North Denver Metro Asphalt Paving Company, Excellent Reputation, Many Ways to Grow

Financial & Assets Details

About the Business

Business Description

North Denver Metro Asphalt Paving Co.

An asphalt only paving company that has 100% referral/recurring revenues as proven by their lack of advertising and by having no website.

The companies first job was in early 2014. They do patchwork including a lot of trenchwork patching for the replacing of underground utilities. They do road work, new subdivisions, commercial builds, and various jobs for mostly general contractors.

There are many ways to grow this company, but it really comes down to adding employees because they have all the work they can do now. They are selling for quality-of-life reasons. They lost a couple of contracts because of Covid and then in 2021 Suncor shut down in April and didn’t start up again until July which resulted in their asphalt increasing in price from 48 dollars per ton to 65 dollars a ton which had a double negative impact in 2021 based on a loss of revenue and paying employees who were temporarily not working. This was all temporary and 2022 returned to mostly a normal year.

The 2022 revenues were 9.7M with 609K in earnings. They currently have a backlog of work.

The current value of the assets are estimated to be 1.27M plus 280K for a fairly new paver they want the buyer to take over the payments for. The current asset values were calculated fully knowing that a buyer and/or bank will most likely double check this through an equipment appraisal. The 1.27M does not include the new paver they bought in January 2022 for just over 300K which was built in 2018 and had under 200 hours on it when they bought it. This paver is over 450K brand new and they are asking the new buyer to take over the payment balance of 280K plus a sales price of 1.45M. This is only 2.4 times their 2022 earnings which is a very low multiple considering their level of assets, backlog, and recurring revenues. In other words, you get 1.27M worth of assets for 1.45M plus taking over the paver payments with a residual balance of 280K for a paver worth a lot more than 280K. This means that you are paying less than 200K in goodwill for a business that did 9.7M in revenues with 609K in earnings.

The company was started in 2013 from zero with their first job in early 2014. They do patchwork including a lot of trenchwork patching for the replacing of underground utilities. They do road work including work on both I 25 and I 70. The also do new subdivisions, commercial builds, and various jobs for mostly general contractors.

They currently have 2 full time crews totaling 20 employees. In 2019, they had 30 employees made up of 3 crews and had a record year generating almost 12M in revenue and 1.3M in earnings. They have 2 full time estimators now and had 3 in 2019(one retired in 2020).

Future Growth: Per above, it is all about finding competent employees and estimators. There is more work in Colorado than workers to do it all and the new infrastructure bill has yet to take hold. Assuming you find the employees, the new owner can create a website with search engine optimization and or pay per click. Can add cement instead of 100% asphalt. Can bid on the “bid sheets” that are online that always have many projects on them looking for companies to perform the work. The new owner can solicit more commercial parking lot installation and maintenance. This would be enhanced by adding design, signage, striping, and thermoplastics(reflective arrows, etc.) which they currently sub out for almost 1.5M per year. Adding this would increase their demand and profits on current work. Adding a reactive crew for potholes, crack fill, sealcoating, and other repairs is a high demand service that they only do when they have extra time.

The buyer does not have to be in the paving industry but should have construction experience as an owner or manager.

The sales price of 1.45M plus the assumption of the note on the new paver is priced as if this will be an asset purchase with them keeping their cash, collectable accounts receivables, and all debt paid off except a paver. This may quality for a standard SBA loan but is unlikely to be approved for a preferred SBA loan because of 2021. The company is an S corp.

Details:

The business has very loyal and long-term crews who have been trained in all of the types of work that they do. They do some work year-round but most of their revenues and profits are from April to October which is the main reason that they use crews instead of employees. They have all been trained for safety and efficiency. They are trustworthy, competent, and reliable because they overpay them.

Location: The property is 5.12 acres which they use about 2/3rds of which is what they are willing to lease. The leased area will include a 5K square foot building with two large bay doors, 1700 square feet of which is office space with 4 offices. Plus, that leased portion of the property will have more storage than they have ever needed. The is plenty of room to grow. The lease rate with be 12,650 per month triple net for the first 2 years with a 3% COLA afterwards.

The company has a great reputation for safety, quality, and reliability. They have a great record for safety (OSHA) as proven by their low workman’s comp MOD rate of .73 which is very good.

Growth & Expansion

There is more work in Colorado than workers to do it all and the new infrastructure bill has yet to take hold. Assuming you find the employees, the new owner can create a website with search engine optimization and or pay per click. Can add cement instead of 100% asphalt. Can bid on the “bid sheets” that are online that always have many projects on them looking for companies to perform the work. The new owner can solicit more commercial parking lot installation and maintenance. This would be enhanced by adding design, signage, striping, and thermoplastics(reflective arrows, etc.) which they currently sub out for almost 1.5M per year. Adding this would increase their demand and profits on current work. Adding a reactive crew for potholes, crack fill, sealcoating, and other repairs is a high demand service that they only do when they have extra time.

Market Competition:

The companies first job was in early 2014. They do patchwork including a lot of trenchwork patching for the replacing of underground utilities. They do road work, new subdivisions, commercial builds, and various jobs for mostly general contractors.

Location Details:

The property is 5.12 acres which they use about 2/3rds of which is what they are willing to lease. The leased area will include a 5K square foot building with two large bay doors, 1700 square feet of which is office space with 4 offices. Plus, that leased portion of the property will have more storage than they have ever needed. The is plenty of room to grow. The lease rate with be 12,650 per month triple net for the first 2 years with a 3% COLA afterwards.

Support & Training

Will stay as long as needed

Reason for Selling:

Semi-Retiring