Type: Manufacturing

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Product & Company.

The subject entity is engaged in the manufacture of proprietary fiberglass “add-on” truck covers.  The company both distributes to a nominal number of resellers and directly sales from it production facilities.  The business has operated successfully for about 30 years with this product line at the same physical location.  The products have impeccable quality and craftsmanship.

Sales.

Nominally 80% of gross sales are of the subject entity’s proprietary manufactured products.  The balance, 20% of gross sales, are of accessories and related products, some of which are purchased from other manufacturers.  All sales orders are prepaid.  Manufactured products are custom produced.  A five (5) day order to fill (or ship) turnaround is customary. 

Location.

Since its inception, both the manufacturing facilities and offices have been located at one location in the southeastern United States . 

Assets and Liabilities.

Operations.

Approximately 80% of gross sales are from the primary manufactured fiberglass truck cover product line, with balance from related accessories.

Business operating hours for both the manufacturing and sales functions are Monday thru Friday, 8 hours, and ½ day on Saturday.     

Existing total facilities utilize approximately 15,000 square feet, allocated as follows: 10,500 square feet of manufacturing space, 3,000 square feet of storage, and 1,500 square feet of office space. 

Sales originate from nominal advertisements in pickup truck periodicals, from local newspaper classified ads, from word of mouth, and from recognition of its trade name clearly imbedded on the visible product.

Nominal sales are from the internet, which technology the owners have not thoroughly capitalized upon.  There are no sales from independent salespersons, whom the owners have not utilized.  Recent annual advertising budget averages approximately $15,000.

Product does not have intrinsic product liability.

Financials.

Recast income statements indicated estimated annual pretax profits of $60,000.  One owner compensation is about $40,000.  SDCF is about $100,000.  Capitalized pretax earnings using a multiple of 4x are nominally $400,000. 

Employees.

Owners and 5 employees average 15 plus years of experience.  Most employees have attained a high level of skill related to their specific input to the product line.  Employees fully understand that the product must have exceptional quality.  Average non-owner wage is $13 per hour.  Employees receive three (3) weeks of paid vacation.  There are no other employee benefits.  Subsequent to the purchase the manufacturing supervisor can be either hired externally or promoted from current employee base to replace the owner.

Working Conditions.

The process requires a clean environment.  EPA concerns are minimal.  The facility is not air conditioned.

Competition.

There are several larger entities in this industry, none considered dominant.  The subject company’s product line is clearly differentiated in terms of both quality and style.  Product returns are rare.

Buyer Skill Level.

The new owner should possess marketing and sales skills.  The ability to speak frankly with a skilled workers is a plus.  

Current owner training will be provided for about a six month period at nominal compensation.

Owners' Reason For Selling.

Nearing retirement.

Offering, Price, and Terms.

Total asking price (current and deferred) is $650,000, cash.

All liabilities will be paid-off by sellers.

Owners will retain cash balance and two vehicles.  Real estate is not included in the selling price.  Current lease is at fair rental value and is not expected to change. 

Buyer Capital Investment.

Additional capital investment expected in either expanded manufacturing facility or merger with compatible manufacturer with existing plant capacity.  Replacement facility expected to require nominally 50,000 square feet to achieve economies of scale.  Principles (who also own the current real estate) do not desire for the existing facility to be used long-term by the purchaser. 

Additional Items.

The business operations can potentially be formulated as a franchise.  It is contemplated that various regional franchise operations might be practicable.  The molds can be reproduced at a fraction of their original production cost, and the subsequent second-generation molds become the basis for a franchisee’s operations.   

The opportunity exists for the production and sale of custom name brand product lines. 

Caveats.

Buying a business is a complicated process.  In any business purchase the buyer should obtain or perform due diligence during the acquisition process.  The buyer should carefully consider the risks involved in any investment, including the subject entity.  For most individual purchasers it is perhaps a substantial personal investment.  If the buyer has had no prior experience in the industry then the risks should be considered as being greater.  Both the subject entity and the business broker suggest that the buyer obtain suitable advice from counselors of the buyer’s choosing (and at the buyer’s cost), and among other things perform a site visit, obtain independent appraisals, and make appropriate inquiries.

Follow-up Contact.

Chris Whitener
Broker
Equity Financial Group Inc.
cw@EquityFinancialGroup.biz
877-318-4898 (toll free)

Document Disclaimer: The information contained in this document may contain confidential information from Equity Financial Group Inc.  Any release of this information without the express written permission of Equity Financial Group Inc. is prohibited.  Additional information requires an executed Confidentiality Agreement.  Reported amounts should be verified through buyers due diligence.  

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