New Deals: A roofing contractor, moving company, and 3 other finds

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NEW DEALS

1/ Roofing and General Contractor

📍 Location: Florida
💰 Asking Price: $4,850,000
💼 EBITDA: $1,489,814
📊 Revenue: $5,671,220
📅 Established: 2012

💭 My 2 Cents: Roofing can be awesome cash-flowing businesses that, unlike HVAC, hasn’t yet fully caught the eye of roll-ups. They provide an invaluable service, are almost always in demand (especially in Florida, a state prone to natural disasters), and are often funded by insurance payments. I like how this company has diversified by also offering general contracting services and that the owner is willing to use their licenses to qualify the business as long as needed. I also really like the nearly $600K in FF&E and the $1M in real estate included in the purchase price (this may extend the amortization on an SBA loan beyond 10 years which can improve your cash flow). However, I’d want financial statements from the past five years to see the revenue breakdown between roofing and general construction and confirm the consistency of their earnings over time (since roofing can be seasonal and impacted by weather patterns). I’d also need to check on their current work-in-progress and backlog, how they handle increases in material costs, how much competition they face and how they bring in new business, the qualifications and experience of their staff, and the condition of their equipment and facility. Ultimately, given their significant cash flow, this feels like a good deal at a reasonable price.

2/ Moving, Storage, and Trucking Company

📍 Location: Vermont
💰 Asking Price: $3,500,000
💼 EBITDA: $751,000
📊 Revenue: $8,100,000
📅 Established: 1985

💭 My 2 Cents: This trucking company generates revenue from four distinct but complementary streams, offering moving, storage, and short-haul services along with the sale of moving supplies. They operate from three seller-owned buildings that provide a mechanics bay and office and warehouse space. I really like that they have distinct related business lines that play so well together, as these can guide clients to each other and increase their average client lifetime value. I also like their ongoing commercial contracts that bring in consistent revenue, their robust staff of 60, and the whopping nearly $2M of FF&E included in the sale. While their numbers look solid, I do have several questions. First, because all of these facilities are owned by the seller, I’d need to make sure that they are fairly calculating EBITDA, given the rent that would need to be paid by a new owner. Relatedly, I’d want to ensure the lease terms are long-term and make sense. The moving arm of the business is a franchise, so I’d need to fully understand this arrangement and the terms, costs, and benefits involved. Finally, I’d want to understand how their one major contract fits into their overall operation and if they are facing any capital expenditures on vehicles or equipment. This deal calls for serious diligence, but could well be worth it.

3/ Package of Subway Locations

📍 Location: Illinois
💰 Asking Price: $3,000,000
💼 EBITDA: $731,313
📊 Revenue: $6,956,983
📅 Established: 1993

💭 My 2 Cents: This multi-unit Subway franchise package includes 12 locations across Illinois and Missouri. Franchises can be great opportunities for the right owner in certain situations. With a large portfolio like this, you can see some serious cash flow while benefiting from synergies in both staffing and operations. The Subway brand also provides stability, recognition, and significant corporate support through advertising and operational guidance. As with any franchise, I’d want to spend significant time understanding the franchise agreement so I know what fees are required, what limitations there are around operating decisions, and if there are any restrictions concerning future growth or an eventual sale. I’d also need to dive into the financials for each location to make sure you aren’t overpaying for an underperforming site. I’d finally want to know the level of competition within 5 miles of each location, if there are any challenges in staffing, and how the overall management for the 12 sites is structured. If you're comfortable with the franchiser terms, this could be a great opportunity to join the largest string of sandwich shops in the world.

4/ Metal Manufacturing Business

📍 Location: New York
💰 Asking Price: $2,400,000
💼 EBITDA: $500,000
📊 Revenue: $2,000,000
📅 Established: 1971

💭 My 2 Cents: I like manufacturing businesses like this one that have been in operation for a long time, as this tells me they have really worked out their product-market fit. This niche metal manufacturer, in operation since 1971, specializes in custom items for high-value government contracts. I like how these government contracts, with their normally favorable terms, represent a very steady source of revenue. This company is also unlikely to face much competition in their niche as it can be very challenging to become an approved supplier for these contracts. Another real positive is the very significant amount of FF&E included in the sale, which represents another strong barrier to entry as it can be very difficult and expensive to procure the highly specialized equipment involved. I’d want to better understand exactly what they produce, who their key government clients are, and what their rate of repeat business is. I’d also need more detail on their government contracts to include their standard terms, if there are any licenses or certifications needed to operate the business, and the role of the owner. With the renewed emphasis on domestic manufacturing, this looks like an especially appealing opportunity.

5/ School Bus Business

📍 Location: New Jersey
💰 Asking Price: $6,600,000
💼 EBITDA: $1,600,000
📊 Revenue: $3,500,000
📅 Established: 2004

💭 My 2 Cents: School bus operations are generally reliable, stable businesses driven by ongoing client contracts. This company has been in operation for 20 years, with an impressive fleet of 36 vehicles (23 of which are less than four years old) to service its 28 routes. Assuming a solid reputation and quality service, there shouldn’t be much risk to their earnings and repeat business going forward. I really like that they’ve recently added a mechanic shop, which services both their fleet and external customers, as in this business, you want to be on top of fleet maintenance, repair, and replacement costs. I also like the massive $4M of FF&E included in the sale, which makes the asking price extremely reasonable. However, I’d need to really dig in on the actual value, condition, and projected useful life of their fleet. I’d also want to look into their annual maintenance costs, the standard terms of their contracts with local school districts including how often they’re renegotiated, their rate of contract renewal, how they source new clients, how difficult it is to attract and retain drivers, and the day-to-day role of the owner.