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May 15, 2018This apparel manufacturer boasts a highly efficient operation with a remarkable 36% gross profit margin and 14% net profit margin, yet is operating at only 50% capacity, leaving significant growth potential. The company has a highly capable team of designers, technical staffers, sewers and packagers as well as management that will potentially remain through an extended period.

The business is operated out of very well equipped Los Angeles based facility that has been specifically designed to maximize productivity and optimize workflow. The company’s total assets are estimated to exceed $3.0 ml in value, with its specialty manufacturing equipment’s value topping $1.0 ml if liquidated but nearly $4.0 ml new. The property is potentially available for $9.0 ml, but will not be sold without a business sale (though the business need not remain in the property once sold).

While competition exists, this company is a leader in its manufacturing segment. It is not the largest in terms of size or capacity, but it may be with respect to margin and efficiencies. The company achieves some of the quickest production turn times in the industry, allowing them to often be first to market with the latest fashion trends. This, coupled with their convenient Los Angeles location and highly capable production team, provides them a sustainable long-term advantage over local and offshore production. While they do not attempt to be the low cost, they deem their apparel to be the highest quality in their product categories. This is corroborated by their revenue growth and sustained profitability levels.

The company has several avenues of growth readily available. As it is estimated that they operate at or below 50% capacity, they can take on the additional customers that come to them on a regular basis. They feel they have the capacity to $20 - $30 ml in revenues with $3.0 – $4.0 ml in profits out of the facility. The firm may also expand their apparel focus. To maintain maximize efficiencies they specialize in a few particular types of apparel, however, they have the know-how to manufacturing a far reaching variety of pieces with their highly design staff, expertise, sew department and valuable equipment. Alternately, they can launch multiple in-house labels for each differing apparel segment, with a focus on direct to consumer sales versus wholesale to further bolster margins. Finally, the company outsources some functions to minimize its staff count. In doing so they give up margin. Space remains for a buyer to insource these or to shift them offshore.

Training: 4 Weeks at 30 hrs/wk

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