New Deals: A demolition company, card laundromat, and 3 other finds

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NEW DEALS

1/ Demolition Company

📍 Location: Westchester County, New York
💰 Asking Price: $1,600,000
💼 EBITDA: $680,000
📊 Revenue: $4,000,000
📅 Established: 2010

💭 My 2 Cents: Demolition services are always in demand as they can be an essential part of both new construction and renovation projects. I like that this full-service demolition company is licensed in major contracting markets across the Northeast and Southeast and holds certifications with notable authorities such as the NYC HPD and FEMA, as this gives them a competitive edge while supporting their strong cash flow. I also like how they operate from a home-based setup with a small team of five employees, giving them a low cost structure and a lot of flexibility and scalability. Given the size of the team, I’d be curious as to the roles and responsibilities of their different employees and especially the current owner. It’s important to make sure that there is a real business that still exists here once the owner leaves, so I’d need to verify that their reputation, expertise, and client relationships are transferable to a new owner, or at least that there is a very clear transition strategy in place. I’d also want to check on their financials for the past three years, what is involved with their different licensing requirements, how they source new business, how they work with subcontractors, and if there is any seasonality to their operations.

2/ Card Laundromat

📍 Location: Bronx, New York
💰 Asking Price: $3,300,000
💼 EBITDA: $591,900
📊 Revenue: $1,089,600
📅 Established: N/A

💭 My 2 Cents: Laundromats are quintessential boring businesses that can be real cash cows. This absentee-run, renovated laundromat has been operating in their high-density residential community for 20 years. I really like their consistent foot traffic, large space, and numerous relatively new (under two years old) machines, resulting in some great margins. Other positives are that their machines are card-operated, reducing the risk of losing money, and that the business can be operated with a very small team of three FT and one PT employees, with the owner only stopping by once a week. I also like that there is a 20-year lease in place, so a new owner will have a long line-of-sight to one of their most important costs. I’d need to verify the age and condition of their equipment, the terms of their lease, and if their employees are slated to stay post-transition. It’s important to note that with this type of cash business it can be challenging to confirm actual earnings as compared to tax returns, which can make securing financing complicated, so I’d need to see detailed financials for the past three years. I’d also want to understand how their revenue is distributed across their different services, what their main costs other than rent are, what other laundromats operate within a one-mile radius, how their pricing compares with their competitors, if they do any advertising, and if they have the capacity to offer more services. Overall, this should be an awesome opportunity for someone looking to get into the industry.

3/ Towing Business

📍 Location: Phoenix, Arizona
💰 Asking Price: $1,000,000
💼 EBITDA: $534,345
📊 Revenue: $1,387,544
📅 Established: 2021

💭 My 2 Cents: While this towing company is a relatively new business, they’re in an industry I love and are already generating some serious cash flow. And with their large facility with a salvage yard, six trucks, various lifts, and skilled staff, the groundwork seems set to support their continued growth into the future. While at first glance things are very appealing, I’d need to ask a couple of pointed questions. I’d need to dig into why their FF&E is only valued at $70K given the amount of equipment and fleet involved, why the owner is selling now after such a short tenure, and why the business is listed at such a low 2x multiple given their growth and cash flow. I’d also need to see detailed financials validating their 15% per month growth and I’d want to get a handle on how they acquire their customers, who their key competitors are, what the utilization rates for their equipment and facilities are, and how much room there is for growth before needing to make additional investments. Generally, the towing businesses I see have been around for a while and aren’t showing much growth. If you can verify all of the information here and get comfortable with the growth story and cash flow without having a long history of financials to inspect, then this could be a really interesting opportunity, especially with the owner offering up to 50% financing.

4/ Commercial HVAC Contractor

📍 Location: Dallas County, Texas
💰 Asking Price: $4,950,000
💼 EBITDA: $2,057,745
📊 Revenue: $7,569,342
📅 Established: 1996

💭 My 2 Cents: Regular readers know that I love HVAC companies. They are basically the perfect boring business offering an essential service…except for one little problem: they can be expensive to buy because of competition from private equity. That’s why I was excited to find a commercial HVAC contractor of this size in the growing DFW area asking just 2.5x EBITDA. I also like their robust facilities, large team, decades of experience, extreme profitability, and very reasonable multiple compared to similar HVAC businesses. I’d want to get a feel for the revenue breakdown between their different services, who their main clients are, what their marketing and sales strategy looks like, who their key competitors are, the qualifications and experience of their staff, and the nature and condition of the $175K of FF&E included in the sale. I’d also be curious as to the extent of their online presence to include any customer reviews. With the business being SBA pre-qualified and the owner willing to offer a long-term lease or sale of their 8500 sq ft office/warehouse, this looks like an awesome deal.

5/ Multi-Location Rim and Tires Facility

📍 Location: Florida
💰 Asking Price: $4,000,000
💼 EBITDA: $928,433
📊 Revenue: $6,384,692
📅 Established: 1999

💭 My 2 Cents: This 25-year-old garage focuses on auto customizations while providing a full range of services from special wheels and tires to body restoration and painting. I really like the scale of this business with their two locations, 14 employees, and high revenue and cash flow numbers. In this type of business, reputation is critically important (we all ask family or friends for auto shop recommendations), so this company’s longevity is a great indicator of their ability to build and keep a loyal customer base over time. Tied to this, the owner is offering a 10-year lease, so you can count on being able to hold onto their excellent reputation going forward. I also like their different revenue streams, as even if economic conditions bring a downturn in customization work, the repair work will always be there. I’d want to check their financials for the last five years to see how well they performed through different economic cycles. I’d also want more detail on the revenue split between their different service services as well as their different locations, what is included in the FF&E and inventory, who their main competition is, and the roles and experience of their staff. Finally, I’d be keen to look into their marketing sales strategy, if they have an online presence to include ratings and reviews, and what opportunities exist for expanding their services or geographical reach.