Ethanol Plant Maintenance
With nearly $3.5M in assets!
With nearly $3.5M in assets, this company offers over a dozen services throughout seven states! The certified team of 30-40 highly skilled employees uses their expertise to provide pipe welding, millwrighting, plant maintenance, mechanical work, air & asbestos work, instrument installation, confined space rescue, hydro blasting, excavating, and demolition. Assets include over $1.5M in equipment comprised of welding machines, a plasma table, mobile trailer, oxygen equipment, grinding equipment, mechanical tools, and hand tools, along with $1.3M in vehicles and $620,500 in inventory. The owner currently manages financial oversight and does not do labor.
Most of the work is in a four-state zone of Iowa, Nebraska, South Dakota and Indiana, but they have frequent jobs in Texas, Georgia and North Dakota. They are equipped to handle work anywhere within the continental United States.
Growth opportunities would include marketing, as most work is currently acquired through word-of-mouth tactics. Setting up more jobs outside of the main four states would also allow for more growth and revenue. They also have an expertise in Mechanical and Elevator work that is currently an untapped market.
- Year Established:2006
- Location: Iowa
- Service Area: 7 main states: IA, NE, SD, IN, TX, GA, ND
- Clients: Plants, Commercial Clients
- Services: Pipe Welding, millwrighting, plant maintenance, mechanical work, air and asbestos work, instrument installation, confined space rescue, hydro blasting and excavating, demolition
- Building: Office Space, Temporary Office Created at Job Site
- Reason for Selling: Retirement
- Personnel: 30-40 year-round: all W-2
- Seller Training Period: 6 months
- Growth Opportunities: Increase marketing, increase workload outside of main seven states
- Current Owner’s Responsibilities: Financial oversight, no labor
- List Price: $4,800,000
- Gross Sales:
- 2019: $7,256,948
- 2018: $9,658,493
- 2017: $6,148,771
- Cash Flow:
- 2019: $948,382
- 2018: $864,278
- 2017: $736,260
- Assets Included in Purchase*
- Equipment: $1,552,354: Welding machines, plasma table, mobile trailer, oxygen equipment, grinding equipment, mechanical tools, hand tools
- Vehicles/Trucks: $1,322,855
- Inventory: $620,500
- A/R: $367,841
- WIP: $1,809,628
Cash Flow Analysis
|Description of Financial Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$279,214||$298,319||$30,438|
|Compensation to Owner||$156,025||$152,056||$154,000|
|Life Insurance||$18,779||$31,108||$21,082||Personal Insurance|
|Dental/Vision Insurance||$26,891||$27,933||$34,239||Personal Insurance|
|Income Taxes||$0||$0||$85,618||Personal Taxes|
|Replacement Cost||$-80,000||$-80,000||$-80,000||Ongoing Salary for CEO/Pres|
|Equipment Rent||$233,556||$183,470||$214,746||Paid to self|
|Seller's Cash Flow = Total Addbacks + Net Income||$948,382||$864,278||$736,260|
|Profit Margin||13.07 %||8.95 %||11.97 %|
- Up to 70 Employees – All W-2
- 30 Welders
- 20 Mechanics/Millwrights
- 5 Scaffolding Employees
- Administrative Staff
- Increase Marketing
- Acquire more work outside of the main four states.
The Firm used a cash flow valuation methodology to determine the purchase price of the business.
The formula used is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.
A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.
For this business, the 2019 Cash Flow was used with a prescribed multiple of 5. With this information, the computation is as follows:
$948,382 x 5 = $4,741,910
The fair market value found above positions the business list price at $4,800,0000.
Purchase Price: $4,800,000
15%Buyer Down Payment: $720,000
10%Seller Financing: $480,000
75%Bank Loan: $3,600,000
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $8,949.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $47,309.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.
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