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Details - Information last confirmed on November 5, 2020

The owner of this attractive, cash flowing, 50 year old road milling and pulverizing business has reached retirement age and looks forward to transitioning his successful business to only its third owner-operator.

Located in mid-Michigan, the preponderance of the company’s projects are within 100 miles of it home base. There is no customer concentration as its five largest clients (primarily road builders) combined do not exceed 25% of revenues in any given year.

This seasonal business typically operates no more than seven months annually with the business shuttered from some point in October and reopening as early in April as Michigan weather permits. The company’s nine union employees are laid off during the down period. The company also has an estimator and office manager both of whom work reduced schedules in the off season.

During the past three, March 31st fiscal years, this ‘C’ corporation has averaged $3.35 million in annual revenues while recording an exceptional average annual SDE (seller’s discretionary earnings - the historic cash flow available to pay an owner-operator and service debt) of $890,000. The SDE figure is even more impressive given that the only addbacks of significance are the seller’s W-2 salary, interest and depreciation.

The business is being listed at $2.58 million, a competitive 2.90x multiple of SDE. The seller envisions an asset sale in which he retains cash and A/R while retiring all liabilities. Included in the listing price is $3.0 million (cost basis) of fixed assets and of course the goodwill of the business.

From a buyer’s standpoint, assuming a 10% down payment and an annual buyer salary of $200,000, a typical deal would boast a bank pleasing 2.24x debt coverage ratio after the buyer’s $200,000 salary. Given the company’s solid history, outstanding reputation, wealth of fixed assets, and the strong debt coverage ratio, banks, even in the Covid-19 era, should show great interest in financing a sale to an owner-operator with industry experience.

A combination of Covid-19 and Michigan weather caused the business to get off to a late start to the 2020 construction season. As a result the company has a significant backlog and plans to work as late in the fall as weather permits and is hoping for an early start to the 2021 season so it can wrap up uncompleted 2020 construction projects before starting its new 2021 contracts.

For more information on this successful, niche business, please contact broker.

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