Update:  We are lowering the price to 625K with 450K of that in down payment.  One of the owners wants to move to Arizona and has made plans already and COVID has had a negative impact on their sales which is both temporary and unfair to them but we have to adjust the price to compensate.  In short, their sales people are commission only and part of their sales are door to door.  It took them 5 months in 2019 to get the sales team they wanted whom all did a great job but all left when Colorado shut down in March of 2020 because of the impact that COVID was having on their sales(commissions).  They went almost 6 months without leads/sales generated from their sales team which meant they were selling 3 ½ deals a month instead of the 12 a month they averaged before COVID.  They rehired 5 new sales people in September and have finish training them but Colorado is “Red” again and COVID will continue to hurt their sales until we get a working vaccine.  Their model has already been proven and the owner in charge of the hiring, training, and sales didn’t want to sell.  His partner is a friend who is not qualified to take this company to the next level and has asked for the sale.  The owner in charge of sales will stay long term as an employee as the sales manager with a heavy emphasis on his compensation tied to growth and/or keep up to 20% ownership.  He knows the company will recover and grow long term and make him and the new owner a lot of money. 

We wanted to get ahead of what is going on with the price.  They now believe that 2020 will show approximately $775K in sales and $450K in earnings.  I have given this a very low multiple of 1.6 times based on how new it is, the COVID volatility, etc.  1.6 times 450K(2020 estimate) is 625K which is the new sales price.  We have priced this to sell quickly because the 2nd owner is requiring this to be able to get to Arizona. 

This business has a 51% profit margin, 2 mostly absentee owners, the owner in charge of sales and training will consider staying to help grow the business for as long as the owner wants him post closing.  The combined hours of both owners is only 25 hours a week. No professional license is required for the owner or for employees/subs.  This is a sales and fulfillment model that they have created for solar and other increasingly popular “Green” products.  This model works and the business can be expanded in Denver and opened in other markets.

This company was started in May of 2019 by two friends who created a model that combines a successful no cash up front sales process with the most popular, energy efficient, cost saving, and relevant future home improvement products: Residential Solar Panels, Nest Thermostats, Attic Fans, and Insulation.  This is why the business has gone from zero to 1.18M in revenue over their first 12 months until COVID happened.  One of the owners is not comfortable with the next steps for the business. The one owner who is in charge of the sales process, hiring, and training believes he can be important in the transition and future of the business and will help longer term and will even consider keeping some ownership however the new buyer wants him. They are selling because they agreed that if one owner wanted to sell that they both would sell he felt that he is not a corporate type personality and this company should be adding more employees, locations, markets, products, and will need more of a business oriented person going forward to manage a larger operation.  They have struggled with the decision to sell but feel a different buyer who knows business more than they do should step in at this point as the new owner to take this to the next level. 

The business started May 1, 2019; therefore, they do not have a full year tax return yet but do have accurate CPA compiled financials and use QuickBooks.  The trailing 12 month profit and loss statement from October 1, 2019 to September 30, 2020 shows 1.18M in revenues and 610K in normally adjusted earnings. This business has been priced at 1.6 times their trailing 12 months earnings but after March of 2021 they will have completed their first full year tax return which means that their multiple should be at least a 2 times multiple instead of only 1.6.  When this business recovers after a vaccine is in place, it will be worth a lot more money by 2022.  I believe this company has one of the best equity growth potentials with minimal capitalization I have ever seen and it should benefit from Biden’s green energy plans also.  You must see the video interview in the data room link that will be sent to you once you complete the NDA in the blue link above. 

Keep in mind that they made over 450K on their bottom line by selling only 105 packages over the last year.  There are millions of homes that could  benefit from this program. 

This company has many modern and valuable pieces:  A profit margin of 51%, products that are increasingly popular and are green that can save people money, sales people whom are all subs working remotely, easy to grow model, and one of the two owners willing to stay and work for as long as the new owner wants him to make sure the new sales people/managers are properly trained and new markets successfully opened.  Since a buyer will not be able to get SBA bank financing currently because they don’t have a full year of a tax return yet, we have decided to lower the price of this to only 1.6 times their anticipated earnings of 450K for 2020.  They had 610K in trailing 12 months of earnings through September 30th.  A new buyer can use their own equity in their home, other properties, another business, or borrow money privately to get the down payment. They will carry 43% of the sales price and one of the owners will stay on OR will consider keeping some ownership and work long term, both indications of their confidence in the future of this business.  This means that the sales price is now 625K with a 450K down payment as part of that price.    

There are a lot of special things about this company but nothing more important than their overall model which combines aggressive marketing with increasingly popular energy efficient products that does not require licensed employees or “masters” of their industry like most specialty construction and service companies.  They sell the products with little or no money out of pocket for the customer and follow through with the process from the sale, the financing through 3rd party finance companies, and finally the fulfillment by 3rd party contractors.