EXECUTIVE SUMMARY-LEAD SHEET
CONFIDENTIAL MEMORANDUM----INFORMATION SUPPLEMENT
A PROFITABLE SPECIALTY EQUIPMENT DUSTRIBUTION BUSINESS FOR SALE POSITIONED FOR FUTURE SUCCESS.
IN December 2016, IBISWorld Industry Report 42512 stated the following regarding
WHOLESALE TRADE AGENTS and BROKERS in the US:
"This Industry is Positioned to Earn Increased Commissions Due to Larger Commission Volumes".
“SDCF” -A BUSINESS BUYERS BEST FRIEND !!!
PROJECTED AVERAGE SELLER’S DISCRETIONARY CASH FLOW is $750,000
AND OTHER IMPORTANT FINANCIAL METRICS BENEFITING THE PURCHASERS.
BUYER’S PROJECTED ROI IS 71.78% AND THE TOTAL PROJECTED "SDCF" AMOUNT
COLLECTED IN 15 YEARS EQUALS
HOW CAN THE SELLING PRICE AND PURCHASE PRICE FOR A BUSINESS BE $2,800,000
AND ACTUALLY COST THE BUYER(S) BETWEEN 23% AND 12% LESS AS FOLLOWS"
$2,156,000 (23% PRICE REDUCTION)
$2,476,600 (12% PRICE REDUCTION)
THIS IS A UNIQUE BUSINESS AND ALMOST 77% OF THE PURCHASE PRICE
IS TO BE PAID WITH “BEFORE-TAX-DOLLARS”
FIT Benefits Are Between:
$323,400 (Assumed 15% FIT Rate) AND $840,840 (Assumed 39% FIT Rate)
Most Buyer’s and their professional advisors will agree that the acquisition
price for this business is stated fairly, especially since
almost 77% of the Purchase Price is to be paid with
Primarily Due to FIT TAX DEDUCTIONS CREATED FROM AMORTIZATION of Intangible Assets.
FOLLOWING IS A SUMMARY OF WORKING CAPITAL ASSETS INCLUDED IN THE SALE
Business Working Capital Assets Help to Reduce the Buyers’ Financial Risks Substantially, Compared to Most Other Businesses for Sale Such as Those with Large Dollar Amounts of Fixed Assets. This Business Has Working Capital Assets of $1,116,038 which is Equal to Approximately Thirty-Five (40%) Percent of The Entity’s Total Selling Price Consisting of the Following:
1. Near-Cash Assets of $645,936.
2. This Business Uses a Large Amount of Business Working Capital that is Provided by Internally Generated Interest-Free “Ever-Green-Loans”.
3. Relatively Few Businesses the Size of this Business Operate with Such a Small Amount of Fixed Assets, Less than $20,000.
STATEMENT OF FINANCIAL OPERATIONAL METRICS AND OWNERSHIP BENEFITS
This business generates strong profits with only a minimal reinvestment required to operate the business. This is a full service Industrial material handling company with a solid reputation for customer service. The Company was formed in 2005 by the current owners who have operated the business the past eight years. The Company enjoys a good reputation in the industry and in its area of operation.
Beneficial attributes of this business include some of the financial and operational benefits enjoyed by selected successful and important internet based businesses such as Google, Apple and a growing list of others. Financial and operational benefits for this type business include the following:
1. Flexible business operation model that may be expanded to other lucrative and growing markets in almost any location, especially in the United States.
2. Minimal investment in inventory and customer accounts receivable and, when required, only then for a short time period.
3. Relatively low total operational cost.
4. New business relationships may be developed in targeted markets with customers and vendors without the need for extensive travel and within a reasonably short time period, especially within the continental United States.
RECENT OPERATIONAL PERFORMANCE METRICS FOR THIS BUSINESS:
a. 2013 Commission Income and Owner's Discretionary Cash Flow (ODCF) increased over 2012 by 38% and 15%, respectively.
b. 2014 Commission Income decreased by $58,000 or 6.4% from 2013 and Owner's Discretionary Cash Flow (ODCF) decreased from 2013 by the same dollar amount and percentage; result is only a minimal one-year decline.
c. 2015 Commission Income and Owner's Discretionary Cash Flow (ODCF) both increased over 2014 by 15%, respectively.
d. d. 2016 Commission Income and Owner's Discretionary Cash Flow (ODCF) decreased by $437,000 or 45%. The Sellers attribute this downturn to the anxiety and uncertainty of the United States Economy in 2016 as created by the National Presidential Election and related activities.
e. 2017 Commission Income Year-To-Date at September 30 exceeds the full Year 2016 by $300,000. The full year 2017 amount may prove to be the one of best year of the past five years. Also, such an achievement will assure that SDCF will be within the same successful range, a splendid recovery from the 2016 election year.
f. Selling Price is $2,800,000 and assets included in the sale includes $646,000 of Working Capital Current Assets such as Cash Deposits, Customer Accounts Receivable and Inventory. Except for year 2016, SDCF has been increasing during the last five plus years.
The above list of recent Operational Performance Metrics for this Business reveals the management’s flexibility and the fact that operating ratios were consistent and helped to define the low level of fixed operating costs this business enjoys. The performance of this business in year 2017 is commendable and, also, illustrates that the business is flexible and the financial and management capabilities of the Current Owners/Sellers.
THE ACQUISITION OF THIS BUSINESS PRESENTS A BIG OPPORTUNITY FOR A QUALIFIED BUYER.