Garbage Pick Up in 3 Communities
With 2,400 accounts and growing by 120 new accounts each year, this absentee sanitation business in eastern Nebraska is a great acquisition for an Omaha or Lincoln-based company looking to expand into a new market. In business for 46 years, the owner has built a great team of employees covering all shifts, including one Saturday morning route. Customer are a mix of residential and commercial, with the majority falling into the residential category. There are currently 170 business accounts that could be a great area to grow.
Serving customers in 3 towns, the business does not offer recycling. A larger sanitation company acquiring this one could add recycling services to clients, but a smaller outfit or a single buyer would not find any profit in recycling. Due to this, the best growth exists in expanding the territory, which may require more employees to cover more accounts.
Included in the sale is over $225,000 in assets. All vehicles and equipment are currently housed on a private property, so a buyer would need to move everything to a new location. A space of roughly 4,600 sq. ft. should suffice. Priced at $455,000, this business offers a tidy income for a buyer simply overseeing operations!
- Years in Business: 46
- Location: Eastern Nebraska
- Service Area: 3 communities
- Number of Accounts: 2,400
- 170 are businesses
- Averages 120 new accounts/year
- Services: Garbage pick-up for residential and commercial locations. NO recycling.
- Storage: Required storage of vehicles/equipment is roughly 4,600 sq. ft.
- Reason for Selling: Retirement
- Employees: 5 FT, 1 PT (works Saturday shift)
- Hours: Mon – Fri 5am to 1pm, Sat 5am – 9am
- Growth Opportunities: Expand territory. Seek out more business accounts. More employees to cover more accounts. Build a simple website to draw clients.
List Price: $390,000
2017 - $592,751
2016 - $597,177
2015 - $584,301
2018 - $110,514 (Annualized)
2017 - $81,634
Profit Margin: 18%
Assets Included in Purchase –
Equipment: $120,671 – totes, dumpsters, containers
Vehicles: $109,291 – 4 garbage trucks
- 2,400 accounts
- 170 business accounts
- 120 new customers per year
- Company has a 10-year contract with a nearby town
- Exclusive rights with a 5-year option
- 170 – 175 accounts in the town
- January 1, 2018 starts a contract with a new housing development
- Will add about 21 new accounts
Cash Flow Analysis
|Description of Financial Statement||P&L Statement|
Jan - June
|Tax Return||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$35,052||$29,698||$70,322||$69,226||$65,326|
|Compensation to Owner||$11,760||$32,898||$35,906||$37,555||$26,505|
|11% Tax on total W2 Salaries||$1,294||$3,619||$3,950||$4,131||$2,916|
|Interest||$0||$80||$833||$326||$80||Non-onward going expense|
|Non-Business Telephone||$1,080||$2,160||$2,160||$2,160||$2,160||Personal cell phone payments|
|Insurance Premiums||$4,300||$8,600||$7,600||$0||$0||Auto - $3000/year, Supplement - $3600/year, Life - $2000/year|
|Meals & Entertainment||$166||$566||$642||$0||$0||Non-onward going expense|
|Seller's Cash Flow = Total Addbacks + Net Income||$55,257||$81,684||$121,413||$113,840||$105,687|
|Profit Margin||18.32 %||13.78 %||20.32 %||19.48 %||18.40 %|
- Cash Flow, Profit Margin and Gross Sales increase year after year
- Gross Sales have grown by 4%
- Cash Flow has increased by 15%
- Over a 3-year period, Profit Margins average 19%
- 4 garbage trucks with a replacement value of $109,291
- Equipment – replacement value of $120,671
- 100 dumpsters
- 700 – 800 trash cans
- 96-gallon totes
- 68-gallon totes
- And more!
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business. The formula used is as follows:
Cash Flow x Multiplier = Price
“Cash flow” is the sum of net income plus any owner perks and non-onward going expenses.
“Multiplier” is a prescribed number between 1 and 5 determined by a 100-point, 20-question rating system used to determine the business valuation (average is 3).
The Cash Flow for 2017 is $81,634, and the prescribed multiplier is 4.8
With this information, the computation result follows:
$81,634 x 4.8 = $391,843
The List Price for the business is set at $390,000.
Purchase Price: $390,000
10% Buyer Down Payment: $39,000
15% Seller Financing: $58,500
70% Bank Loan: $292,500
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $1,091.
Bank Loan 10-year term at a rate of 6% equals a monthly loan payment of $3,247.
After business expenses and loan payments, a buyer with a 10% down payment of $39,000 would retain a profit of $29,578, a 76% return on investment in the first year!
A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed Purchase Price of $390,000 with the terms listed above, the coverage ratio is 1.57.
Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available.
Offer Price: $
% Buyer Cash Down at Closing: $
% Seller Carry Back via Promissory Note: $
year term at a rate of %
% of Purchase Price secured by Buyer and Seller
Total Bank Loan Need: $
% of Purchase Price
Desired Loan Type:
Desired Bank Terms: year term at a rate of %
Total Business Assets, Inventory, and A/R: $
Total Undercollateralized Loan: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2017 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2017 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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