High Profit Mfg of Engineered Industrial Electronics - SOLD

DECEMBER 19, 2021

During the 17 years that Praxis Business Brokers has been selling businesses, we rarely offer for sale a small business with all these attributes:

1. $1.0 (+) million in revenues
2. SDE (four year average) exceeding 35% of revenues
3. No customer concentration
4. Non-Union
5. Unparalleled barriers to entry
6. Proprietary product line
7. Impressive facility in great location
8. Offered at an attractive listing price of 3.75x SDE
9. Clean CPA prepared financials (without silly addbacks on SDE calculations)
10. A balance sheet with less than $5,000 of total liabilities

The listed company is a 26 year old engineering business with its core competency in design and manufacturing of state-of-the-art engineered industrial electronics products. The company supports customers with technical expertise and fast turn-around repair of both its own and competitors’ products.

The company has an outstanding website which gives customers insight in the business’s capabilities which include its standard lines of proprietary industrial electronics products, engineered and custom-made products as well as applications insights in different industries.

Located in a desirable West Michigan suburb at a busy intersection of two well-traveled city streets and minutes from two interstate highways, the business occupies a modern, attractive 7,000 square foot space (in a center for businesses) with a highly favorable lease at less than 4.0% of revenues. In addition to the owner, the company employs an office manager and several engineers/technicians. The least senior employee has four years of experience. Average annual employee compensation exceeds $50,000.

During the past four years, the business has had average annual revenues of $1,055,000. During the same four year period, SDE (seller’s discretionary earnings – the historical normalized cash flow available to pay an owner-operator and service debt) has averaged $440,000 annually with 2021’s SDE tracking at a remarkable $500,000 annual clip.

The business is being offered for $1.65 million which is 3.75x average annual SDE. The price includes $150,000 of inventory and all fixed assets. The seller envisions a cash-free, debt-free transaction in which he retains cash and A/R while retiring all liabilities.

A typical SBA deal for this business would include 10.0% buyer cash ($165,000), a matching amount for a seller note, and a $1,320,000 SBA term loan. The deal would result in a four year average annual free cash flow (after both bank and seller note debt service and after paying the buyer a $100,000 annual salary) of $150,000, with 2021 tracking impressively at more than $200,000 of after debt service free cash flow.

The owner/seller plans to retire after an orderly transition period for the buyer who should have experience and/or be comfortable in the industrial electronics product space. For more information on this established, attractive, cash flowing, niche manufacturing business, please contact Mike Greengard ([email protected] or 616-450-0707).