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Opportunities

90% Reoccurring Client Base in Scaffold Rental

Loan would be nearly fully collateralized with $13.75MM in assets!

CASH FLOW
$4,881,762

Specifications

  • Price
    $20,750,000

  • Revenue
    $13,984,276

  • Cash Flow
    $4,881,762

  • Service Area
    Twin cities Metro and upper Midwest

  • Reason for Sale
    Retirement Planning

  • Profit Margin
    39%

 

This scaffolding rental company has a 90% reoccurring client base! They currently have 500 clients in their customer base, with 25 continuously recurring clients that include general contractors, concrete & masonry, demolition, and repair and installation contractors. The sellers are willing to carry 10% and roll equity for another 10% of the note.  At a price of $20,750,000, you are looking at a 120% return on investment in the first year!

 

They install, dismantle, rent, and sell frame scaffolding, system scaffolding, shoring scaffolding, and hydro mobile platforms with nearly 60% of their revenue coming from rentals. This business has over $3.75M in work-in-progress and backlog, which is an average of 70% utilized with about $9.9M in inventory out for rentals on a monthly basis. Boasting $4.5M in hydro mobile inventory (96), they are far ahead of their competitors who only have 1-3 units. They also offer 3D drawings on more complex projects which differentiates them in the market. In addition, the recently passed US infrastructure bill caters to this company’s core customer base and will certainly increase their revenue in the coming years.

 

This company does little to no marketing or advertising due to their recurring clients. A new owner could absolutely grow by simply adding a marketing and sales plan. This business has a sister company (23% of revenue) that is Union based. In any given month, they have around 150 work orders and their large projects that go for longer than one year are greater than $1M in value. Assets include almost $11M in scaffolding inventory and $1.45M in vehicles like flatbed trucks (5) and pickups (20).

 

Their current work-in-progress is valued at $1.7M, with $2.05M in backlog. The current workload consists of 40% construction, 30% restoration, and 20% industrial. At any given time, they have anywhere from 45 – 60 employees with 7 of them in the office, 12 in the yard/shop, and 25-40 laborers. Two of the owners focus primarily on sales; the third owner manages day to day business. They are currently transitioning responsibilities to other employees. Priced at $20,750,000, this is a business that is positioned to grow in the scaffolding space through acquisition of more inventory and expansion into different cities.

Business Highlights


Year Established: 2007

Location: Minneapolis Metro area

Service Area: Twin cities metro and upper Midwest

Services: Install, dismantle, rent, sell frame scaffolding, system scaffolding, Shoring Scaffolding and Hydro mobile platforms

Clients: 500 clients customer base with 20 recurring clients

Buildings: 50,000 square feet space – 3,000 square feet is office building; 47,000 square feet is warehouse and 1.2 acres yard for outside storage. 

Reason for Selling: Retirement

Personnel: 45 to 60; 21 employees who work in office and yard and ~ 25 - 40 laborers/contractors throughout the year.

Seller Training Period: 1 – 4 years

Growth Opportunities: Expansion into other cities

Current Owners’ Responsibilities: Active; Replacement or Retainment salaries accounted for in Cash Flow


Financial Highlights

  • List Price: $20,750,000

  • 2019 Cash Flow: $6,759,560
  • 3-yr. Avg. Cashflow (’19-'21):  $4,881,762

*amounts may vary

Assets

  • Assets: 13,750,000
  • Machinery & Equipment: $634,741 - Ladders
  • Vehicles: $1,578,432 - Flatbed trucks (5), 27-foot straight trucks, one-ton truck (1), pickups (20)
  • Inventory: ~$11,000,000
  • Furnitures & Fixtures: $41,090
  • Capital Expenditure: $700,000-$1,000,000

Cashflow Analysis

Description of Financial StatementP&L Statement
Jan- Dec
Tax ReturnTax ReturnNotes
202020192018
GROSS SALES$13,883,263$15,248,006$12,821,559
Net Income Shown on Financial Statement$1,657,297$1,861,398$2,689,170
ADDBACKS
Compensation to Owner$973,600$1,608,339$755,111
11% Tax on total W2 Salaries$107,096$176,917$83,062
Depreciation$1,320,000$2,266,121$1,061,690
Interest$40,717$86,683$107,013
Retirement Plan$600,000$1,023,000$553,722
Cell Phones$1,800$1,800$1,800
Life Insurance$26,000$26,000$26,000
Health Insurance$16,000$16,000$16,000
HSA$15,000$15,000$15,000
Donations$2,300$0$0
Amortization$0$11,302$11,484
Auto Expense$42,000$42,000$42,000
Replacement$-375,000$-375,000$-375,000
Inventory Adjustment$200,000$0$0
TOTAL ADDBACKS$2,969,513$4,898,162$2,297,882
Seller's Cash Flow = Total Addbacks + Net Income$4,626,810$6,759,560$4,987,052
Profit Margin33.33 %44.32 %38.90 %

  • Gross sales in 2020 is $13,883,263, down 9% from 2019 due to COVID-19. In spite of that they still have a current backlog of $3.5M of projects.

Employees

 

This company has anywhere from 45 to 60 employees depending on the season.

They have 21 employees who work in office and yard and ~ 25 0 40 laborers/contractors during the year.

 

  • Owners (3)
  • 21 employees; 12 in office 9 in yard/ shop 
  • Sales representatives (4)
  • Draftsman (draws scaffolding)
  • Office Manager
  • 11 in shop
  • Drivers, mechanics, (11)
  • Laborers and contractors
    • 25 in the Winter
    • 40 in the Summer

 

Typical Clients

 

This company has a customer base of ~500 customers.

They provide services to office buildings, schools, churches, power plants, municipal buildings and theaters.

 

 

  • Existing customers call them for rentals
  • They have contracts only on installations and dismantles
  • The concrete and masonry firms just call them for projects

Services

 

This business installs, dismantles, rents and sells frame scaffolding, system scaffolding, shoring scaffolding and hydro mobile platforms.

 

Service % of Projects % of Revenue
Rentals of the different scaffolding and Hydro Mobile platforms 77% 59%
Erection, dismantle, sales 23% 41%

 

 

Growth Opportunities

 

This company can can grow by expanding their work out of the twin cities metro area as well as increasing their inventory and employees. 

The areas below are opportunities for growth;

  • Swing stage rental
  • Sales and installation
  • Construction equipment rentals
  • Sales e.g. Grout hog, mixers, The Mule robotic block laying tool etc.

 

Funding Example

Purchase Price:

$20,750,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
3 year average (19-21)
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
3 year average (19-21)
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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