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Opportunities

Regional Liquid Transportation

CASH FLOW
$307,339

Specifications

  • Price
    $1,165,000

  • Revenue
    $3,732,154

  • Profit Margin
    8%

  • Location
    Northwest Iowa

  • Service Area
    Regional and cross-country

  • Reason for Sale
    Retirement

  • Lease
    3.5 acres with 7,200 sq. ft. building: 2.5 garage stalls for repairs, office; building available for future lease

  • Intangible Assets
    Strong client base, long-term clients, lower overhead due to many owner/drivers, direct line on potential large contracts

  • Employees
    On-site: 5 (2 dispatchers, 2-3 mechanics). Off-site: (20+ contract drivers, 3 company drivers)

Transporting non-hazardous liquid commodities is the specialty of this consistently growing company.  Located in Northwest Iowa, this business offers hauling throughout the central region of the US (70%) as well as throughout Oklahoma, New Mexico and Arizona (30%).  Working with over twenty contracted owner/operator haulers and three company drivers, upcoming work is anticipated to be well over $3MM in 2019.  Building upon positive word-of-mouth referrals and long-term client relationships, this company has earned significant contracts for designated deliveries totaling over a reliable $2.5MM in revenue.  The owner currently oversees daily operations but is not responsible for driving or billable hours. 

 

Additional income is earned by providing roadside service as well as truck and trailer maintenance or repair, which has the potential to build into a significantly larger stream of income.  The owners are also methodically investing in the tools required to expand into regular deliveries of metered freight.

 

With a spacious 3.5 acres parcel and a 7,200 sq. ft. building, this location has plenty of room for storage, mechanical repairs, and office support.  There are 2.5 garage bays for repairs and the business is located on a busy Interstate.  

Business Highlights

  • Year Established: 2004
  • Location:  Northwest Iowa
  • Service Area: Regional and cross-country
  • Services:  Transportation of non-hazardous liquid commodities, truck and trailer repair services
  • Clients: Dedicated deliveries for at least 10 companies, 28 other companies
  • Building:  3.5 acres with 7,200 sq. ft. building: 2.5 garage stalls for repairs, office; building available for future lease
  • Reason for Selling: Retirement
  • Employees: On-site: 5 (2 dispatchers, 2-3 mechanics). Off-site: (20+ contract drivers, 3 company drivers)
  • Hours: Office: M-F 8-5, but dispatchers are on-call throughout the week and runs are done 24/7
  • Seller Training Period: 6 months – 1 year
  • Growth Opportunities: Expand truck repair services, expand services with meters to gain addt’l contracts
  • Current Owner’s Responsibilities: Daily oversight

Financial Highlights

  • List Price: $1,165,000
  • Gross Sales:
    • 2017: $3,732,154
    • 2016: $3,052,038
    • 2015: $2,685,808
  • Cash Flow:
    • 2017: $307,339
    • 2016: $279,063
  • Assets Included in Purchase*
    • Work in Progress & Secured Work: $3MM+
    • A/R:  $180,000
    • Intangible Assets: Strong client base, long-term clients, lower overhead due to many owner/drivers, direct line on potential large contracts

*amounts may vary

Cash Flow Analysis

Description of Financial StatementTax Return
Business 1
P&L Statement
Combined 1 and 2
Tax ReturnTax ReturnNotes
2017201620152014
GROSS SALES$3,732,154$3,052,038$2,685,808$2,855,502
Net Income Shown on Financial Statement$183,087$135,679$102,085$69,472
ADDBACKS
Depreciation$75,856$104,195$41,803$30,774
Interest$23,236$7,653$31,231$32,082
Non-Business Telephone$5,220$5,220$5,220$5,220$435/month
Insurance Premiums for Owners: Health, Life, Auto$3,762$4,240$2,500$2,500
Pension and Profit Sharing$0$1,930$0$0
Travel$3,156$5,000$1,400$2,300
Bronco Expense$0$210$0$0
Meals and Entertainment$1,185$2,575$2,393$2,343
Property Tax$11,837$12,361$12,500$12,984
TOTAL ADDBACKS$124,252$143,384$97,047$88,203
Seller's Cash Flow = Total Addbacks + Net Income$307,339$279,063$199,132$157,675
Profit Margin8.23 %9.14 %7.41 %5.52 %
  • Increasing sales YOY!

Typical Clients and Services

Clients:

  • Dedicated deliveries for at least 10 companies
  • Standard deliveries for 28 other companies
  • Many clients have been with this company since it was established!

 

Services:

  • Transportation of non-hazardous liquid commodities
  • Truck and trailer repair services on-site
  • Roadside truck and trailer repair services

 

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Employees

Total team:

  • 5 On-site employees:
    • 2 dispatchers
    • 2-3 mechanics
  • 23+ Off-site:
    • 20+ contract drivers
    • 3 company drivers

Growth Opportunities

  • Expand truck repair services
    • On-site
    • Roadside
    • Build on local plant traffic and repair needs 
  • Expand services with meters to gain additional contracts that require metering of loads 
  • Expand territories 
  • Build team of contracted drivers

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 2017 cash flow was used with a prescribed multiple is 3.8.  With this information, the computation is as follows:

$307,339         x          3.8       =          $1,167,888

The fair market value found above positions the business list price at $1,165,000.

Funding Example

Purchase Price:                                $1,165,000

12.5% Buyer Down Payment:             $145,625

12.5% Seller Financing:                      $145,625

75% Bank Loan:                                   $873,750

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $2,715.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $11,482.

After business expenses and loan payments, a buyer with a 12.5% down payment of $145,625 would retain a profit of $136,972, which results in a 94% 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 $1,165,000 with the terms listed above, the coverage ratio is 1.8. 

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. 

Purchase Price:

$1,165,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

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: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2017 cash flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2017 cash flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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