New Deals: A candle and fragrance manufacturer, commercial roofing company, and 3 other finds

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NEW DEALS

1/ Candle and Fragrance Manufacturer

📍 Location: Missouri
💰 Asking Price: $6,900,000
💼 EBITDA: $1,310,000
📊 Revenue: $5,400,000
📅 Established: 1998

💭 My 2 Cents: This candle and fragrance business manufactures and sells its products under 4 brands nationwide while also handling private label manufacturing for other companies. I’m a big fan of companies like this that not only have their own in-house product lines but also are contract manufacturers, as they can easily cover for a downturn in one of their brands by bringing on additional outside clients. I like their well-equipped facility, experienced management and staff, and the more than $1M of specialized equipment included in the sale. They also have excess capacity in their current space, which means there is room to grow without the need for new investment. I’d want to better understand the nature and economics of their different product lines, their customer base and distribution network, how revenue is distributed across their different sales channels, and what their client retention rate and average lifetime value are. I’d also want to look into how they handle fluctuations in demand, if there are any recurring supply issues, how they attract new clients, and who their main competitors are for either their brands or contract manufacturing. Finally, I’d want to explore the possibility of expanding or adding to their current brands.

2/ Commercial Roofing Company

📍 Location: New York, New York
💰 Asking Price: $6,650,000
💼 EBITDA: $1,795,945
📊 Revenue: $18,146,275
📅 Established: 2014

💭 My 2 Cents: Commercial roofing companies occupy a great space in the construction business as they provide a specialized essential service that is always in demand. This company offers a full suite of roofing jobs for clients ranging from schools to government agencies. I really like that they can handle a wide array of jobs and that their diverse clientele protects them from a downturn in any one part of the economy. Their staff of 51 includes managers ready to keep things rolling smoothly post-transition, while the current owner’s commitment to the business is seen in their readiness to stay involved for 1-2 years and to provide 10% financing and 5% roll equity. I also like that the business comes with $2.2M in working capital, $1.1M in FF&E, and more than a year’s worth of work in progress and scheduled backlog. It’s impressive how they’ve built the business solely from referrals and repeat clients, but I’d want to get a handle on how they acquire and lock in new clients, who their main competitors are, and who is responsible for client relationships. I’d also need to dig into their financials for the last 3 years, the details of their working capital and current and projected projects, and the breakdown in revenues between their different services. Ultimately, this looks like a business you can grow with an active marketing and sales effort, especially considering their ability to handle solar projects.

3/ Heavy Duty Towing, Road Service and Truck Repair Business

📍 Location: Pennsylvania
💰 Asking Price: N/A
💼 EBITDA: $1,787,400
📊 Revenue: $6,005,054
📅 Established: N/A

💭 My 2 Cents: If you’ve recently been on a highway, then you know how this heavy duty towing, road service, and truck repair business provides an always needed service. I like that it has significant scale, tons of invaluable specialized equipment, and substantial revenues with extremely impressive margins. There isn’t anything too complicated about this industry, so the $7M in FF&E included in the sale not only represents the equipment needed to keep the business operating post-transition but also a serious barrier to entry to potential competitors. I’d need to check on the condition of the key equipment included in the FF&E and whether there are any challenges in finding and retaining the skilled employees required to operate this equipment. I’d also want to know how stable their business has been over time and if there has been any recent growth, how revenue is distributed across their different services, if they have any recurring revenue, if there are any seasonality issues, who their main competitors are, and on what basis they compete for new business.

4/ Painting Contractor

📍 Location: Lake Worth, Florida
💰 Asking Price: $2,900,000
💼 EBITDA: $875,000
📊 Revenue: $3,499,000
📅 Established: 1991

💭 My 2 Cents: It’s easy to overlook how indispensable the painting industry is to residential and commercial construction, but basically every structure needs a coat of paint. This painting contractor has over 30 years in operation and has built long-standing relationships with home builders and developers that win them a steady 10-20 bids per month. In a highly competitive field with few barriers to entry, I like how they focus on their established reputation and high-quality service to give them a competitive edge. I also like that they operate out of a spacious state-of-the-art facility, so they are well-positioned to handle various jobs. I’d want to get a handle on who their key customers are, if there are any customer concentration issues, what the revenue split between residential and commercial work is, if there is much repeat business, and how much work in progress and backlog they currently have. I’d also be curious about how much competition they face in their market, how they bid for new work, if they do much marketing, who holds the relationships with key customers, how involved the owner is in customer relations and day-to-day operations, and what would be involved in replacing them. If that all checks out, then painting is a great boring business with steady cash flow.

5/ Structural Steel Manufacturer & Erector

📍 Location: Mercer County, New Jersey
💰 Asking Price: $4,499,000
💼 EBITDA: $1,659,900
📊 Revenue: $8,932,700
📅 Established: 2004

💭 My 2 Cents: Steel is quite literally one of the backbones of our economy, as there are basically no construction or infrastructure projects without it. This particular steel company provides a full range of services to both the private and public sectors. Because this industry requires significant investment in equipment and skilled labor, I like how this business comes with a spacious, well-equipped physical plant and a well-trained staff of 18 that will remain post-transition. Given their importance, I’d want to know more about this facility and its equipment, what FF&E and inventory are included in the sale, and the specific roles and qualifications of their employees. I’d also need to look into their historical performance and financials, the average size and value of a job, if there are recurring supply issues, who their key clients are, and how they distinguish themselves from their competition. Lastly, because this business requires expertise, I’d need to understand how involved the owners are and how vital it will be to take advantage of their continued support post-transaction.