Trailer Manufacturer & Painting: 90% Collateralized
Serving rural municipalities, farming communities, road-pavers, and gravel haulers!
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.
- 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
- List Price: $397,000 CAD
- Gross Sales:
- 2019: $616,039
- Cash Flow:
- 2019: $116,830
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
Cash Flow Analysis
|Description of Financial Statement||P&L Statement||P&L Statement||P&L Statement||P&L Statement||Notes|
|Net Income Shown on Financial Statement||$9,274||$-22,155||$-42,116||$-35,512|
|Compensation to Owner||$76,622||$82,500||$70,751||$88,260|
|Seller's Cash Flow = Total Addbacks + Net Income||$116,830||$95,425||$68,276||$90,727|
|Profit Margin||18.96 %||8.23 %||8.43 %||8.30 %|
- Rural Municipalities
- Farming Communities
- Paving Companies
- Gravel Haulers
- Fabrication of custom trailer parts
- Assembly of trailers
- Painting of trailers
- Ability to customize trailer dimensions to fit specific needs
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
- Expand website and social media presence
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.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2019 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2019 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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