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Hot Runner System Engineering – 25 Patented Products

With over $1.5M in sales and a 39% profit margin!

CASH FLOW
$919,939

Specifications

  • Price
    $2,400,000

  • Revenue
    $2,595,341

  • Cash Flow
    $919,939

  • Location
    Chicago, Illinois

  • Service Area
    Nationwide

  • Employees
    8: 1 Owner (President/Treasurer), 1 Design Engineer/Project Manager, 3 Machine Operators , 1 in Assembly, 1 Office Manager, 1 Financial Officer/HR

  • Profit Margin
    39%

  • Intangible Assets
    Solid reputation in the market, long-standing client relationships

  • Reason for Sale
    Retirement planning

With over $1.5M in sales and a 39% profit margin in 2020, this Chicago area business has 25 patented products and a nationwide client base! The company specializes in the design, engineering, and manufacturing of hot runner systems and components for mold making and thermoplastic processing plants. After designing and engineering the custom hot runner system to fit their customers’ plastic injection molding system, they manufacture the system on-site, assuring quality control and reduced cost to their clients. They also have the capability to retrofit existing molds; they can repair or re-configure a system, replace heaters, nozzles, and other components, and they can troubleshoot leaks, heating issues, and flow problems. All of these services contribute to their long-standing client relationships and solid reputation in the market for over 35 years. Their diverse client base consists of mold makers and processing plants for consumer goods in categories such as medical, automotive, cosmetics, caps & closures, consumer electronics, and pet products. Their customers design the product, manufacture it through 3D printing, and gives them the specs; this team then designs the custom hot runner system needed to fit their needs and requirements.

 

The highly skilled and experienced team includes the Owner (President/Treasurer), as well as a Design Engineer/Project Manager, 3 Machine Operators, 1 in Assembly, 1 Office Manager, and 1 Financial Officer. The owner currently handles general oversight of the business and team as well as some of the engineering; the Design Engineer/Project Manager handles all design engineering for the hot runner systems and manages each project from beginning to end.

 

Priced at $2,400,000, this company certainly has the potential to go global!  An existing hot runner system company could take this business to the next level by using the 25 patented products, the team’s experience, and the customers already in place and expanding. A mold maker could also expand their business by purchasing this company, which would complement their services and products.

Business Highlights

Year Established: 1984

Location: Chicago, Illinois

Service Area: Nationwide

Services: Design, engineering, and manufacturing of precision hot runner systems and components

Clients: Mold making and thermoplastic processing companies

Lease: 12 sq. ft. facility: 3k is office space, the rest is manufacturing and warehouse space; $11k/month

Reason for Selling: Retirement planning

Personnel: 8 FT, 1 PT: 2 Engineers, 4 Machine Operators , 1 in Assembly, 1 Office Manager, 1 (PT) Marketing Associate

Seller Training Period: 1-2 years

Growth Opportunities: Great opportunity for an existing hot runner system company to expand by using this company’s experience and customers; a mold maker could also expand their business by purchasing this company, which would complement their services & products

Current Owner’s Responsibilities: General Oversight of the business, occasionally assists the other engineer on staff.

Financial Highlights

  • List Price: $2,400,000

  • 2021 Annualized Cash Flow: $919,939
  • A/R: $200,972

*amounts may vary

Assets

  • Assets: $1,524,700
  • Machinery & Equipment: $1,426,779
  • Vehicles: $9,795
  • Furniture, Fixtures, Software: Inventory: $88,126
  • Intangible: Solid reputation in the market, long-standing client relationships

 

* Over 65% Collateralized *

Cash Flow Analysis

Description of Financial StatementP&L Statement
Jan-May 2021
Tax ReturnTax ReturnTax ReturnTax ReturnTax ReturnTax ReturnNotes
2021202020192018201720162015
GROSS SALES$1,081,392$1,541,795$1,278,782$1,569,063$1,433,304$1,187,962$1,249,543
Annualized$2,595,341
Net Income Shown on Financial Statement$339,900$383,577$261,872$374,302$252,655$73,801$95,165
ADDBACKS
Compensation to Owner$50,400$147,030$139,180$138,800$122,400$124,000$106,000
11% Tax on total W2 Salaries$5,544$16,173$15,310$15,268$13,464$13,640$11,660
Depreciation$0$88,881$13,199$883$1,124$1,527$14,707
Interest$0$0$25$124$0$0$512
Health Insurance$7,625$4,636$4,636$4,636$4,636$4,636$4,636For personal health insurance
Simple IRA$0$16,101$13,909$12,449$11,574$3,387$0Personal expense
Gifts$100$0$0$0$792$1,194$956Non-onward going expense
Replacement$-20,833$-50,000$-50,000$-50,000$-50,000$-50,000$-50,000To replace owner's spouse as HR/Payroll
Donations$572$0$0$0$0$0$0
TOTAL ADDBACKS$43,408$222,821$136,259$122,160$103,990$98,384$88,471
Seller's Cash Flow = Total Addbacks + Net Income$383,308$606,398$398,131$496,462$356,645$172,185$183,636
Annualized
Profit Margin35.45 %39.33 %31.13 %31.64 %24.88 %14.49 %14.70 %

 

 

Valuation

Funding Example

Purchase Price:

$2,400,000

$
%
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:
2020 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2020 Cash Flow
$
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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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.