NEW LOWER PRICE! 24 Year Old Custom Manufacturing Co in South Denver Metro, Long Standing Customer Base with Nationally Known Names
ManufacturingFor Sale in denver, CO
Financial & Assets Details
About the Business
12 21 21 Update: Potential Buyers had noticed a large miscellaneous negative expense in the 2020 PL and some manual adjustments in the April PL of 2021. There was also an unusually large difference between the tax returns(cash based) and the PL’s(accrual based). The Sellers agreed to bring in a professional bookkeeper who spent over 2 weeks rebuilding the financials for 2019, 2020, and 2021 to make sure they are accurate and would survive due diligence. The earnings have started improving dramatically in the fall of 2021 after a rough 12 months from Covid’s impact on the supply chain pushed some of their contracts back to the 2nd half of 2021. The data room has been updated with the new and accurate financials and an explanation of the difference between the tax returns and financials. The fully reconciled, compiled, and now accurate financials are night and day better than the lower inaccurate ones which means that this should have been done sooner.
Here are the results: The trailing 12 months to November 30th 2021 had properly adjusted earnings of 236K instead of the inaccurate and much smaller number we were showing before. The 2020 properly adjusted earnings is now 249K instead of a much lower and inaccurate number we were showing before. He had agreed to lower the sales price to 800K in early November which he probably would not have had to do if we had gotten the financials fixed before that adjustment. The current value of the assets which is mostly equipment is estimated to be 782K which leaves only 18K in Goodwill for this purchase.
In addition, the owner states “We have secured a contract for some aluminum Motor Plates from a customer for 330 pcs totaling $53,926 which is a 20% higher price than the last order for 330 that we finished in early December. We start the renewed contract in January. This increases the volume of the work for this major customer and this is looking like a recurring longer term need of theirs.
The owner uses 200 sq ft personally which can be used for additional equipment or storage post-closing.
This business did within 50K either above or below 1.05M in revenue for over 10 years in a row until the supply chain broke because of Covid in mid-2020. The 2020 drop in revenues and earnings was temporary with 2021 returning to above average numbers in both revenues and earnings. December is looking like a record month and will bring up the year to date numbers into record territory.
This business does custom manufacturing for both private and Government clients. The company focuses on quality which is why they have some of the newest and best machines in the industry. This is also why they have consistently gotten contracts for both military, private, and aircraft parts, equipment, and vehicle orders.
24 Year Old Custom Manufacturing Company
Location: South Denver Metro, CO
The current trailing 12 month revenues to November 30th were 1,068,424 with earnings of 236,256 which is vastly better than what we were showing before. The properly adjusted earnings for 2020 was 249,760 on 785,869 in revenues. The 2019 revenues were 1,244,109 with 223K in earnings. 2017 and 2018 had very similar numbers. The company has had no bad debt and 100% of signed contracts have been executed.
This company has American made equipment that is newer and more valuable than I typically see the estimated value of the assets is 782K. The very high quality combined with the fact that the assets represent over 95% of the sales price helps to push up the multiple just as it does for equipment rental and other companies with a large amount of easy to liquidate assets. Equipment rental often sells for 5 times the earnings and have a smaller profit margin than this company does. This company also has long term recurring revenues from a well-known customer list, quality customers means no bad debt also, great reputation, loyal long term employees, and they have participated in many strategically important military and aircraft projects.
The owner and his wife started this business over 20 years ago. The company has earned a great reputation and are 5 star rated with Google and Facebook and A+ rated with the Better Business Bureau. They also were honored to be selected as one of the top ten machine shops in the country in the 2000’s by American Machinist Magazine which had 1200 entries. They were vetted for the processes and quality.
They have a long-standing customer base with nationally known names which they make both products and/or parts for. They do several large projects every year along with smaller ones for a solid/recurring base of customers. They have a very high percentage of recurring revenues which makes them more valuable. They currently have a large pipeline of over 200K. They do 85% private and 15% Government work. The Government work is mostly DOD work.
They provide CNC milling, vertical and horizontal boring, CNC and Swiss screw machining, milling, I.D./ O.D and flat face grinding, engraving, conventional and CNC turning, drilling, tapping, and welding. They work with aluminum (all types), stainless steel, carbon steel, hastalltoy/ titainium, honeycomb plastics (all types), and tool steel (all types), tungsten alloys.
