25 yr. Absentee-Owned Demolition, Excavating, Recycling Facility

Denver, CO (Denver County)

Seller Financing Available
25 yr. Absentee-Owned Demolition, Excavating, Recycling Facility
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Asking Price: $6,900,000

Cash Flow: $2,918,436

Gross Revenue: $7,900,000

EBITDA: $2,918,436

FF&E: $5,500,000

Inventory: $500,000

Real Estate: N/A

Established: 1994

25 yr. Absentee-Owned Demolition, Excavating, Recycling Facility

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Business Description

4.8M Down Gets $5.5M in Assets, Cash Flows $2.95M on $7.9M in Sales, Niche, Exca

South East Metro Denver: Denver Demolition, Excavating, and Recycling Center Inc. for sale.

25 Yr. Old Niche, absentee-owned, Denver business provides comprehensive demolition, excavating, as well as a centrally-located 5-acre recycling center for most-every type of landscaping and construction material. Cash flows of $2.9 on over 7.8M in sales.

2018 Cash Flow was $2,918,436 on sales of $7,841,965
2017 Cash Flow was $2,661,241 on sales of $6,599,171
2016 Cash Flow was $2,538,297 on sales of $5,677,710

Sales Price and Deal Structure: The sales price is $6.9M with at least $4.8M of that down to closing. The seller will carry up to $2.1M paid over 4 years. At closing, the buyer will receive well-over $5M in heavy equipment and a wide righty of assets and small tooling beyond that is completely debt free as the business has no significant debts on the balance sheet currently.

In summary, the buyer is putting down $4.8M and is getting well-over $5M of assets at the closing. A business that cash flows an average of $2.7M in and of itself is arguably worth 3 to 4 times that amount, and of course, a business that is absentee-owned and has this level of liquid equipment would typically sell for say 3.5 times $2.75M, which is approximately $12-$13 million. In other words, the buyer is paying about 500K less that “the value of the assets they are getting” at the closing and is carrying 100% of the goodwill and blue sky (intrinsic value) of the business in the $1.8M note. The buyer MUST HAVE no less than $1MM of their OWN $1M to put down on this deal for the SBA to do the deal. (really about $700K, but we wanted a margin.)

Who We Are: We are an absentee-owned $7.9/yr. demolition/recycling/excavating business for commercial and residential construction projects. As part of our comprehensive services we also do sewer and water hook-ups so that we are one-stop shopping for our customers. We cash flow approximately $2.9 million per year on sales of $7.9M+. We have been operating in Denver Metro for almost 30 years. We are so well established that, unlike our competitors, we have no longer have to “bid” most jobs; the work is just handed to us and we give them a price and in almost all cases we get the contract. Only 10 or 15 years ago we didn’t have the name and established reputation that we have today for solid work that exceeds expectations and is completed before schedule. Today, we have 39 of the strongest workers in the industry and the finest equipment to do any type of project in our established niche market. The business is owned by 1 person who does not manage any of the day-to-day operations and as of recent is almost completely removed from the business. Today, the business is run by 4-5 key employees who love their jobs.

We have a massive recycling center that charges great fees to receive materials and we sell recyclables to recycling companies out of our massive processing facility. On 5 central acres in the Denver metro, every day (6 days a week) we receive 1,000 – 1,000 tons per day of many landscape and recycling materials. Just to give a sense of the scale of this operation, we have a new $420,000 impact crusher and a new $220,000 jaw crusher which are designed to process up to 2,000 tons per day for recycling material. In the simplest terms we will have between 75 and 150 tractor-trailers coming through our yard 6 days a week bringing recyclables and landscape waste to our large processing center and we charge market fees for this inbound material. Then we separate and process these varied materials and then the end product of a wide variety of metals, aggregates, and soils are sold out the other end of the facility to other recycling centers and end users of these recycled commodities.

In the last 3-5 years our facility has grown enormously in terms of its capacity to handle material and will now cash flow between $3.5-$4M on sales of $10M-12 easily with the new equipment that we have. Our customers who bring waste to us are very wide and varied from dozens of different industries, again, who pay us dump fees to deposit their debris in our central location. Then we sell the end product after processing to no less than 10 large metal/concrete/aggregate companies who and pay solid fees for these recycled products for these commodities that they ultimately sell to their end users. An example, we buy materials that we can recycle for say $16.50/ton and after we process the same material, we sell it to recyclers for $40/ton.

