Return To Opportunities List

Opportunities

Envelope Manufacturing & Wholesale with 85% Recurring Clients

635 active clients throughout New England with 25,000 sq. ft. plant 20 minutes from downtown Boston

CASH FLOW
$866,210

Specifications

  • Price
    $2,450,000

  • Revenue
    $5,170,212

  • Cash Flow
    $866,210

  • Equipment
    $532,500

  • Location
    Boston, Massachusetts (suburb about 20 minutes from downtown)

  • Service Area
    National, with 70% of clients in New England

  • Reason for Sale
    Partner Retiring

  • Employees
    25: 2PT & 23FT includes 3 FT Client Service Managers, 1 HR and Accounting, 1 Driver, 2 PT Assistants, 18 Production

  • Intangible Assets
    Long-term client relationships

This envelope manufacturing company has 635 active clients throughout New England with a 25,000 sq. ft. plant 20 minutes from downtown Boston! This essential business was established in 2002 and has 85% recurring clients. Their solid customer base is comprised of database directories, financial, insurance, and banking industry clients, real estate & law offices, and small print shops that can’t handle large size or volume.  Services include envelope sales (65%), printed forms & letters (25%) and packaging of sales guides, employment contracts, and business packages (10%). Of envelope sales, 40% is manufacturing and 60% is wholesale printing and imprinting. Their $1.2M in assets includes $525k in A/R, along with 4 pieces of converting equipment, 4 offset printers, 8 color cold web printers, 2 digital envelope presses, and 3 folders. Their team of 25 includes 3 client service managers, 1 HR and accounting, 1 driver, 2 assistants, and 18 production workers; once a job is started, turnaround to completion is 7-8 working days.

 

There is a spike in sales from September to November each year, due to increased direct mail marketing for the holiday season.  At other times of the year, the business has a balanced client base for direct mail marketing and financial services businesses and well as printer envelope converting. Their service area includes national clients, but 70% of their clients reside in the New England area.

 

Selling at a low 3.25 multiple, a 12.5% down payment of $306,250 would return $441,867 in the first year after debt payments – a 144% return on investment. Growth opportunities include expanding the second shift to increase capacity, continuing strategic acquisition plan that the business has followed over the past several years and engage in direct selling efforts rather than work through reselling merchants and brokers. 

Business Highlights

  • Year Established: 2002
  • Location:  Boston, Massachusetts (suburb about 20 minutes from downtown)
  • Service Area: National, with 70% of clients in New England
  • Services: Envelope sales (65%), Printed forms & letters (25%), Packaging of sales guides, employment contracts, and business packages (10%)
  • Clients: Database directories, financial industry, real estate & law offices, small print shops that can’t handle size or volume; 635 clients with an average 7 new clients/month – 85% recurring
  • Building: 25,000 sq. ft. facility
  • Reason for Selling: Partner retiring
  • Personnel: 25: 2PT & 23FT includes 3 FT Client Service Managers, 1 HR and Accounting, 1 Driver, 2 PT Assistants, 18 Production
  • Seller Training Period: 3-5 years
  • Growth Opportunities: Expand second shift to increase capacity, direct sales rather than broker marketing, continue strategic acquisition strategy
  • Current Owners’ Responsibilities: Owner 1: Company Management, Owner 2: Strategic Marketing

Financial Highlights

List Price: $2,450,000

Gross Sales:

  • 2020: $5,170,212 Annualized
  • 2019: $5,593,248

Cash Flow:

    • 2020: $866,210Annualized
    • 2019: $681,109
    • 2018: $718,220
    • 2-Year Average: $755,180

Assets Included in Purchase*

  • Equipment: $532,500 Includes 4 pieces of converting equipment; 4 offset printers; 8 color cold web printers; 2 digital envelope presses; 3 folders
  • A/R: $525,000
  • Inventory: $203,350
  • Intangible Assets: Long-term client relationships

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 


Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan - July 2020
Tax Return
Accrual
P&L Statement
Jan-July 2019
Tax Return
Accrual
Tax Return
Accrual
Notes
20202019201920182017
GROSS SALES$3,015,957$5,593,248$3,059,800$5,671,094$5,249,094
Net Income Shown on Financial Statement$187,265$77,690$-45,712$79,794$9,191
ADDBACKS
Compensation to Owner$286,238$496,319$290,303$559,962$507,115
11% Tax on total W2 Salaries$31,486$54,595$31,933$61,596$55,783
Depreciation$0$12,446$0$24,534$25,936
Interest$9,915$20,346$11,985$22,068$9,615
Meals & Entertainment$1,472$4,217$4,327$0$0
Contributions$162$0$203$0$0
Replacement$-43,750$-75,000$-43,750$-75,000$-75,000$75k: Owner 1: retain or stay, Owner 2: 80% retired - no replacement needed
Auto$4,496$9,300$10,825$0$0
Auto Lease$8,467$11,598$7,069$0$0
Owner's Life Insurance$4,892$7,752$4,815$0$0
Travel$0$485$324$0$0
Amortization$0$7,867$0$0$0
Rent$32,146$83,494$54,905$75,266$51,575$18k/month onward going
Replacement$-17,500$-30,000$-17,500$-30,000$-30,000PT bookkeeping replacement cost - most responsibilities will be absorbed by current staff
TOTAL ADDBACKS$318,024$603,419$355,439$638,426$545,024
Seller's Cash Flow = Total Addbacks + Net Income$505,289$681,109$309,727$718,220$554,215
Profit Margin16.75 %12.18 %10.12 %12.66 %10.56 %
Cash Flow Analysis

Income Analysis

*Of envelope sales, 40% is manufacturing, 60% is wholesale printing & imprinting

*Packaging refers to packaging of sales guides, employment contracts, and business packages

Personnel

  • 3 Owners
    • Owner 1: FT – production, purchasing, overall company management – will stay on 3-5 years if buyer desires
    • Owner 2: Works from home out of state (sales) – no replacement needed
    • Owner 3: PT – Acct/HR/Customer Service – 6-month transition; responsibilities can be divided
  • 3 FT Client Service Managers
  • 1 HR/Accounting
  • 1 Drive
  • 2 PT Assistants
    • 1 supports HR/Accounting functions
    • 1 supports Marketing 
  • 18 Production

Target Size Run for Printing

  • Target size: 25,000 – 150,000
  • Custom direct mail envelopes
  • 4 color letterhead envelopes
  • Ballot request forms for 350 towns in Massachusetts. (The owner got his mail-in ballot request with a return envelope inside that was printed by the company??)
  • They are doing a lot of invitation envelopes for online invitation companies - A1, A2 A6, A7, A8 sizes: 2,500-12,000 in 40 different colors - company is handling their own warehousing and inventory
  • Doing more euro flaps than square flaps (pointy)
  • Financial printing: 401k envelopes - John Hancock

Reselling Partners

  • Paper merchants
  • Printers
  • Value add people who do entire projects - they may buy 8 different things, 2 from this company
  • Mail houses
  • Flat sheet litho printers
  • Other envelope printers

Photos