You will get approximately 782K in current value Assets! This includes 675K in equipment at current value. This equipment includes AAS ST20Y live tool (12’’ dia x 12.5 long), HAAS ST30 CNC Lathe (3.0 through, 21’’ dia x 26’’ length), HAAS VF-7 CNC Mill (84″ x 32″ x 30″), HAAS VF-4 CNC Mill (50″ x 20″ x 25″), (2) Fadal CNC 15 mills, Fadal CNC 3016 mill with 4th axis, Daewoo CNC 200B lathe (1.75’’ through), Daewoo CNC 200C lathe (2.0’’ through) w/ barfeed, Atrump engine lathe, (2) Manual mills, Acer Surface grinder, Summit I.D/O.D. grinder, and a Zeiss Dura Max CMM along with many traditional tools and equipment.
The sales price has been lowered to 800K from 925K which is a great price for a Fabrication/Manufacturing Company with their reputation and 95% of the sales price is current value assets made up of mostly large equipment. The should finish 2021 with 265K in earnings which means this company at only a 4 times multiple(low for a manufacturing company with 95% of the sales price covered by assets and long term recurring major aerospace and military contracts) would be selling for over $1M.
This is a “Fun” business to own that is growing and the Owners wants to make sure the new owner continues their growth and success. They have turned down some large projects for quality of life reasons having raised a family in the Denver Metro Area. The owners decided to maintain a 40 hour week for him and less than 30 hours a week for her so they could raise their kids and enjoy what they do.
The seller seeks 800K plus a small amount of inventory. This is a LLC and will most likely be an Asset Sale. The business will be offered with the Sellers keeping their cash, AR, and will be transferring the business debt free. Recurring revenue from large customers is very valuable.
The buyer will also step into a solid pipeline of recurring revenue with some of the highest gross profit margins in the industry which is a direct result of their operating model, reputation, and relationships. This business will not change the day after the closing. They currently have 161,804 in work in progress or signed contracted work heading into 2022 when 60K is more normal. The owner states “the business was set up to be a turn-key business and does not need the new owner to make it profitable”. The business has several easy to get certifications.
They have a great reputation for the quality of our work, dependability, accurate bidding, and for fair dealings. The seller will agree to full Reps and Warranties to a solid legal and business standing. The seller will offer “to off-set” against the sales price for any liabilities originating before the closing and indemnify their financials.
Growth Opportunities: They have not needed to advertise in the past based on the quality of their work and reputation. They have less than ¼ of 1% of their revenues in advertising cost which is almost zero advertising. A new owner can use their 5 star reputation to advertise for more work.
They have 6 trustworthy, competent, and reliable employees. They have room for at least 10 employees if the new owner wants to grow this company. The owners do not do the work themselves. The owner just needs to maintain relationships, bid work, and oversee the business in general. The Sellers believe all employees are loyal, love their jobs, and will all stay after the transition. The owner will offer a full time transition and then stay part time afterward to help as needed.
Their location is leased in a new looking brick building that was built in 2006 with plenty of parking. The building is 5,500 square feet and they pay 16.88 per square foot which is 7,737 per month triple net. The building has many custom improvements including 1500 AMP service through a company owned separate electrical gear cabinet outside the back of the building. The business has a full camera set up in and around the business and the building. He just signed a new 3 year lease in December of 2021.
Jeff C Eisnaugle
Business Broker Colorado, LLC
This is prepared by Business Broker Colorado, LLC. It was not created by the seller and neither the Broker or the Seller are responsible for its accuracy. Buyers are responsible for their own due diligence. Neither the Broker or the Seller will indemnify or guarantee any forward looking statements or projections. The information contained in this e-mail message is confidential and may be protected from disclosure. Please be aware that any other use, printing, copying, disclosure or dissemination of this communication may be subject to legal restriction or sanction.
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Growth & Expansion
They have not needed to advertise in the past based on the quality of their work and reputation. They have less than ¼ of 1% of their revenues in advertising cost which is almost zero advertising. A new owner can use their 5 star reputation to advertise for more work.
The company has earned a great reputation and are 5 star rated with Google and Facebook and A+ rated with the Better Business Bureau. They also were honored to be selected as one of the top ten machine shops in the country in 2009 by American Machinist Magazine which had 1200 entries.
Their location is leased in a new looking brick building that was built in 2006 with plenty of parking. The building is 5,500 square feet and they pay 16.88 per square foot which is 7,737 per month triple net. The building has many custom improvements including 1500 AMP service through a company owned separate electrical gear cabinet outside the back of the building. The business has a full camera set up in and around the business and the building. There is one year left on the lease which can be renewed and/or renegotiated.
Support & Training
Will stay for a full time transition and then stay part time afterward to help as needed.
Reason for Selling:
Wants to spend more time with family