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Food Processing & Manufacturing Facilities – Mechanical Advisory Firm

All labor is subcontracted out – serving major commercial clients since ’92 in HVAC, mechanical & plumbing!

CASH FLOW
$2,416,800

Specifications

  • Price
    $12,250,000

  • Revenue
    $6,600,020

  • Cash Flow
    $2,416,800

  • Location
    Greater Vancouver District

  • Service Area
    Coast to Coast in Canada

  • Reason for Sale
    Retirement planning

  • Employees
    4: 1 Owner, 1 Project Manager, 1 Estimator, 1 Office Manager/Bookkeeper + exclusive subcontractors as needed (3 of which are exclusive to this company)

  • Intangible Assets
    Significant reputation in the area, legacy company in construction world

  • Profit Margin
    37%

All labor is subcontracted out! This mechanical advisory firm has been serving major commercial clients since 1992 in HVAC, mechanical, and plumbing. Deemed an essential business amid the pandemic, this company’s largest customers are food processing facilities and Amazon distribution centers, with a strong foothold in the logistical and institutional sectors. Their highly experienced team has over 100 years of combined experience; it consists of the owner, who acts as General Manager, plus 1 Project Manager, 1 Estimator, 1 Office Manager/Bookkeeper, and subcontractors as needed (3 of which are exclusive to this company). Using proprietary software that tracks the breakdown of all of their costs for each individual project has set them apart from the competition; it allows them to be exceptionally cost-conscious and pursue jobs that match their skill set, while being cost-effective. Clients know this company will always stay on budget. The vendor will finance or roll equity of 15% to show good faith and a vested interest!

Established in 1992, they are a legacy company in the construction world; they receive invitations from the contracting and construction communities to bid a job.  The team is committed to seeing a job through from beginning to end, from the bidding process to coordinating the resources and installation needed for the project. Services include plumbing, heating, ventilation, air conditioning, sprinklers, industrial gas fitting, steam fitting, process piping, and pneumatics.

 

This would be a fantastic bolt-on opportunity for a controls contractor, electrician, or civil contractor. Creating synergy between two companies would be an incredible opportunity to expand the market share and boost revenue.

Business Highlights

  • Year Established: 1992
  • Location: Greater Vancouver District
  • Service Area:  Coast to Coast in Canada
  • Services: Plumbing repairs, heating & air conditioning maintenance & repairs
  • Clients: General contractors for institutional, commercial, and industrial projects; several clients in food processing industry
  • Certifications: Certified Gas Contractor, Licensed Plumbing Contractor, Class A Boiler Contractor, Licensed Refrigeration Contractor
  • Lease: 4,000 sq. ft. space
  • Reason for Selling: Retirement Planning
  • Personnel: 4: 1 Owner, 1 Project Manager, 1 Estimator, 1 Office Manager/Bookkeeper + exclusive subcontractors as needed (3 of which are exclusive to this company)
  • Seller Training Period: 18 months
  • Growth Opportunities: Great bolt-on opportunity for a business owner in electrical contracting field; Create synergy and expand market share
  • Current Owner’s Responsibilities: General management & oversight. Owner spends 2-3 weeks out of each month out of town at his other homes

Financial Highlights

  • List Price: $12,250,000 CAD
  • Gross Sales:
    • 2020 (FYE July 2020): $6,600,020
    • 2019 (FYE July 31, 2019): $5,913,195
  • Cash Flow:
    • 2020: $2,416,800
    • 2019: $1,810,789
    •  2018: $4,540,514
    • 2017: $1,610,232
  • Assets Included in Purchase*
    • Equipment: $298,639: Office & computer equipment, office furniture, proprietary software, leasehold improvements
    • Vehicles: $418,343: Service vehicles
    • A/R: $1,444,969

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

Cash Flow Analysis

Description of Financial StatementP&L Statement
August 1, 2019 - July 2020
P&L Statement
August 1, 2018 - July 31, 2019
P&L Statement
August 1, 2017 - July 31, 2018
P&L Statement
August 1, 2016 - July 31, 2017
Notes
2020201920182017
GROSS SALES$6,600,020$5,913,195$12,461,492$7,093,916
Net Income Shown on Financial Statement$2,343,357$536,403$1,396,474$1,440,732
ADDBACKS
Depreciation$0$66,035$45,538$64,105
Management Renumeration$0$1,174,751$3,064,902$71,795
Auto Expense$30,000$30,000$30,000$30,000$2,500/month personal
Meals & Entertainment$33,943$0$0$080% personal
Cell Phone$3,600$3,600$3,600$3,600$300/month personal
Donations $5,900$0$0$0
TOTAL ADDBACKS$73,443$1,274,386$3,144,040$169,500
Seller's Cash Flow = Total Addbacks + Net Income$2,416,800$1,810,789$4,540,514$1,610,232
Profit Margin36.61 %30.62 %36.44 %22.70 %
  • Profit Margin 2020: 37%

 

The fluctuations in year-over-year sales are the direct result of the way construction jobs progress regarding their year-ends. If they complete a project in June but process the hold-back, etc. in August, that would have a reduced amount of profit in the year the job was completed, but a significant increase in profit in the year the hold-back was invoiced. This becomes apparent when the projects are of significant size ($5-10M) – that possibly moves $1M of profit from one year to the following year.

This year, they have completed several smaller contracts and probably only have about $200k of hold-back that has not been invoiced and will be invoiced in the first couple months of the 2020/2021 year.

Clients

  • Food Processing Plants
  • The food processing plant customers are 10-15-20 year-old relationships and are very stable
  • Some of their largest customers: pork, dairy, poultry plants
  • Cold Storage Facilities
  • Distribution Centers (Amazon)
  • There is currently a fast-track for Amazon distribution centers in the lower mainland – there are 3, but there will be about 20
  • Logistical industry will keep going strong in the future
  • General Contractors
  • Industrial Property Owners
  • Construction Project Managers

 

*Deemed essential due to customers in food processing industry

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • Plumbing repairs, heating & air conditioning maintenance & repairs

Software

This company has their own proprietary software, making them incredibly unique. It gives feedback to the estimating team, enabling the business to be extremely cost-conscious and pursue jobs that match their skill set, while being cost-effective. For ease, the system works in costing centers for everything – they know exactly what they are doing for each type of equipment and get scorecards on efficiencies in real-time.

This software gives them higher margins, setting them apart from the competition.

Personnel

  • 1 Owner: General Management & Oversight
  • Founded the business – started it with 3 other staff in ’92, incorporated in ’98 – it’s been a viable entity ever since
    • 1 Project Manager
    • 1 Estimator
    • 1 Office Manager/Bookkeeper
    • Subcontractors as needed (3 of which are exclusive to this company)
    • Specific disciplines are subcontracted (controls, sheet metal)
    • One of the industry’s best payers
    • The business purchases all equipment themselves and subcontract the labor only – makes them more competitive

    Growth Opportunities

    • Great bolt-on opportunity for a control contractor, electrician, or civil contractor
    • Create synergy and expand market share

    Funding Example

    Purchase Price:              $12,250,000 CAD

        15%Buyer Down Payment:     $1,837,500

        15%Seller Financing:              $1,837,500

        70%Bank Loan:                        $8,575,000

    Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $34,257.

    Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $95,200.

    A lender is required to have a minimum 1.3 coverage ratio for any business loans extended. At a proposed purchase price of $12,250,000 with the terms listed above, the coverage ratio is 1.67.

    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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    210 N 78th St. 2nd Floor
    Omaha, NE 68114

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    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.