We have the best (ONLY) recycling facility within a 10-15-mile radius: Like a gas station that is the ONLY gas station within a 10-15-mile radius, we can pretty much charge a nice premium for our inbound tonnage from waste haulers. We charge normal market rates for most waste/debris, but we could raise our prices simply because either they pay it, or drive it 10-15 miles north or east and incur the fuel and trucker drive time, etc. when you are the only game in town you are calling the shots and there will be no other facilities coming to compete because all the land in our radius used up and zoning for a recycling facility would not be possible or economically practical for a new competitor. This is everything to ensure stronger margins for the new owner, but again, the seller has not pushed prices to where they could be.

In terms of demand for both ends of this operation, there is a never-ending demand from construction companies and individuals to bring waste to our facility. In fact, the demand to dispose and recycle materials is greater in our 15-mile radius then we are currently receiving by a long shot. We are only receiving a small percentage of waste and recyclables in our market, and the rest are taken to facilities that are much further away than where we are, and of course “miles are money” in the hauling industry. We just need start marketing our existence and our capacity to customers that don’t currently use us to let them know that we are here and what we do. In summary, we are the only facility to take this waste in all of north metro Denver and have the fastest on/off access to 3 major highways.

It must be made clear here that at no point in the past have we done any form of sales or marketing or business development efforts to grow any aspect of this recycling facility as well as the demolition and excavating arm of the company. Our website and internet presence is just 1 year old – new site last year. Simply put, a new owner could dramatically increase the amount of material that can be brought to this facility by creating awareness and this is something we never pursued in any regard, in terms of bringing in more materials and waste, and selling the end-recycled products and commodities. Tin terms of end-users of who we send to, here is a never-ending demand for aggregates, copper, steel, other metals, road base, good soils and other construction commodities. Simply put, the 10 to 15 customers who buy our end products has an insatiable thirst for more material and recyclables than we could ever produce.

Commercial and Residential Demolition and Excavation Services are more straightforward and need less of an explanation then the landscape materials and recycling company just described. Demolition and excavating are the oldest and original services of our company and we have an excellent history and reputation among hundreds and hundreds of construction companies. In terms of our track record, we have completed approximately 10,000+ individual projects in our history and have never missed the mark or left a job without exceeding the customers’ expectations. If it wasn’t done right the first time, we ALWAYS made it right 100% of the time, we have never had a bond called or a complaint filed against us that we were found of any wrongdoing.

Diversified for all economies: It’s important to know that we are diversified in the services we provide for any economy. When new construction slows down and there is less work to be done, it has always been the case that high-end neighborhoods in the Denver Metro area have valuable land with homes that need to be demolished and new foundations that need to be excavated. This has been a constant in good and bad economies. We have the finest reputation in this niche market for turnkey services related to demolishing a commercial building or home, hauling all the material away, digging a new and larger foundation, and completing the sewer and water hook-ups, which is all the services in this phase of any construction project. Simply put, we have the finest reputation for completing jobs and exceeding expectations, we have the best equipment and the best equipment operators and laborers in the industry. Again, you don’t cash flow $2.3M on sales of over $7M if you don’t know what you doing.

We Turn Down Tons of Work: Again, the business has been 100% absentee-owned, at least from a standpoint of the owner serving in a position of business development or traditional management/oversight. Basically, the owner has spent many years in the field operating a piece of equipment, literally. However, it is clear to key management that a new owner could double the excavating revenue immediately with the work that is already being asked of them that they currently turn down. More specifically, the company has all of the excavation, and to a smaller extent, demolition work they could possibly handle starting immediately. The general manager has claimed, “that they turn down just as much work as they accept”. All the new owner would need to do is to hire more workers and the work is sitting at our front door to go right to $10M in sales. As stated below, we have well-over $5M in solid and well-maintained equipment, and the new owner would not need another machine, truck or piece of iron, to go to $10M as we have everything to handle the increased workload. And as stated above, in almost all cases we don’t even have to bid for this work or compete for it, it is sitting at our door and we just need to price the work, submit a quote, and in virtually all cases they sign off on the job.

