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Manufacturer & Supplier of Commercial Envelopes – 85% Recurring Client Base

25,000 sq. ft. facility near downtown Boston!

CASH FLOW
$681,109

Specifications

  • Price
    $2,250,000

  • Revenue
    $5,145,132

  • Cash Flow
    $681,109

  • 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.  Priced at $2,250,000 and with a seller earnout of $300,000, this is an amazing opportunity for a new owner to step in and grow the business.

 

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.

 

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: $2,250,000

 

  • Gross Sales:
  • o   2020: $5,145,132
  • o   2019: $5,593,248

     

    • Cash Flow:
      • 2020: $475,840 (Down due to COVID-19)
      • 2019: $681,109
      • 2018: $718,220
      • 3-Year Average: $625,056
      •  

        • 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
          • 95% of equipment maintenance is done in-house. Head pressman maintains all Jet pressers, head web pressman maintains both webs, and the head of the cutting department maintains the 2 pieces of cutting equipment.
            • A/R: $525,000
            • Inventory: $203,350
            • Intangible Assets: Long-term client relationships

        Cash Flow Analysis

        Description of Financial StatementP&L Statement
        Jan - Dec 2020
        Tax Return
        Accrual
        Tax Return
        Accrual
        Tax Return
        Accrual
        Notes
        2020201920182017
        GROSS SALES$5,145,132$5,593,248$5,671,094$5,249,094
        Net Income Shown on Financial Statement$263,942$77,690$79,794$9,191
        ADDBACKS
        Compensation to Owner$513,162$496,319$559,962$507,115
        11% Tax on total W2 Salaries$56,448$54,595$61,596$55,783
        Depreciation$0$12,446$24,534$25,936
        Interest$16,001$20,346$22,068$9,615
        Meals & Entertainment$5,858$4,217$0$0
        Contributions$1,457$0$0$0
        Replacement$-75,000$-75,000$-75,000$-75,000$75k: Owner 1: retain or stay, Owner 2: 80% retired - no replacement needed
        Auto$7,426$9,300$0$0
        Auto Lease$12,856$11,598$0$0
        Owner's Life Insurance$7,924$7,752$0$0
        Travel$0$485$0$0
        Amortization$0$7,867$0$0
        Rent$23,324$83,494$75,266$51,575$18k/month onward going
        PPP Loan$-327,558$0$0$0
        Replacement$-30,000$-30,000$-30,000$-30,000PT bookkeeping replacement cost - most reponsbibilities will be absorbed by current staff
        TOTAL ADDBACKS$211,898$603,419$638,426$545,024
        Seller's Cash Flow = Total Addbacks + Net Income$475,840$681,109$718,220$554,215
        Profit Margin9.25 %12.18 %12.66 %10.56 %
        2020 down due to COVID-19

        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