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Trailer Manufacturer & Painting: 90% Collateralized

Serving rural municipalities, farming communities, road-pavers, and gravel haulers!

CASH FLOW
$116,830

Specifications

  • Price
    $397,000

  • Revenue
    $616,039

  • Cash Flow
    $116,830

  • Multiplier
    3.40

  • Profit Margin
    19%

  • Down Payment
    10%

  • Employees
    4: 1 owner, 2 FT welders/fabricators, 1 FT office/shop assistant

  • Service Area
    Southern Saskatchewan, Canada

  • Location
    Regina, Saskatchewan (205km away)

This custom trailer fabrication business serves a wide variety of clients, including rural municipalities, farming communities, road-pavers, and gravel haulers. They also experienced employees and a 19% profit margin! Established in 1965, this business has been creating custom trailers for parts of Canada and the US, including Alaska, Montana, and both coasts. Operating out of a 60x300 ft. facility in Southern Saskatchewan, this business does custom fabrication, along with assembly of trailers. Trailers include gravel, clam-style, flat decks, and more, each with a variety of dimensions that can be customized. Each trailer is completed within two weeks of placed order. Included in purchase price is over $378,000 worth of assets, including equipment such as band saws, jigs, forklift, payloader, and welders!

Sales are conducted by two dealers in Canada and the owner, with most sales being done over the phone and no travel. Personnel includes four experienced employees: 1 owner, 2 full-time welders/fabricators, and 1 full-time office/shop assistant. The current owner oversees operations, conducts some sales, and assists in the shop when needed.

The ability to customize dimensions for various trailer styles sets this business apart from competitors. Opportunities for growth include expanding the current website and social media presence to attract a wider range of customers.

 

Business Highlights

  • Year Established: 1965
  • Location: Regina, Saskatchewan (205km away)
  • Service Area: Southern Saskatchewan, Canada   
  • Services: Custom trailer fabrication, trailer painting
  • Clients: Rural municipalities, farming communities, road-pavers, gravel haulers
  • Building: 60x300 ft. located on 22 acres of land; shop, office space
  • Reason for Selling: Retirement planning, pursuing other (non-competitive) interests
  • Personnel: 4: 1 owner, 2 FT welders/fabricators, 1 FT office/shop assistant
  • Seller Training Period: 6-12 months 
  • Growth Opportunities: Expand website & social media presence
  • Current Owner’s Responsibilities: Oversees operations, some sales, and assists in the shop when needed

Financial Highlights

  • List Price: $397,000 CAD
  • Gross Sales:
    • 2019: $616,039
  • Cash Flow:
    • 2019: $116,830

*90% collateralized!

Assets Included in Purchase*

  • Equipment: $235,697: Office & manufacturing equipment: Shears, iron workers, 2 band saws, jigs, forklift, hoist, payloader, welders, shelving for parts within buildings
  • Vehicles: $72,573
  • Inventory: $62,657
  • A/R: $7,498
  • Intangible Assets: Established reputation, strong customer service

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

Cash Flow Analysis

Description of Financial StatementP&L StatementP&L StatementP&L StatementP&L StatementNotes
2019201820172016
GROSS SALES$616,039$1,160,169$810,352$1,093,263
Net Income Shown on Financial Statement$9,274$-22,155$-42,116$-35,512
ADDBACKS
Compensation to Owner$76,622$82,500$70,751$88,260
Amortization$14,000$17,711$22,562$18,394
Interest$15,854$16,289$15,999$18,505
Non-Business Telephone$1,080$1,080$1,080$1,080$90/month
TOTAL ADDBACKS$107,556$117,580$110,392$126,239
Seller's Cash Flow = Total Addbacks + Net Income$116,830$95,425$68,276$90,727
Profit Margin18.96 %8.23 %8.43 %8.30 %
2019 Profit Margin: 19%

Clients

  • Rural Municipalities
  • Farming Communities
  • Paving Companies
  • Gravel Haulers

Services

  • Fabrication of custom trailer parts
  • Assembly of trailers
  • Painting of trailers
  • Ability to customize trailer dimensions to fit specific needs

Personnel

4: 1 owner, 2 FT welders/fabricators, 1 FT office/shop assistant

  • 1 Owner: oversees operations, some sales, and assists in shop
  • 1 office/shop assistant: does accounting/office services, assists as welder in shop when needed
  • 2 welders/fabricators: create custom trailer parts and assemble trailers

Growth Opportunities

  • Expand website and social media presence

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 2019 Cash Flow was used with a prescribed multiple is 3.4.  With this information, the computation is as follows:

$116,830         x             3.4     =      $ 397,222

The fair market value found above positions the business list price at $397,000 CAD.

Funding Example

Purchase Price:                   $397,000 CAD

10%Buyer Down Payment:        $39,700

10%Seller Financing:                  $39,700

80%Bank Loan:                         $317,600

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $740.

Bank loan 10-year term at a rate of 6% equals a monthly loan payment of $3,526.

After business expenses and loan payments, a buyer with a 10% down payment of $39,700 would retain a profit of $65,636, which results in a 165% return on investment in the first year.

A lender is required to have a minimum 1.25 coverage ratio for any business loans extended. At a proposed purchase price of $397,000 with the terms listed above, the coverage ratio is 2.28. 

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.

Purchase Price:

$397,000

$
%
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:
2019 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2019 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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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.