Over $5,000,000 in Newer/New Equipment: The seller spent over $3,000,000 on new equipment in the past few years alone to maximize depreciation ($3.9M for those 2 years) to cut taxes and buy enough equipment to be able to double the gross sales immediately. The general manager of the company has stated clearly that, “going forward, starting 2019-2020 the new owner can increase sales to $10M in sales, and triple cash flow to $3.5M now that we have all equipment needed for this production level. Only 2 years ago, we would have been maxed out at about $7M with the equipment we had.

You will Need about $150k in Working Capital: the seller is taking the $1.1M in cash on the balance sheet and all AR and will pay off all APs. Again, 100% of all debts will be paid off at closing. The new owner will need about $150,000 working capital to take over and grow the company. Also, as stated there is more than enough equipment to grow the business to over $10M ASAP.

We Have No Real Competition: There are really only 1-2 other companies that do what we do and have the equipment and skilled workers to handle these often-delicate jobs. Part of the reason we have at least 3-$4M of additional work sitting at our door that we take a pass on at any point throughout the year is that we are the best on our market at what we do and we truly are one-stop shopping, which is beneficial to our customers.

The Ownership Transition: In terms of this business transaction, we envisioned that the new owner would create a new role of sales and business development, which we have never had. We have everything in place to grow to $10M-$12M, we just need more sales in the existing market by simply taking on more of the work that is being asked of us that we turn down. The new owner will require no specific construction experience since our workers know how to run themselves. However, it is encouraged that the new owner should take the time to be a full-time, hands-on manager/operator (at least for the first year to learn the business). He/she should have good management skills. The seller wants to find someone to take the business to the next level.

There Are No Negative Disclosable Items: The company is in excellent standing. There are “no ghosts in this closet”! As stated above, after completing over 10,000 jobs we have NOT had 1 complaint for unsatisfactory work that we did not immediately fix on our watch and our dime, we have never failed on a job. We have had 1 legal battle in the past 10 years, it went to trial AND WE WON THE CASE. Other than that, we have had no lawsuits, or pending violations of any sort. We have never had an OSHA violation. We have always had an excellent safety record with virtually no injuries for at least the past 7-10 years. We take worker safety very seriously and the seller is 100% committed to sign for Reps and Warranties that provides for a solid protection of the buyer in these areas.

Licenses and Permits: Initially, the new owner needs no specific licensing or permits in Colorado, the company has all licenses needed to operate going forward. However, within the first 1-2 years the new owner would need to transition the licenses to themselves, but the seller will keep his license active for the company until this transition is complete.

Detailed Information

Inventory:
Included in asking price
Real Estate:
Owned
Building SF:
N/A
Employees:
39
Furniture, Fixtures, & Equipment (FF&E):
Included in asking price
Facilities:
6 acres for lease, 4,500/mo. Property Lease: The address above is an approximate 12-acre facility that the current owner/seller owns. He is interested in leasing approximately half of this property which is all of the functional space you will need to manage this entire operation and even grow the business to $13-$15M/yr., on the 6 acres that will be leased by the new owner. Historically the seller has been paying himself 54,000/yr. to his LLC that owns the property for this operation. The seller seeks a rent of $4500/mo. for the first year and then $5,000/mo. for the next 5 to 7 years or whatever timeframe the buyer seeks for a lease. The $5,000/mo. will be increased by 5% per year starting the third year. It must be made clear here that this is an absolute “sweetheart” rent rate because this 6-acre location given its proximity to highway access and no other competing facility for a 10-15-mile radius, and given the enormous cash flow, is worth well-over $10,00/mo. Even forgetting those two points, it’s worth over 10,000/mo. in the raw sense. Anyway, the property has no mortgage, the seller is not greedy, and is comfortable with this lease agreement going forward.
Financing:
seller carries up to $2,100,000
Reason for Selling:
dire medical situation.
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Paul Olsen

Business Listed By:
Paul Olsen

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