Successful Tractor and Outdoor Power Equipment Company

APRIL 25, 2023

We are pleased to present an outstanding tractor and outdoor power equipment business that has served area residents for over 75 years. The seller has decided to retire and transition his successful operation to a new owner operator.

The business has been a model of consistent performance over the years with a significant increase in revenue and profits since 2019. Located in an attractive, organized and well-maintained building, it has great visibility on a busy highway near the “gateway to the north” on the eastern side of Michigan. The real estate is not included in the sales price but is available for lease or purchase if the buyer desires.

The company has several diverse revenue streams including new equipment sales, service, and parts. It offers an established and trusted OEM tractor line (under 100 hp) along with a well-known line of outdoor power equipment including lawn mowers, trimmers, chain saws and snow blowers. They also offer a popular line of quality off-road vehicles. Service is another important revenue stream as many area dealers of new equipment do not offer repair and warranty options. Spare parts are carried in inventory for over 10 brands of equipment.

The customer base is loyal and long term with many of them returning for more than 30 years or more. Another major customer group includes owners of second homes who travel north to their cottages throughout the year.

Revenues could likely be increased by developing a mobile service department and establishing an online part sales program. The addition of another OEM equipment line would broaden the product offering and could also increase sales. The business has an excellent website which gives customers insight into the company’s equipment and service offerings

The business comes with a management team in place including a general manager to oversee daily operations. The owner has agreed to stay on for up to a one year transition period if desired by the buyer to help with training, customer retention, etc.

Over the past three years the company has had average annual revenues of over $4.7 million which resulted in an average annual SDE (SDE=Sellers Discretionary Earnings – the normalized cash flow available to pay an owner/operator and service dept) of $336.000 over the same three-year period. Annual revenues in 2021 and 2022 increased an average of $ 700,000 (15%) compared to the previous year. For 2023, net income has increased over 70 % from the previous year.

With a favorable SDE multiple of 3.3x, the business is attractively priced at $ 1,295,000. The seller envisions an asset sale in which he retains cash and A/R while retiring all liabilities. The buyer receives the goodwill of the business, all fixed assets and approximately $175,000 (cost basis) of inventory. For a qualified buyer the seller will carry a meaningful six-figure note.

A typical deal for the purchase of the business looks great: with $ 130,000 (10% of purchase price) buyer cash, a matching $ 130,000 seller note, and the balance financed by an SBA term loan. Total annual debt service will be approximately $164,000 which would result in a current post-debt discretionary cash flow for the buyer of $240,000 in 2023.

If you are searching for a successful high cash-flow business (with significant barriers to entry) located in a growing and desirable region of Michigan, this business represents an exceptional opportunity. For more information, please contact Steve Huntley at 616-902-0898 or [email protected]