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We are pleased to offer a successful, well-established (i.e. in continuous operation “forever”) West Michigan hardware store. This iconic business leases a late model 6,000 square foot facility (with a 6,000 square foot basement) on a 1/2 acre plot. Rent (to a third party) is a favorable 7.0% of revenues. The facility is located at the intersection of busy city streets providing both easy access and high visibility. Major highways are just minutes away, and there is ample dedicated parking at the store’s main entrance.
Included in the price of the business is $350,000 of inventory encompassing every conceivable SKU of branded hardware items including tools, supplies, fasteners, etc. In addition, the business has several repair centers (windows, screens, pipe threading, keys, power tool repair, ratchet kit rebuild, blade & chain sharpening, etc.) to take care of all its customers’ (commercial and individuals) needs.
This long-time business has been in the seller’s hands for the past 33 years. Unlike most hardware stores, he has developed a strong relationship with a loyal clientele of commercial customers including builders and manufacturing entities. This “b to b” component complements the walk-in traffic from individuals and homeowners. With the store not offering evening or Sunday hours, the business is able to operate with just three full-time and three part-time employees The owner looks forward to selling his very successful store and retiring after giving the buyer ample transition training.
Now the numbers: the business generated the past four years, average annual gross sales of $800,000 while recording average, annual SDE (seller’s discretionary income - the normalized, historical cash flow available to pay a buyer and service debt) exceeding $200,000. The business is being offered for $875,000 which is a combination of:
• 2.5x SDE which is 2.5 x $210,000 = $525,000
• Inventory at cost (as of 11/30/21) = $350,000
• $525,000 + $350,000 = $875,000 list price for the business
The seller envisions a cash-free, debt-free asset sale in which he retains the cash and A/R while retiring all liabilities. The seller will match a buyer’s $100,000 (11.5%) down stroke with a $100,000 seller note, leaving $675,000 required from an SBA term loan. In this scenario, the buyer can expect estimated annual debt service (SBA loan + seller note) approximating $99,000, leaving the buyer on average more than $100,000 of annual post debt service discretionary cash flow.
Disclaimer: DealStream has not independently verified any of the information in this listing and makes no warranty as to its accuracy or completeness. This listing does not constitute an offer to sell, solicit or make an offer to buy an investment interest. Offers to sell, or the solicitation of offers to buy, any security can only be made through official offering documents, such as a subscription agreement and private placement memorandum.