New Deals: A paving company, security transportation services business, and 3 other finds

Sign Up | Podcast | Advertise | Work With Me

NEW DEALS

1/ Paving Company

📍 Location: Illinois
💰 Asking Price: $7,500,000
💼 EBITDA: $2,016,000
📊 Revenue: $21,948,000
📅 Established: N/A

💭 My 2 Cents: Paving is a great niche that is always going to be a necessary service. I really like how this company is basically recession-resistant, as roads and lots need regular maintenance and resurfacing in good times and bad. I also like their focus on operational efficiency, which has helped them achieve average gross margins of 16%, nearly double that of their competitors. And, the fact that they have 50 employees tells me that they have successfully grown their business while building a solid reputation. The company comes with nearly $6M in equipment and fixtures included in the price, meaning a new owner is gaining real tangible assets ready to take on existing and new jobs. They get all their work through a public bidding process, so I would need to dig into how this works, including how many projects they routinely bid on, how many of these they normally win, and what factors might cause them to lose out on a project. I would be especially focused on who is currently responsible for sourcing and bidding projects, and I would want to make sure there is a plan for who will handle this post-transition. I’d also want to better understand their average project size and duration, who their key clients are, the total value of their current contracted backlog, and if there are any licensing requirements that need to be addressed in a transition.

2/ Security Transportation Services Business

📍 Location: New Jersey
💰 Asking Price: $4,290,000
💼 EBITDA: $1,270,000
📊 Revenue: $3,700,000
📅 Established: 1994

💭 My 2 Cents: This company provides secure transportation for over 350 financial industry clients in New Jersey and Pennsylvania. It’s really nice that they operate with long-term, recurring contracts in place, so their monthly revenue is extremely secure and predictable. They have a 30+ year track record, and as long as they continue to provide quality services at fair market prices, there shouldn’t be much risk of losing their current customers. I like how they’ve developed an experienced staff and put clear management systems in place, representing a huge plus for buyers looking to enter a business where they might not have much experience. Another bonus is that the business is SBA pre-qualified and the current owner has offered up to $900,000 in seller financing. As this business is built around their clients, I’d want to know how they acquire new accounts, how sticky their customers are, who their main competitors are, and if they compete on anything other than price. I’d also want to learn more about the terms and value of their typical contract, the number and condition of the vehicles included in the sale, what staff recruiting and retention normally looks like, what special licensing requirements might be involved, and if the owner plays a key role that would need to be replaced post-transition. In thinking about growth, I’d want to ask how much they could expand with their current personnel and equipment and how large an area they could potentially serve. At worst, this is a nice turnkey cash producer. At best, this could be a real winner if you’re able to expand geographically.

3/ Commercial Roofing Contractor

📍 Location: West Palm Beach, Florida
💰 Asking Price: $1,295,000
💼 EBITDA: $617,637
📊 Revenue: $2,635,160
📅 Established: 1995

💭 My 2 Cents: You all know roofing is my kind of boring business, with an always-in-demand essential service, relatively low overhead, decent margins, and, often, payment through an insurance company. I really like this company’s southern Florida location, as both the ongoing development in the area and the wear and tear the local climate puts on buildings means a constant supply of new work, with this seen in their currently having several million dollars of contracted backlog. I also appreciate how this business primarily handles larger commercial projects, as the sales cycle is easier than with smaller residential jobs. At the same time, a new owner could look to expand into the residential market and grow the business by offering service contracts to both new and existing customers. However, I would need more information about a downturn they had from 2020-2022 due to a supply chain issue. I’d need to get a handle on the root cause of this issue, what impact it had on their reputation (especially if there were contracts that were not completed), their financials prior to and following the issue, and what has been done to ensure it won’t happen again. I’d also be curious as to their current marketing and sales strategy, their amount of repeat business, and if their key staff will be staying on post-transition. Assuming this company is now back on track, it’s hard to go wrong with a roofing business in Florida.

4/ Pool Service Business

📍 Location: Jacksonville, Florida
💰 Asking Price: $2,817,500
💼 EBITDA: $550,000
📊 Revenue: $2,446,596
📅 Established: 2016

💭 My 2 Cents: If you’re looking for a simple, turnkey business, this pool service company could be it. I love their basic service contract model that currently maintains 740 residential and 60 commercial accounts, bringing in $190K in monthly recurring revenue. I also really like that they are located in Florida, with year-round demand for their services, and that they augment their base recurring revenue with repairs and other services. Other positives are that this company comes with fully equipped trucks and it can be managed remotely. Before diving in, I would want to hone in on their average contract length and value, client churn rate, how they acquire and retain customers, who their key competitors are, and how they compare to the competition on service and price. I’d also want to look into their current marketing and sales efforts and what additional staff and equipment might be needed to grow revenues. The employees, customers, routes, and contracts are already in place, so this should be a layup to get into the pool business. As long as you can be sure that employees will stay on and accounts will transfer, this could be a really nice base from which to grow.

5/ Aerospace Contract Manufacturing Firm

📍 Location: Pennsylvania
💰 Asking Price: $2,300,000
💼 EBITDA: $553,441
📊 Revenue: $1,500,000
📅 Established: 1992

💭 My 2 Cents: This business is a niche manufacturer for companies in the aerospace, ordinance, medical, and other precision metal processing industries. I love companies like this that have established themselves in a specific niche, as their expertise usually means that there are not a lot of suppliers who can do what they do, so they end up with very sticky customers. Add in multiple quality approvals from NADCAP (National Aerospace and Defense Contractors Accreditation Program), and you have a serious barrier to entry for competitors. I also really like that their customers are both commercial and military, with the latter making them more immune to normal economic cycles, and that the sale includes over $2.2M of precision and other equipment whose value basically equals the entire acquisition price. I’d want to know about the condition and useful life of this equipment, what is involved in maintaining their NADCAP approvals, and if there are other licensing or certification requirements for operating the business. I’d also want to better understand who their key customers are, if there are any customer concentration issues, what the revenue split between their different products is, and if they bring in much recurring revenue.