It has been a great 23 year run for the Founder-Owner-Seller of this high cash flow and well-established Heating, Cooling and Plumbing business located in the highly desirable 5 County Grand Traverse Region of (Northern Michigan). The owner is now ready for retirement after helping with the successful business transition to only its second owner.
As would be expected from this attractive business, its reputation for quality work and excellent service is outstanding. In addition, the company has a very efficient business model with technicians driving company vehicles from their homes directly to job sites where required materials are directly shipped reducing the amount of warehouse space required and minimizing the double-handling of materials. The company has a crew of 5 experienced, highly trained, well-compensated, non-union technicians with most having been with the business for several years. The technicians are regarded as knowledgeable, dependable and friendly. They are supported by the seller and a general manager, both of whom have morphed, in recent years, to part-time roles. A lead technician rounds out the company’s capable staff.
The company boasts a long list of loyal and desirable repeat customers who also serve as a wonderful source of referrals. The business has a diverse customer base including several high-end builders who have been using the company’s services for many years. Such solid customers allow the company to avoid low margin bid projects. Other major long-term customers include large commercial service accounts and a significant loyal residential customer base. There would seem to be a meaningful opportunity for increasing revenue with inexpensive marketing approaches such as putting company logos on the trucks, mailings and improving the company’s social media presence.
The current owner and General Manager spend approximately 20 to 30 hours a week at the company. The owner handles all the estimates and field supervision, and the GM takes care of the office and scheduling. Both have agreed to stay on to help the new owner get started and complete a successful transition if needed.
Equipment and vehicles are late model and in excellent working order. The business operates out of an attractive downtown office.
Over the past four years the company, impressively, has had average annual revenues of nearly $1.5 million dollars which resulted in an average annual SDE (SDE=Sellers Discretionary Earnings – the normalized cash flow available to pay an owner/operator and service dept) of nearly $250.000 over the same four-year period.
With a favorable SDE multiple of 2.95x, the business is attractively priced at $785,000. The seller envisions and asset sale in which he retains cash and the minimal A/R while retiring all liabilities. The buyer, in addition to receiving the goodwill of the business, receives all fixed assets (which includes a plethora of vehicles), and approximately $60,000 (cost basis) of inventory. And for a qualified buyer the seller will carry a high five-figure seller note.
A typical deal for the purchase of the business looks great: with $78,000 (10% of purchase price) buyer cash, a matching $78,000 seller note, and the balance financed by a SBA term loan. Total annual debt service will be approximately $93,000 resulting in a post-debt discretionary cash flow for the buyer of more than $150,000 annually.
If you are searching for a successful high cash-flow business (with significant barriers to entry) located in a growing and desirable region, this business represents an exceptional opportunity. For more information, please contact Steve Huntly at 616-902-0898 or email@example.com.