Deal Flow: Niche Manufacturing Business

Unlocking Potential in an Aluminum Seating & Railing Manufacturer

I came across an interesting listing here in Tampa that looks promising. Established in 1983, the company operates in a specialized niche and looks to have solid financial performance. The owner is retiring, which is always the best reason for a sale. 6 x cash flow seems a little steep, but given the longevity of the business, it may well be justified. This could be a match for the owner/operator, or an excellent bolt-on for someone doing a US-based manufacturing roll up.

The company specializes in manufacturing outdoor aluminum seating and railing systems. Let’s take a closer look:

Financial Overview

• Asking Price: $4,000,000
• Cash Flow: $651,000
• Gross Revenue: $3,801,238
• EBITDA: Not disclosed
• FF&E: $200,000 (included in the asking price)
• Inventory: $140,000 (included in the asking price)
• Rent: $5,000 per month

Business Operations

• Location: Tampa, FL
• Facilities: 15,000 sq ft leased facility, lease expiring on 3/31/2025
• Established: 1983
• Employees: 15

Business Description

The company manufactures and installs outdoor aluminum seating and offers renovation and repair services that comply with safety codes and ADA requirements.

Analysis

Valuation and Price Justification:

• The asking price of $4,000,000 represents approximately 6.15 x the annual cash flow. I would think something with this revenue profile would trade closer to 4 x, so the price may be a little rich.
• The inclusion of FF&E and inventory in the sale does adds tangible value to the deal.

Strengths:

• Niche Market Focus: Specialization in aluminum seating and railing systems for both public and private sectors provides a strong competitive edge.
• Long-standing Operation: Established in 1983, the business appears to have built a significant reputation and client base.
• Compliance and Certifications: Compliance with ADA and safety codes, along with FDOT certification should provide a partial moat against the competition.

Risks and Considerations:

• Market Dependency: The business is probably susceptible to fluctuations in public spending on infrastructure and educational facilities, which impacts demand.
• Lease Expiration: The nearing lease expiration is a massive potential risk if not renewable under favorable terms.

Growth Opportunities:

• Geographic Expansion: Expanding operations into new geographic areas could open additional markets, especially in regions with growing educational and public infrastructure investments.
• Technological Integration: Adopting new technologies in manufacturing processes and design could improve efficiency.

Operational Transition and Support:

• The seller’s commitment to stay on as a paid consultant for one year is a significant positive. This would ensure continuity and a smooth transition of knowledge and relationships to the new owner.

What do you think? Check it out and let me know!

About: Silverwave Deal Flow combs through and analyzes thousands of businesses available for sale that may be of interest to entrepreneurs looking to acquire an existing business. We are not affiliated with the business listed for sale unless otherwise disclosed.