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Custom Fabrication Manufacturing For Sale

Denver, Colorado, US
Asking Price:
$800,000 Furniture / Fixtures included
Sales Revenue:
$785,000
Cash Flow:
$155,000

11 15 21 Update: The earnings have started improving in October of 2021 after a rough 12 months from Covid’s impact on the supply chain pushed some of their contracts back to the 2nd half of 2021. The owner states “We have secured a contract for some aluminum Motor Plates from ……. for 330 pcs totaling 41,256. We have already done 110 of these a month for them for several months. This vastly increases the volume of the work for this major customer. Recent discussions indicated that this might become a longer term monthly contract. I should know by November but all indications are that this will most likely be a yearly recurring contract. We were also asked to update the current value of the assets of the business and he found that he had not added the 60K machine earlier. The updated current asset value is 745,000 as of 11 15 21 which is only 55K away from the sales price of 800K. Also, he uses 200 sq ft personally which can be used for additional equipment or storage post-closing and they have 3000 sq ft. to the right of them that is available. It has a mezzanine as well of 800 sq ft. To the left is 2000 sq ft. that wants to get out of it. So, there is an additional 5000 sq ft. available. They also have the updated electrical gear that produces 2500 amps of power, so there will be no need to upgrade that along with a 35 CFM screw type compressor that will handle adding more equipment.

Also, meeting with ….. to start privatizing more work than 20% (50k per month more) ….. wants us to do more work with them. They will supply material and tooling to help us. They currently have a three year back log. “We are in contact for a contract for 136 motorcycles over 5 years with the …… which starts 2022 and totals 1.2M. These are the same bikes that we already supplied them, they love them. We have been invited to visit a future base because the …. and ….. are considering ordering the same motorcycles. They are also looking for tan and green versions in the future.”
This business did within 50K either above or below 1.05M in revenue for over 10 years in a row until the supply chain broke because of Covid in mid-2020. The recent drop in revenues and earnings is temporary. Historically, manufacturing adjusts to fill voids in the supply chain which means that shortages in supply always corrects itself over a fairly short period of time. When this is resolved, it will cause a catch up on already signed contracts which would be very good for the new owner. This is similar to metals 4 years ago and lumber last year, both of which have corrected themselves. There are real supply and demand reasons for why this is temporary as evidenced by the vast increase in electronic chip manufacturing currently under construction to address one of the shortages impacting them. Other relevant updates include him being more aggressive in filling the current gap in their capacity and current production as evidenced by the first couple of paragraphs above. The sales price has been lowered again to 800K which is now only 55K above the current value of the assets which is mostly large equipment. There is not much goodwill in the listing.

For Sale:
24 Year Old Custom Manufacturing Company
Location: South Denver Metro, CO

The 2019 revenues were 1,161,662 with 183K in earnings. 2017 and 2018 had very similar numbers. The company has had no bad debt and 100% of signed contracts have been executed. This is important since two large signed contracts have been pushed from 2020 into the 2nd half of 2021. The current trailing 12 month revenues to August 31st were 963,651 with earnings of 64,486 which is improving over the last couple of updates finally. The properly adjusted earnings for 2020 was 155,429 on 785,869 in revenues. Covid has also created a better than normal opportunity for the 2nd half of 2021. The company had been very consistent until 2020, making the impact of Covid fairly easy to quantify for this company because of how stable and predictable the company’s earnings have been.

This company has American made equipment that is newer and more valuable than I typically see the estimated value of the assets is 745K. The very high quality combined with the fact that the assets represent over 95% of the sales price helps to push up the multiple just as it does for equipment rental and other companies with a large amount of easy to liquidate assets. Equipment rental often sells for 4 ½ to 5 times the earnings and have a smaller profit margin than this company does. This company also has long term recurring revenues from a well-known customer list, quality customers means no bad debt also, great reputation, loyal long term employees, and they have participated in many strategically important military and aircraft projects.

