Regional Liquid Transportation
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.
- 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
- 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 Statement||Tax Return|
Combined 1 and 2
|Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$183,087||$135,679||$102,085||$69,472|
|Insurance Premiums for Owners: Health, Life, Auto||$3,762||$4,240||$2,500||$2,500|
|Pension and Profit Sharing||$0||$1,930||$0||$0|
|Meals and Entertainment||$1,185||$2,575||$2,393||$2,343|
|Seller's Cash Flow = Total Addbacks + Net Income||$307,339||$279,063||$199,132||$157,675|
|Profit Margin||8.23 %||9.14 %||7.41 %||5.52 %|
- Increasing sales YOY!
Typical Clients and Services
- Dedicated deliveries for at least 10 companies
- Standard deliveries for 28 other companies
- Many clients have been with this company since it was established!
- 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.
- 5 On-site employees:
- 2 dispatchers
- 2-3 mechanics
- 23+ Off-site:
- 20+ contract drivers
- 3 company drivers
- Expand truck repair services
- 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
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.
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.
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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