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Opportunities

Make $100,000/Year with Recurrent Sand and Gravel Production

Sold

CASH FLOW
$137,038

Specifications

  • Price
    $281,000

  • Revenue
    $334,883

  • Cash Flow
    $137,038

  • Equipment
    $380,000

  • Inventory
    $200,000

  • Down Payment
    10%

  • Multiplier
    2.75

  • Industry
    Contracting

  • Location
    Western Nebraska

150 major clients with new contracts daily.  This sand and gravel production operation makes 42% profit with a just two full time loyal employees – one Gravel Pumper and one Loader Operator - and relatively low expenses.  Building a solid reputation through selling different aggregates to 5 counties in western Nebraska, the business has maintained long standing relationships as a primary vendor for municipalities and businesses. Gross sales consist of 60% municipal, 10% state, and 30% local businesses – mainly area farmers.  

The land is available for sale in a separate transaction, and the owner is willing to lease the land back to the new owner at a royalty of $1 per ton of aggregate sold. This will include keeping the entire business on site.  

The current Owner operates the business; however, the seasonal staff of 1 full-time gravel pumper, 1 full time loader operator and 1009 employees (when needed) are able to operate independently as needed.  Because the employees are seasonal, they are only paid when they work.  

The Owner’s current responsibilities include bidding, acquiring parts for maintenance, light management and equipment operation as needed.  In preparation for retirement, the Seller has been turning down opportunities that could turn into a profitable sideline for the business. One of these sidelines is to dig ponds and man-made lakes in the area. The business is set to grow, with the current staff and equipment running at approximately ½ capacity.

Business or equipment loan is over collateralized! 

Business Highlights

  • Years in Business: Over 60  
  • Location and Service Area: Servicing a 5 county area in western Nebraska
  • Number of Clients: Approximately 150, new contracts daily
  • Capacity: Business and equipment is running at ½ capacity
  • Demographics: Business is location dependent and very steady - 60% of contracts are with municipalities in a 5 county area, 10% to the state, and 30% to businesses 
  • Lease: Land is available for purchase in a separate transaction- Owner will charge royalties of $1 per ton sold for land usage and storage of equipment
  • Reason for Selling: Retiring to travel with his wife
  • Seller Training Period: 30 Days
  • Growth Opportunities: Owner frequently turns down requests for digging ponds and lakes as he is preparing for retirement
  • Current Owner’s Responsibilities: Owner operates the business, but staff is able to operate independently for long stretches as needed - Primary responsibilities include bidding, acquiring parts for maintenance, light management, and occasional equipment operation as needed 

Financial Highlights

  • List Price: $281,000
  • Gross Sales 2016: $334,883 (annualized)
  • Gross Sales 2015: $282,828
  • Owner Profit/Cash Flow 2016: $137,038 (annualized)
  • Owner Profit/Cash Flow 2015: $118,948
  • Owner Profit/Cash Flow 2014: $85,672
  • Assets Included in Purchase: $580,000
  • Equipment: 4 Cat Loaders - $125,000, 3 10’ barges – $150,000, pumps and floats – $50,000
  • Vehicles:  2 trucks with two roll up trailers and miscellaneous equipment – $55,000
  • Aggregate Inventory on Hand: $200,000
  • Intangible Assets: Excellent vendor relations, longevity 

    *amounts may vary

Cash Flow Analysis

  • The Recasted Cash Flow Analysis shows the add back of Owner non-business expenses or those expenses (such as depreciation and interest) which are specific to the current Owner and will not carry to a new Owner
  • Gross sales traditionally occur over a 4-5-month period per year

Assets

  • 2 CAT 950 LOADERS $50,000
  • 2 CAT 966 LOADERS $75,000
  • 2 PEKYO 10’ BARGES AND 1 THOMAS 10’ BARGE $150,000
  • PUMP & PARTS $15,000
  • LOADER $37,230
  • PUMP & PARTS $15,000
  • 1,000’ PIPE & FLOATS $35,000
  • 2 TRUCKS $30,000
  • 2 ROLL UP TRAILERS & MISC $25,000

TOTAL EQUIPMENT $417,230

Aggregate Product Information

Aggregates per specification of contract are produced. During production, primarily one type of aggregate, such as sand or gravel, is produced at a time. Digging in the river is not permitted, but the business has permits to dig approximately 70’ from the shore of the river. 

First, they dig to the water table, which is generally 5’ or 6’ deep, and then dig another 6 feet under that. A hole approximately 100’ by 100’ is produced, into which an excavation barge is lowered.  Material is then pumped from below the water table and sift it to obtain the desired aggregate. 

Lease Information

Main Location (Seller Owned)

  • Seller will charge royalties of $1 per ton (2,000 pounds) of aggregate sold as a lease.  These payments will entitle a new Owner to keep all equipment on site, excavate the land for contracts, and the use of a building on site.  The land may be purchased in a separate transaction, or a Buyer could enter into a 5-year lease.  
  • There are 100 acres on the river with approximately 30% utilized in the last 30 years.
  • In 2016, approximately 35,000 tons were sold, equaling a rent of $35,000.  This has been reflected in the Recasted Cash Flow Analysis which is attached

Neighboring Location (Third Party Owner)

  • Land Owner is paid $2 per yard (2,700 pounds) of aggregate sold as a lease
  • In 2015, the amount paid was $3,600.

Word from the Seller

1. Can you please elaborate on your background, when you started the business, and why? 

I have been around the business since I was a little kid. My father started the business. I started getting paid when I was ten to help out. When I was 13, I began running gravel, and as a teenager, I took on more responsibilities. My father’s health began to decline while I was a young man and I left town to get work. My uncle purchased the business from my father and I worked as an iron worker for 15 years. I purchased the business from my uncle 21 years ago to come home. 

2. What are some of the highlights, aspects about your business that you are proudest of? 

Staying in business and growing – especially through tough economic conditions.

3. Can you describe your competitors and what makes your business different? 

We do business in a 50-mile radius in about 5 counties. We are more personable and easier to deal with. Since location is so important in our business, we really don’t compete for a whole lot.

4. What is your reason for selling?  Please elaborate.

I just turned 65, would like to travel with my wife. I have a vacation home in South Dakota I would like to spend more time at.

5. How do you see yourself assisting the new owner in the transition?

Advice, bidding operations, contacts, showing the ropes, phone support.

6. What are your growth ideas for the next owner? 

Since I have been relaxing as I prepare for retirement, I have turned down a lot of offers to dig man-made lakes and ponds. It would not be hard to turn this into a profitable sideline for a motivated new owner.

Valuation Details

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 Prescribed Multiple   = Fair Market Value

Cash Flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A multiple is prescribed by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiple.

For this business, a two-year average Cash Flow (2014-2015) was used.  The prescribed multiple is 2.75.  With this information, the computation is as follows:

$102,310 x 2.75 = $281,325

The Fair Market Value found above positions the business List Price at $281,000.


Click to download NDA form

Print, sign and send to:

210 N 78th St. 2nd Floor
Omaha, NE 68114

Or fax to:

f 402.939.0857

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The Firm Business Brokerage is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.