Seller Financing Available
Event Rental, Denver, 2.1M Rev, 397K Adj EBITDA, Absentee owner
Denver Event Rental, 2.2M Rev, 397 Adj EBITDA, $1.73M Assets
2014 revenue was $2.1M and the adjusted EBITDA was $397K. The 2013 adjusted EBITDA was $322,445 on $2,023,979 in revenues. Both the revenues and net income were better than 2013.
The Cap X should be an average of $120,000 per year with mild growth. They are right on the edge of making great cash flow. They just need growth.
The owner is absentee, has not been involved in the operations, and didn’t have commission based incentives for sales! The company has a custom facility, top of the line equipment and inventory, and an excellent reputation. The new owner needs to add an outside commission based salesperson. He believes they should be doing $4MM in sales and have the equipment and infrastructure already in place to do so. The market for their business is fantastic and expected to continue to grow long term based on the improving economy and increasing population of Denver. The company just needs a more proactive sales orientation.
The sales price is $1.1MM which is significantly less than the current value of $1,728,000 of the inventory and equipment. As of December 15, 2014, they have a full appraisal of the current value of the equipment and inventory. They used an appraiser who the banks often hire for equipment oriented businesses here in Colorado and it is USPAP compliant which most banks require. They currently have over $4MM of equipment and inventory in original cost. It is proof that you could not start this company from scratch for anywhere near the sales price which also helps as a barrier to competition. The buyer will also benefit from the 2012 $1.3MM build out with an additional $10,000 in leasehold improvements customized for this business.
The lease is below the market rate and the landlord will allow a choice between a one year lease or a long term lease giving the buyer a chance to move the business if they choose to.
They have many well-known and long-standing customers from a diversified customer base that send them business every single year creating a strong base through this recurring revenue.
This is a simple story. Less than 2% growth during a recovery period for both the economy and for Denver during the last four years while their competitors have grown substantially over the same period. They have great equipment, location, employees, an A+ Better Business Bureau rating, and their prices are less than the 3 companies in Colorado that are currently larger than they are. They just need to hire one or two salespeople and they can gain market share and improve utilization. Everything is in place for this company to be much bigger and more profitable. See the owners interview in the data room in the full sales package.
Location: Denver, CO
The current sales price is $1.1MM and goes up $50K Feb 1st, March 1st, and again on April 1st because if they still own it on May 1st, they are keeping it through the summer which is when they make most of their money. The sale includes all of the assets which are worth $1.728MM. This will be an “asset sale” and the owner will be keeping his cash, AR, and AP which are not large balances and transferring the business debt free. The owner will consider all offers that are heavily weighted on the down payment. This company was originally priced at $2MM 3 years ago by a business brokerage and they could not sell it. I got the listing this summer and priced it at $1.6MM and the current price is down to $1.1MM which is crazy to me based on both the current earnings, value of inventory, and its potential equity build with a very simple fix.
Brief Overview and Deal Points:
The owner states: “All the business needs is a new owner to come in and drive sales, the equipment and infrastructure is already in place at great expense to be able to fulfill whatever orders the new sales team brings in.” The bottom line is that there is nothing wrong with the demand for their services, their reputation, quality or quantity of equipment, and the employees that all make it happen. The problem is that while the economy and their competitors grew, they didn’t have a sales force that was proactive. The new owner recently added commission based incentives but believes management needs to be restructured with an emphasis on proactive sales.
You must send in the NDA to see the video walkthrough to appreciate the quality and amount of their equipment and inventory. Keep in mind that the $1.728MM in equipment and inventory is valued at less than half of what it cost new. In addition, the landlord spent $1.3MM customizing a building for this business which includes a special floor, conference room, showroom, 5 offices, new electrical, energy efficient lighting, etc. The company spent over $10,000 in addition to the build out to further perfect the space. For example: the electrical was completely redone to 800 AMPS, 277/480 Volts, and 3 phase. You couldn’t come close to starting this company for the sale price. It would cost close to twice the sales price just to buy the equipment and inventory plus some leasehold improvements. They also have a very large quantity of high quality rental items including event tents and canvas that lasts forever and will maintain its used value for a long time. They have over $4MM in original cost that would make this business impossible to start from scratch.
