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Manufacturing of Diesel Emission Control Products

Sold

Over $1.25M in assets and a 23% profit margin!

CASH FLOW
$638,355

Specifications

  • Price
    $2,425,000

  • Revenue
    $3,054,449

  • Cash Flow
    $638,355

  • Equipment
    $356,415

  • Location
    Ontario, CA & Washington, US

  • Service Area
    Canada, US, & Global

  • Profit Margin
    23%

  • Multiplier
    3.80

  • Valuation
    $2,425,749

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 StatementP&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
20202020201920182017
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$13,57590% is personal
Meals & Entertainment$7,029$6,279$5,770$5,855$7,57780% is personal
Telephone$5,843$6,620$7,513$5,687$2,04375% is personal
Travel$2,228$0$3,000$0$0One-time Cost
Tools/Work Shop Supplies$8,000$8,000$8,000$8,000$8,000Personal Expense
Replacement$-85,000$-85,000$-85,000$-85,000$-85,000To 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 Margin18.21 %22.50 %20.03 %25.68 %28.85 %
Profit Margin: 23%

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

Click to download NDA form

Print, sign and send to:

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

Or fax to:

f 402.939.0857

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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.