Listing ID: 83961
Business Overview
We are pleased to represent an outstanding marketing/communication business (and so much more) with a giant cash flow. This family business (established in 1972) has been managed by the same family member for the last 30 (+) years. He now looks forward to retiring after transitioning his very successful business to a new owner-operator.
The company averages annual revenues of nearly $4.0 million with seller’s discretionary earnings (SDE = the historical cash flow available to pay an owner-operator and service debt) of $1.1 million annually. The business is located in two adjacent, attractive late model buildings (each has 14,000 square feet) on a five acre campus just minutes off a major interstate highway in a suburb of a desirable Michigan city. The real estate (buildings and land) is included in the sale price.
So what does a business with only 13 full-time employees (all of whom are long-term, loyal and non-union) do to generate its outstanding top and bottom lines? Well, the flippant answer is everything. In broad terms, the company designs and implements marketing and brand building programs for both large and small businesses. Its two largest clients are truly world class organizations who have been loyal and active clients forever. No A/R issues here.
A partial list of the “everything” business activities in which this company is involved include (in no particular order):
• Design, produce, and distribute every conceivable type of promotional materials, both products and printed material
• Political campaigns
• Establishing new and building established brands
• Involvement in orchestrating “everything” from grand openings to golf
tournaments to new product roll-outs to trade show appearances to sports programs to well, you get the idea…
And speaking of “ideas,” one might say that the company manufactures ideas while making money for both its clients and itself.
During Covid times, many of the company’s clients have asked this business to design and implement new awareness communication programs which often include custom printed material (which the company designs and produces) and/or custom promotional items (which the company designs, manufactures, and distributes).
The company also has a large fulfillment department for it clients. Products are designed, manufactured and then warehoused in a climate controlled environment with fulfillment activity per client specifications which range from hand delivery to overnight shipping services to everything in-between. The company even designs and manages clients’ company stores on a remote, electronic basis.
This high cash flowing business, with a great customer base of both big and small clients, is being offered for $5.65 million which is comprised of the sum of:
1. 3.75x SDE of $1.1 million = $4.1 million
2. $150,000 of inventory of promotional finished goods items (as of 11/30/21)
3. $1.40 million of real estate (two buildings and property)
A typical SBA deal with 10% buyer cash ($565,000), a matching amount for a seller note (to a qualified buyer) and a $4.5 million SBA term loan 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 $150,000 salary) of more than $600,000!
And with several new large projects coming on board in 2021 (4th quarter) and in 2022, the company expects to continue flourishing. To learn more about this extraordinary niched business opportunity with an incredible cash flow, please contact Mike Greengard (mgreengard@praxisbusinessbrokers.com or 616-450-0707).
Financial
- Asking Price: $5,650,000
- Cash Flow: $1,100,000
- Gross Revenue: $4,000,000
- EBITDA: N/A
- FF&E: N/A
- Inventory: $150,000
- Inventory Included: Yes
- Established: 1972
Detailed Information
- Property Owned or Leased:Own
- Property Included:Yes
- Building Square Footage:28,000
- Lot Size:N/A
- Total Number of Employees:13
- Furniture, Fixtures and Equipment:N/A
Located in two adjacent, attractive late model buildings on a five acre campus just minutes off a major interstate highway in a suburb of a desirable Michigan city.
Training and transition will be provided.
Retirement
Additional Info
The venture was established in 1972, making the business 50 years old.
The transaction does include inventory valued at $150,000, which is included in the suggested price.
The company has 13 employees and resides in a building with disclosed square footage of 28,000 sq ft.
Why is the Current Owner Selling The Business?
There are all sorts of reasons why people resolve to sell operating businesses. However, the genuine reason and the one they say to you might be 2 absolutely different things. For instance, they might say "I have too many various responsibilities" or "I am retiring". For numerous sellers, these factors are valid. But, for some, these might simply be justifications to attempt to hide the reality of changing demographics, increased competitors, current reduction in incomes, or an array of various other reasons. This is why it is very crucial that you not rely totally on a vendor's word, but rather, make use of the vendor's solution in conjunction with your overall due diligence. This will repaint a much more reasonable picture of the business's present scenario.
Existing Debts and Future Obligations
If the existing business is in debt, which numerous businesses are, then you will certainly have reason to consider this when valuating/preparing your offer. Many businesses take out loans in order to cover things like supplies, payroll, accounts payable, and so on. Keep in mind that in some cases this can imply that revenue margins are too small. Many companies fall under a revolving door of taking loans as a way to pay back various other loans. In addition to debts, there may additionally be future obligations to think about. There might be an outstanding lease on equipment or the structure where the business resides. The business may have existing agreements with vendors 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 new customers? Most times, businesses have repeat consumers, which form the core of their everyday profits. Certain elements such as new competitors growing up around the location, road building, and staff turn over can influence repeat consumers and negatively impact future profits. One crucial point to take into consideration is the placement of the business. Is it in an extremely trafficked shopping mall, or is it hidden from the main road? Undoubtedly, the more people that see the business often, the better the possibility to construct a returning client base. A last thought is the basic location demographics. Is the business situated in a densely populated city, or is it situated on the outside border of town? Just how might the regional mean home earnings influence future revenue prospects?