They have been given several awards, been voted the 2nd best rental company in all of Colorado, and have many letters from happy customers and people that refer them business. They have a perfect reputation for fair dealings and have an A+ rating with the BBB. The company is an LLC. The seller will agree to full Reps and Warranties to a solid legal and business standing. They invoice approximately 70% of their sales with less than a 1% default rate. The rest is credit cards or cash. They also have an automatic 8% damage waiver that very few clients reject. Most big rentals require a 50% payment up front dramatically reducing their risk of non-payment which helps even our their cash flow.
The owner bought the business in 2006 and moved it to its current location in 2012 at great expense. He is selling because he is a large commercial real estate developer and he has never owned a business like this and wants to focus on his primary real estate business. He will sign a non-compete. Current management will help transition the business and stay on for as long as the new owner would like them to.
They are full service with a full line of products from the very highest end to the low end and everything in between. They also triple check all orders before they are delivered to a client. Once you get me the non-disclosure agreement, you will see the full list of services they provide and a video walkthrough of the equipment, facility, and inventory. I promise that it will exceed your expectations. “We have been very aggressive in maintaining our rental equipment. Great care and attention is given to each piece of inventory and equipment after it is returned from a rental. We learned that the better your equipment looks and works, the better our customers treat it and the more likely they are to recommend us and come back themselves. Our facility is the nicest in our market to accomplish this with many special features custom built to accommodate this philosophy”
The business will transfer debt free with all liabilities on the balance sheet paid at or before the closing. The seller will be keeping the accounts receivables and cash.
They have 8 salaried managers including a CFO making $60K from this business. They also have a part time sales rep(20 hours per week) at $16/hr., and up to 8 drivers at $10-$14/hr. as needed, along with between 8 to 30 helpers as needed, and 7 to 11 kitchen staff as needed. The staff has proven to be trustworthy, competent, and reliable employees. The owner assumes that there will be changes made to upper management based on the need to be more sales oriented with substantial savings of fixed salaries.
The company is located in a 51,000 Sq. foot facility of which they occupy 43,777 fully customized sq. feet that was moved into April 1, 2012. It has ample parking, a spacious carpeted showroom with even the showroom ceiling painted, customer pick up area, reception area, private offices, conference room, 4 ADA approved bathrooms including 2 for guests, sprinkler system, 5 front 12’ bays, energy efficient lighting set to motion sensors, custom floors, and the best infrastructure available. The lease is below market for the area and there may be some flexibility to the term.
Growth and Expansion: The new owner just needs to focus on new sales. This could be done various ways and with little additional fixed cost by adding a couple of commission based sales people. Also, they could improve their online presence by add landing pages for people searching for their type of equipment in their area. They currently have only a single webpage that is not properly optimized.
Plus, Colorado is the best State in the country to own a business. Please see the web link below. Colorado is THE "#1" fastest growing and strongest economies in the United States, per Money.MSN.com and Business Insider. This article ranks all 50 states by eight economic measures including GDP growth, housing prices, job creation and exports.
Please Call of Email for Information: The broker is available at any time to discuss your interest in this offering and can set up a meeting either in person or by phone with the owner(s). Thank you for your interest.
If you are NOT interested in this business for sale, but you refer someone to us who buys it and we collect the full commission, we will immediately pay you a referral fee of $3,000. Please send us anyone (or email this to anyone) who you think would be interested in this offering. Thank you.
Jeff Chapman Eisnaugle
Company Broker Group, LLC.
For 20 Years, We Sell Businesses "Quickly and Quietly"
999 18th St Ste 3000
Denver, CO 80216
This is prepared by Company Broker Group with information provided by the Seller. It was not created by the seller and neither the Broker or the Seller are responsible for its accuracy. Buyers are responsible for their own due diligence. Neither the Broker or the Seller will indemnify or guarantee any forward looking statements or projections.
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