Opportunities
Roofing & Exterior Contractor for 60K
Sold
Specifications
Centrally located in Omaha, this roofing and exterior contracting business is listed for just $60,000. For only $12,000 (20% down), a buyer could easily return the business to making nearly $370,000 and profiting nearly $60,000. The company saw a 35% increase in sales from 2013 to 2015, but sales dropped in 2016 due to the seller’s frequent need to travel out of the country for family health issues. Currently, the owner is splitting time between Omaha and Mexico City, and is ready for the business to sell.
Although sales suffered when the owner was away from the business, he does not work the sites, but focuses on bidding and shift scheduling. Consistent attention to these matters would see the sales values rise dramatically to where they were historically. More referrals and requests are coming in than the seller can devote time to, due to his frequent absence from the business.
Employees include 2 subcontractors, but with the addition of more staff more jobs could be completed. In 2016, the team completed 25 jobs and have already done 6 in 2017 with more to come.
Included in the purchase is roughly $10,000 in tools and office equipment, and a 2004 Chevy Silverado worth about $5,200. Based on 2016 cash flow, a buyer could expect to profit $13,970 in the first year.
Business Highlights
- Year Established: 2005
- Location and Service Area: Omaha Metro
- Demographics: Most business is remodel jobs
- Services: Roofing, gutters and windows
- Reason for Selling: Moving out of the country
- Employees: 2 subcontractors
- Hours: Mon – Fri 9am to 5pm
- Growth Opportunities: The current owner is spending a lot of time traveling and has to turn down many referrals/requests for bids. A new owner could expand business by building more relationships with quality subcontractors and accepting referrals.
- Current Owner’s Responsibilities: Bidding and coordinating contractors
Financial Highlights
- List Price: $60,000
- 2016 Gross Sales: $157,325
- 2015 Gross Sales: $366,804
- Assets included in purchase: $15,200
- Equipment - $10,000 in tools and office equipment
- Vehicle – 2004 Chevy Silverado ($5,200)
- Intangible Assets – A+ BBB rating, website, referrals from high profile real estate company
*Please note: the business saw a drop in sales during 2016 as the owner was frequently out of the country visiting sick relatives. Keep in mind that the owner is not an active worker on the sites, but does handle bidding and scheduling.
Cash Flow Analysis
| Description of Financial Statement | Tax Return | Tax Return | Tax Return | Tax Return | Notes |
| 2016 | 2015 | 2014 | 2013 | ||
| GROSS SALES | $157,325 | $366,804 | $754,013 | $235,808 | |
| Net Income Shown on Financial Statement | $22,439 | $55,107 | $86,842 | $40,954 | |
| ADDBACKS | |||||
| Depreciation | $372 | $2,473 | $6,930 | $0 | Non-onward going expense |
| Meals & Entertainment | $0 | $1,819 | $2,344 | $1,019 | Expenses unrelated to the business |
| TOTAL ADDBACKS | $372 | $4,292 | $9,274 | $1,019 | |
| Seller's Cash Flow = Total Addbacks + Net Income | $22,811 | $59,399 | $96,116 | $41,973 | |
| Profit Margin | 14.50 % | 16.19 % | 12.75 % | 17.80 % |
- The company has done historically well, and with attention could easily return to those numbers
- Owner saw a 68% increase in sales from 2013 to 2014, and a 35% increase from 2013 to 2015
Services
- Roofing
- Metal, rubber, TPO
- Hail damage repair
- Free roof inspection
- Gutters
- Seamless, aluminum, copper, steel
- Siding
- Vinyl, concrete, wood
- Windows
- Bow, bay, circle top, garden and more
Competitive Outlook
- The area is seeing a housing boom, and with new building comes increased need for roofing, gutters, siding and windows
- The roofing industry is increasingly growing more professional, and with a company like this one that has distinguished itself with quality work and great service, a buyer would have a head start
- Current owner received many referrals from a high profile builder for remodels and new jobs
Growth Opportunities
- Expansion into rural areas for commercial and residential services
- Increase commercial roofing work, as that is the biggest earner
- Continue to build relationships with homebuilders and remodelers for referrals
- Hire more subcontractors in order to tackle more jobs and larger jobs
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, the 2016 Cash Flow was used, with a prescribed multiple of 2.7. With this information, the computation is as follows:
$22,811 x 2.7 = $61,589
The Fair Market Value found above positions the business List Price at $60,000.
Funding Example
Purchase Price: $60,000
20%Buyer Down Payment: $12,000
20%Seller Financing: $12,000
60%Bank Loan: $36,000
Seller financing 5-year term at a rate of 4.5% equals a monthly loan payment of $224.
Bank loan 7-year term at a rate of 5.25% equals a monthly loan payment of $513.
After business expenses and annual loan payments of $8,841, a buyer would retain a profit of $13,970. A 20% down payment of $12,000 results in a 2116% return on investment during 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 $60,000 with the terms outlined above, the coverage ratio if 2.58. Please note that the decision 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.
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210 N 78th St. 2nd FloorOmaha, NE 68114
Or fax to:
f 402.939.0857