16 Year Old Western Colorado Medium/Heavy Equipment Sales & Rental Company
The biggest reason this is still available is that the Seller has required that the real estate be purchased at the closing with the business. For the first time, he has agreed to allow the property to be leased. Since this a location driven business, the buyer of the business will most likely still want to buy the property so the Seller will allow the buyer to have both a long term lease and exclusivity to buy the property for up to 2 years post closing.
The earnings makes this an inexpensive business but he has to sell based on his age, health, increasing amount of time spent in Alaska, etc. The business is being offered for the current value of all of the assets. The total current value of the vehicles and rental equipment is 2.15M which are the foundation of the total value of all of their assets of 2.3M which also includes furniture, office supplies/misc, small tools, parts, and other shop supplies. 2018 had revenues of 4.48M in revenues and 953K in earnings.
I made the Seller get rid of his floor plan for new dealership sales because a new buyer could not get a bank loan approved because the bank required that all revenue generating assets be available to a 1st position. This has meant that his dealership sales are down over the last 2 years. A new buyer will almost certainly add a floor plan very soon after a closing to bring back their dealership sales. The other factor effecting their earnings is that the owner is retiring and has not been willing to add any rental equipment. The demand is so high that he was forced to add around 200K worth of rental equipment to keep a couple of customers happy. The Seller knows this business needs another 800K in rental assets based on the current demand which can be bought on credit and will increase profits right away. He has told his employees this is for sale and a new buyer will have the ability to discuss this with his salesman who has been very vocal about this. In short, there are 3 reasons this company is not showing larger revenues and profits: the owner spends over 5 months during peak season in Alaska, he is undercapitalized in rental equipment, and his dealership sales dropped a lot after getting rid of his floorplan. A new buyer can fix all 3 quickly.
The business has seen an increase in revenues from construction rentals by focusing more on Rental Income from the Roaring Fork Valley. He has a full time salesman doing a great job increasing rentals currently. They are one of the closest medium equipment rental/sales company to the 47 mile long roaring fork valley that extends from Glenwood Springs all the way to Aspen where there is a lot of construction taking place. Permits are running at an all-time highs in Garfield, Pitkin, and Aspen Counties.
There is no better time to buy this company than right now. Banks will loan on this business and are requiring 20% down(not 10% unless they have direct experience already) and some additional working capital for well qualified buyers. Jeff
WESTERN CO MEDIUM/HEAVY EQUIPMENT COMPANY
2018 had revenues of 4.48M with normally adjusted earnings of 952K before any add backs for the seller spending 5 peak summer months in Alaska every year. 2019 is looking slightly below 2018. 2020 should have a stronger and more profitable base than 2019 because of the current demand they are seeing with some additional capitalization from the Seller in the late summer/fall and what a new buyer should buy. Demand for the rental equipment is not an issue.
The current value of the assets are currently at 2.3M which is broken up by office supplies/misc, shop supplies, small rental equipment, parts, and vehicles/large rental equipment. He is offering the company for 2.3M. Keep in mind that Heavy Equipment rental companies are location driven and have one of the easiest to liquidate assets of all companies which is why they typically sell for 4 times their earnings or more. This is an inexpensive company selling for less than 2 3/4 times its earnings.
Many long-standing customers with big names along with hundreds of other long-term customers has resulted in a high percentage of recurring business. Plus, western Colorado has some of the largest Natural gas deposits in the country including one literally just a couple of miles from their location. Natural gas activity will most likely increase dramatically in western Colorado with new pipeline(s), democrats getting back into office whom prefer natural gas to coal, and prices firming up.
Equipment companies are typically “Fun” businesses to own.
The owner spends 19 weeks in Alaska mining gold during peak season every year. This negatively impacts the bottom line by at an estimated 250,000 dollars a year which means they should have made at least 1.15M last year. In fact, he takes 22 weeks off a year. A new owner will be able to grow this company by being there and focusing on growth.
Location: Western CO along the I70 corridor