New Deals: A metal fabrication company, staffing company, and 3 other finds

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NEW DEALS

1/ Metal Fabrication Company

📍 Location: North Carolina
💰 Asking Price: $6,850,000
💼 EBITDA: $1,367,466
📊 Revenue: $6,735,486
📅 Established: 1994

💭 My 2 Cents: What I love about the metal fabrication industry is how stable revenues can be because of the crucial role metal fabrication plays in many sectors (i.e. construction, automotive, energy, manufacturing, etc.). There are also significant barriers to entry because of how expensive the machinery is. This metal fabrication company is poised for further growth with its 40,000 sq ft facility equipped with an array of tools and equipment. I like their long history, reputation for high-quality products, loyal customer base, and highly experienced staff that operates with only minimal involvement by the owner. I’d want more detail on who their main customers are and what industries they represent, if there is any customer concentration (which can be common in this industry), the level of competition in their local market, how they acquire new business, and the extent of their current backlog. I’d also want to inquire into the condition of the machinery included in the sale and the key staff staying post-sale, especially since there is skilled labor involved. If that all checks out, then this company looks ready to become even more of a steady cash cow with an enhanced marketing and sales effort.

2/ Temporary Staffing Company

📍 Location: California (Remote)
💰 Asking Price: $2,100,000
💼 EBITDA: $634,000
📊 Revenue: $2,900,000
📅 Established: 1988

💭 My 2 Cents: This staffing and recruiting agency provides both temporary and permanent employees to local businesses, schools, nonprofits, and government entities. The majority of their revenue (70-80%) comes from temporary staffing, which is great in my opinion because it generally comes with a lot of repeat or recurring revenue. They also have very minimal overhead costs as they switched to a fully remote model during Covid. There are obviously major players in this space, so it’s very important to understand this business’s value proposition and why clients decide to work with them. In this particular case, I assume that much of their revenue comes from the long-standing relationships that the owner holds with key clients, so I’d spend the bulk of my diligence time trying to deeply understand the nature of these relationships and if (and how) they will transfer upon a sale. In addition, I’d want to check on the consistency of their revenues and earnings over the past five years since staffing can be both cyclical and face industry-specific volatility. I’d also need to get a handle on their average client duration and lifetime value, what their standard contract looks like, and how they attract and retain candidates for placement. Ultimately, this business has been built mostly on referrals and is super scalable, so a new owner should be able to grow without much investment.

3/ Roofing Company

📍 Location: Florida
💰 Asking Price: $1,800,000
💼 EBITDA: $570,976
📊 Revenue: $4,168,804
📅 Established: 2006

💭 My 2 Cents: With its combination of ongoing population growth and frequent damage-causing weather events, few places need roofing businesses like Florida. Along with their favorable geography, I like this roofing company’s split between new construction and repair and maintenance work, as there should always be a demand for their services even if it’s a slow year in one of their end markets. I also like their mix of commercial and residential clients, with 40% of their revenues coming from local builders and the other 60% from residential sales. A new owner should be able to build on their stable revenue base and grow through modernizing their CRM system and juicing their current word-of-mouth-reliant marketing with paid advertising. What I also like is that the seller is willing to stay on as a consultant and contractor for as long as needed. That said, I’d want to know the revenue split between their installation and repair/maintenance services, if they are overly reliant (more than 10% of their total revenue) on any of their 12 main builder relationships, the value and status of any work they now have underway or in the pipeline, and the qualifications and experience of their staff.

4/ Fire and Rescue Safety Equipment Distributor

📍 Location: Maryland
💰 Asking Price: N/A
💼 EBITDA: $1,100,000
📊 Revenue: $12,400,000
📅 Established: 1961

💭 My 2 Cents: I like that this 60+ year old family-owned distributor operates in an essential niche, providing fire and rescue safety equipment and services. But what I really like is that the business offers both equipment sales and services, as these are highly complementary and should help both diversify their revenue stream and capture as much value as possible from customers. I also love how the average tenure of their employees is 15 years. This could be an opportunity where a new buyer can absorb the decades of experience, relationships, stable operation, and know-how that is already in place and use this as an extremely solid foundation to modernize the business and boost sales. They also don’t have any online presence (!), so that could be an opportunity to help expand their market reach. For this opportunity, I‘d really want to dig into the distribution of revenues between equipment sales and services, see how they have any exclusive distribution agreements or proprietary products, and understand how they attract new business (especially given the lack of online presence).

5/ Electrical Contractor

📍 Location: Texas
💰 Asking Price: $9,000,000
💼 EBITDA: $2,200,000
📊 Revenue: $21,000,000
📅 Established: N/A

💭 My 2 Cents: This electrical contractor has built an impressive niche business specializing in water and wastewater treatment plants, pump stations, and lift stations. They’re on pace for their second year in a row with over $21M of revenue and currently have $54M worth of awarded contracts. These contracts ensure a strong revenue stream going forward, while the demand for water and wastewater treatment installations should see continued growth due to both public and private infrastructure investments. In fact, the wastewater treatment market is projected to grow 6.9% annually between 2024-2032 (those are some strong tailwinds!). This business operates from a 10,500 sq ft facility that is available for purchase for $1.5M, employs a staff of 50, and comes with an established management team, meaning a new owner will have experienced support already built in. On financials alone, this listing has a lot to offer, with an attractive multiple for a very substantial amount of cash flow, over $1M of FF&E, and $3.5M worth of receivables. Combine this with awarded contracts worth more than two years worth of revenue, and this starts to feel like a hard-to-beat safe bet.