Opportunities
Manufacturing of Diesel Emission Control Products
Sold
Over $1.25M in assets and a 23% profit margin!
Specifications
With over $1.25M in assets and a 23% profit margin, this Toronto business has clients all over Canada, the United States, and worldwide! This emission component design and manufacturing company operates out of a 20,000 square foot facility with state-of-the-art equipment and techniques to fabricate products used in new equipment and as retrofits. The business also operates a satellite operation in Washington state, through a US subsidiary. This subsidiary generates significant business and allows the business to perform jobs for government entities who prefer to deal with American businesses. They offer a variety of services to meet their clients’ needs, including CNC spin forming, laser cutting, CNC rolling, mandrel tube bending, MiG and TiG welding, and CNC plasma cutting. Assets are comprised of CNC machines, laser & plasma cutters, welding equipment, mechanical tools, and hand tools. The team is made up of 14 W-2 employees and 3 independent contractors.
The owner is willing to stay on up to one year and is interested in pursuing other interests.
Their clientele consists of distributors, government entities, public institutions, and commercial customers; 75% of sales are made to repeat customers. Sales are made 20% directly to customers and 80% through distributors, with most distributors located in the United States.
This business has a great reputation and consistently gains customers by word of mouth. Growth opportunities include hiring a dedicated salesperson, marketing, and direct sales to the OEM.
Business Highlights
Year Established: 2016
Location: Toronto, CAN and Vancouver, WA, US
Service Area: Canada, US, and Global
Clients: Distributors, Government Entities
Services: Fabricating emission control components
Building: Shop and office space; 20,000 sq. ft. state-of-the-art facility
Reason for Selling: Pursuing other interests
Personnel: 13 Employees, 4 Contractors
Seller Training Period: 1 year
Growth Opportunities: Hiring salesperson, increasing marketing, and expanding US sales
Current Owner’s Responsibilities: Daily management, HR
Financial Highlights
List Price: $2,425,000 CAD
Cash Flow Analysis
| Description of Financial Statement | P&L Statement March 2019-February 2020 | P&L Statement May 2019-April 2020 | P&L Statement March 2018-February 2019 | P&L Statement March 2017-February 2018 | P&L Statement March 2016-February 2017 | Notes |
| 2020 | 2020 | 2019 | 2018 | 2017 | ||
| GROSS SALES | $3,054,449 | $2,836,915 | $4,882,999 | $3,568,334 | $2,573,160 | |
| Net Income Shown on Financial Statement | $505,499 | $403,333 | $831,364 | $700,543 | $573,160 | |
| ADDBACKS | ||||||
| Compensation to Owner | $0 | $185,000 | $100,000 | $200,000 | $200,000 | |
| Amortization | $78,448 | $78,488 | $84,535 | $68,946 | $23,111 | |
| Auto Expense | $25,286 | $25,219 | $22,660 | $12,398 | $13,575 | 90% is personal |
| Meals & Entertainment | $7,029 | $6,279 | $5,770 | $5,855 | $7,577 | 80% is personal |
| Telephone | $5,843 | $6,620 | $7,513 | $5,687 | $2,043 | 75% is personal |
| Travel | $2,228 | $0 | $3,000 | $0 | $0 | One-time Cost |
| Tools/Work Shop Supplies | $8,000 | $8,000 | $8,000 | $8,000 | $8,000 | Personal Expense |
| Replacement | $-85,000 | $-85,000 | $-85,000 | $-85,000 | $-85,000 | To replace GM position |
| Consulting | $9,000 | $10,416 | $0 | $0 | $0 | |
| TOTAL ADDBACKS | $50,834 | $235,022 | $146,478 | $215,886 | $169,306 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $556,333 | $638,355 | $977,842 | $916,429 | $742,466 | |
| Profit Margin | 18.21 % | 22.50 % | 20.03 % | 25.68 % | 28.85 % |
Clients
- Distributors
- Government Entities
- Public Institutions
- Commercial Customers
Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.
Services
- Manufacturing of Emission Control Devices
- Catalyst and DPF Canning
- Fabrication Shop (set up for custom work)
- Metal Spinning and Laser Cutting
Personnel
1 Owner/President
14 Employees
- 1 Quality Manager
- 1 Operations Administrator
- 1 Purchaser
- 1 Customer Service Representative
- 1 Sales Manager
- 1 Production Supervisor
- 5 Welders
- 2 Fabricators
- 1 Shipper/Receiver
3 PT Independent Contractors
- 1 IT Tech
- 1 Bookkeeper
- 1 Accountant
Growth Opportunities
- Hire dedicated outside salesperson
- Increase marketing
- Expand Operation in Washington
Valuation Details
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, a TTM cash flow was used with a prescribed multiple of 4. With this information, the computation is as follows:
Cash Flow x Prescribed Multiple = Fair Market Value
With this information, the computation is as follows:
$638,355 x 3.8 = $2,425,749
Funding Example
Purchase Price: $2,425,000 CAD
| 20%Buyer Down Payment | $485,000 | Must be unborrowed funds |
| 20%Seller Financing or Equity | $485,000 | 5-year term at a rate of 4.50% = a monthly loan payment of $9,042 |
| 60%Bank Loan | $1,455,000 | 6-year term at a rate of 6% = a monthly loan payment of $24,114 |
- Cash Flow: $638,355
- Annual Payment:
- To Seller: $108,502
- To Bank: $289,363
- Net Profit (after expenses and loan payment): $240,490
Print, sign and send to:
210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857