The company has earned a great reputation and are 5 star rated with Google and Facebook and A+ rated with the Better Business Bureau. They also were honored to be selected as one of the top ten machine shops in the country in 2009 by American Machinist Magazine which had 1200 entries. They were vetted for the processes and quality. Please submit the NDA in the first paragraph to be able to get the sales package with the data room link and video interview with the owner and business walkthrough to get a better feel for how good this opportunity is.

They have a long-standing customer base with nationally known names which they make both products and/or parts for. They do several large projects every year along with smaller ones for a solid/recurring base of customers. They have a very high percentage of recurring revenues which makes them more valuable. They currently have a large pipeline of over 200K. They do 85% private and 15% Government work. The Government work is mostly DOD work.
They provide CNC milling, vertical and horizontal boring, CNC and Swiss screw machining, milling, I.D./ O.D and flat face grinding, engraving, conventional and CNC turning, drilling, tapping, and welding. They work with aluminum (all types), stainless steel, carbon steel, hastalltoy/ titainium, honeycomb plastics (all types), and tool steel (all types), tungsten alloys.

You will get approximately 745K in current value Assets! This includes 675K in equipment at current value. This equipment includes AAS ST20Y live tool (12’’ dia x 12.5 long), HAAS ST30 CNC Lathe (3.0 through, 21’’ dia x 26’’ length), HAAS VF-7 CNC Mill (84″ x 32″ x 30″), HAAS VF-4 CNC Mill (50″ x 20″ x 25″), (2) Fadal CNC 15 mills, Fadal CNC 3016 mill with 4th axis, Daewoo CNC 200B lathe (1.75’’ through), Daewoo CNC 200C lathe (2.0’’ through) w/ barfeed, Atrump engine lathe, (2) Manual mills, Acer Surface grinder, Summit I.D/O.D. grinder, and a Zeiss Dura Max CMM along with many traditional tools and equipment.

The sales price has been lowered to 800K from 925K which is a great price for a Fabrication/Manufacturing Company with their reputation and 95% of the sales price is current value assets made up of mostly large equipment.

This is a “Fun” business to own that is growing and the Owners wants to make sure the new owner continues their growth and success. They have turned down some large projects for quality of life reasons having raised a family in the Denver Metro Area. The owners decided to maintain a 40 hour week for him and less than 30 hours a week for her so they could raise their kids and enjoy what they do.

The seller seeks 800K plus a small amount of inventory. This is a LLC and will most likely be an Asset Sale. The business will be offered with the Sellers keeping their cash, AR, and will be transferring the business debt free. Recurring revenue from large customers is very valuable.

Property Information

Real Estate:

Lease

Premises Details:

Their location is leased in a new looking brick building that was built in 2006 with plenty of parking. The building is 5,500 square feet and they pay 16.88 per square foot which is 7,737 per month triple net. The building has many custom improvements including 1500 AMP service through a company owned separate electrical gear cabinet outside the back of the building. The business has a full camera set up in and around the business and the building. There is one year left on the lease which can be renewed and/or renegotiated.

Size in square feet:
5,500

Business Operation

Expansion Potential:

They have not needed to advertise in the past based on the quality of their work and reputation. They have less than ¼ of 1% of their revenues in advertising cost which is almost zero advertising. A new owner can use their 5 star reputation to advertise for more work.

Competition / Market:

The company has earned a great reputation and are 5 star rated with Google and Facebook and A+ rated with the Better Business Bureau. They also were honored to be selected as one of the top ten machine shops in the country in 2009 by American Machinist Magazine which had 1200 entries.

Reasons for selling:

Wants to spend more time with family

Employees:
6
Years established:
1997

Other Information

Support & training:

The owner will offer a full transition and will stay part time afterward to help as needed

Owner financing:
Owner financing is available. Please contact the seller for more information.
Furniture / Fixtures value:
$745,000 - included in the asking price
Inventory / Stock value:
$3,800

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