employees and is located in a building with estimated square footage of 6,000 sq ft.
Why is the Current Owner Selling The Business?
There are all sorts of reasons individuals choose to sell operating businesses. Nonetheless, the real factor vs the one they say to you might be 2 absolutely different things. As an example, they may say "I have way too many various responsibilities" or "I am retiring". For lots of sellers, these factors stand. However, for some, these may simply be justifications to try to hide the reality of changing demographics, increased competition, recent decrease in earnings, or an array of other reasons. This is why it is really important that you not depend absolutely on a seller's word, yet rather, make use of the vendor's response along with your general due diligence. This will paint a more reasonable picture of the business's existing situation.
Existing Debts and Future Obligations
If the current business is in debt, which numerous businesses are, then you will certainly have reason to consider this when valuating/preparing your offer. Numerous businesses take out loans so as to cover things like supplies, payroll, accounts payable, and so on. Bear in mind that occasionally this can suggest that earnings margins are too tight. Many organisations come under a revolving door of taking on debt as a way to pay back other loans. Along with debts, there may also be future obligations to consider. There might be an outstanding lease on equipment or the building where the business resides. The business may have existing agreements with suppliers that have to be met or may result in fines if canceled early.
Understanding the Customer Base, Competition and Area Demographics
How do operating businesses in the location draw in brand-new clients? Most times, operating businesses have repeat clients, which form the core of their daily profits. Certain variables such as brand-new competitors sprouting up around the area, roadway building and construction, and also employee turnover can influence repeat customers and also negatively affect future profits. One vital thing to take into consideration is the location of the business. Is it in a highly trafficked shopping center, or is it hidden from the highway? Obviously, the more people that see the business often, the higher the possibility to develop a returning customer base. A last thought is the basic location demographics. Is the business located in a largely populated city, or is it located on the outside border of town? Just how might the regional median home earnings effect future income potential?
