New Deals: An electrical and HVAC contractor, commercial glass installer, and 3 other finds

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NEW DEALS

1/ Electrical and HVAC Contractor

📍 Location: Duval County, Florida
💰 Asking Price: $3,200,000
💼 EBITDA: $625,974
📊 Revenue: $2,450,480
📅 Established: 1990

💭 My 2 Cents: This business combines the best of two worlds as, after having long operated as an electrical contractor, in 2020 they acquired a complementary HVAC company. With this new business not only do you have multiple revenue streams, with HVAC now accounting for 20% of their gross revenue, but you can build on existing customer relationships and explore other avenues of growth. I like that there is a long-term staff, many holding the necessary licenses to operate the business, who will stay post-transaction and that there is $400K of equipment and $1.7M in real estate included in the sale. The real estate is particularly nice because it allows for an SBA loan with a 25-year term as opposed to the normal 7(a) that only has a 10-year term, bringing down your yearly amortization. I’d want to understand more about the HVAC acquisition and how well the integration has gone, the split between new construction and maintenance work, if there is much recurring revenue, what the current sales process is, and if there is any current backlog of scheduled work. I’d also want to know what the current owner does day to day, if the owner or staff holds the key customer relationships and how this would work post sale, and the condition of the equipment included in the sale.

2/ Commercial Glass Installer

📍 Location: Dallas, Texas
💰 Asking Price: $3,450,000
💼 EBITDA: $960,878
📊 Revenue: $4,725,847
📅 Established: 2010

💭 My 2 Cents: This glass installer focuses exclusively on commercial clients like hospitals, schools, and office parks. There are a number of things I like about this business. To start, they have an 85% repeat business rate, which given their 14-year history, should mean a lot of long-term customers. There is an established team in place and the owner is open to a long transition period to ensure the continued success of the business, so there will be a lot of support if a buyer comes in without direct experience. I also like that they have a substantial contracted backlog of $4M, as well as $4M in current work in progress, so they are on track to keep up revenues well into 2025. I’d want to look into how many clients they have and if there are any client concentration issues, how they acquire new customers and what the bidding process can be like, who their key competitors are, and if they work with general contractors as well as directly with clients. I’d also be curious about the average scope of a project, what their standard contract looks like to include when payment is normally received, and if it makes sense to explore expanding to residential customers. Considering that the transaction is SBA pre-approved and the seller is offering 10% financing, this looks like a really nice deal.

3/ SBA Pre-Qualified FedEx Contractor with 40 Routes And Trucks

📍 Location: Homestead, Florida
💰 Asking Price: $4,300,000
💼 EBITDA: $1,200,000
📊 Revenue: $4,200,000
📅 Established: 2010

💭 My 2 Cents: While there are always FedEx routes available for sale, it’s rare to come across one of this size, with 40 exclusive routes that renew automatically each year, all 40 of the trucks necessary to service them, and 48 employees operating from 3 stations. And, with the logistics, staffing, and demand all ready to go, this is a business that you can jump right into. At the same time, analyzing the value here is different from how I evaluate a more standard business. In this case, you’re basically buying a fair level of cash flow, and as long as consumer shipping patterns don’t change dramatically, you can count on consistently making the same amount of money. While you won’t have much risk of a major downturn, your maximum potential earnings per route do have a limit, and any expansion would have to come through acquiring additional routes. I’d want to dig into their historical performance and the stability of their revenues and earnings over time, the maximum possible earnings that potentially could be made per route, how stable their 25% margins are, how these compare to their competitors, and if there is any way to improve these. I’d also need to know more about the trucks, including their condition, parking situation, and any possible challenges with finding and keeping drivers. Ultimately, this is an opportunity to acquire a great turnkey, and if the deal is larger than what you’re looking for, the seller is open to breaking up the offer into smaller deals of a minimum of 5 routes.

4/ Packaging Manufacturer

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $2,426,000
📊 Revenue: $11,700,000
📅 Established: N/A

💭 My 2 Cents: This customer packaging manufacturer caters to the food and beverage, medical, and outdoor recreation industries. I like their management approach that includes industry experts in each of their departments, nationwide marketing and sales reach, and an average annual 7% growth in revenues over the last 5 years. At this size, a new owner should expect to be entering into a company that is fully staffed, knows what it is doing, has established expertise, and is operating efficiently. Given these dynamics, I’d assume that a new owner can then focus on higher-level strategic decisions as opposed to needing to spend their time on day-to-day operations. The company also has nearly $6.5M of FF&E included in the sale, so there’s a lot of specialized equipment that represents a great barrier to entry as a competitor would have to make a substantial investment to be able to reach a similar scale and level of functionality. I’d need to check on their level of repeat business and recurring revenue (I’d assume it’s high), if there is any risk of customer concentration, who their key competitors are, how they differentiate themselves from the competition, and whether they have any unique products, trademarks, or design or process patents. I’d also want to get a handle on the number and different roles of the employees, the condition of the FF&E, relationships with suppliers, and lease terms for their facility. In our world of online ordering and same-day delivery, there is always a need for packaging, so this business should still have room to grow.

5/ Property Management Company

📍 Location: Polk County, Florida
💰 Asking Price: $950,000
💼 EBITDA: $604,468
📊 Revenue: $2,178,498
📅 Established: 2000

💭 My 2 Cents: This company provides both short and long-term property management services for over 90 homes. I like their location in a market with a lot of second homeowners and their set fee schedule for pool, lawn, and cleaning services. I would assume there is a good deal of stability in their business and that they bring in a sizable amount of recurring monthly revenue from long-term clients who shouldn’t have much reason to ever switch providers. And, for an owner looking to expand, there are always more services you could add while growing your customer base through direct marketing and sales. I’d want to get a handle on their cash flow and how much revenue comes from their different services, if they provide their various services themself or outsource any, and what their standard contract looks like. I’d likewise need to understand their customer retention rate, average customer tenure, how they go about gaining new business, and who their main competition is. If the asking price is actually 1.5x its annual cash flow, then this is a truly great opportunity.