Listing ID: S41001198-2538iec

This Business is being offered in an "Asset Sale," but we are representing the Business's in its earnings as well as in the Company's full balance sheet. But as you can see, we then separate the balance sheet into "those assets employed by the Business, which are to be INCLUDED in the Sale," and those assets and liabilities to be EXCLUDED from the Sale.

INCLUDED:

• Current Assets: Working Capital; ... Accounts Receivable (guaranteed collectable), Inventory (at the lesser of cost or fair market value), Certain Prepaid Expenses
• Capital Assets: All the Tools and Equipment employed by the Business, including a "run about, go-for" vehicle, all at depreciated book value.
• it is anticipated that all will be confirmed subjected to buyer's due diligence.

EXCLUDED:

• Current Assets: Cash assets and Other Current Assets, which are personal, private loan receivables.
• Capital Assets: Intangible Assets; ... the Goodwill from the business acquisitions in 2006 and 2017, Leasehold Improvements, now a physical part of the business premises, Automotive, but for one vehicle that has been a service vehicle of the business, others are private family and recreational vehicles, and excluded also, Tools and Equipment not of service in the business.
• Liabilities: All liabilities on the balance sheet are EXCLUDED and will be retained and satisfied by the Company and Seller.

The Seller is offering 50% Vendor Take Back over 5 year payment terms. 50%; $2,554,047 plus 3.5% interest, with P&I payable at the rate of $46,462/mo, over 60 months. The Buyer must be willing and able to secure; ... guarantee such payment.

The Working Capital Assets included in the Sale Price for the Business totals $2,529,919 including Accounts Receivable and Inventory, and thereby provide opportunity for a Buyer with a banking relationship to pre-establish a Line of Credit to draw down on day-one. As at the October 31, 2020 date on which this listing is based, a Buyer could presumably draw $1,352,833 on that LOC, assuming ratios of 75% on Accounts Receivable and 50% on Inventory. In effect, that could reduce cash to close requirements to $1,201,214; less than 25% of the total Sale Price.

Right now, we are not going to tell you who the Company is or exactly what they manufacture or do, other than they are a manufacture of certain consumer and commercial goods.

If you find you have interest in this Business, based on what we can tell you right now, we would like to forward to you a confidentiality agreement for your execution, and we'd like to know a bit about your business background and about your financial capabilities to purchase this business, should your interests lead you to such.

We are prepared today, to present a good bit of meaningful information that should help you recognize whether or not this is a good business type for you and also enable you to determine whether or not this business is being offered in a manner to be a good financial fit for you. If you see those two fits to be a good potential and if you are willing to enter into a confidentiality agreement with regard, please contact us at broker@3rdPartyOnLine.com to start the process to the full information.

In the meantime, we intend to tell you a good deal, right here in this presentation; much more than most businesses-for-sale presentations do at this early point. We want you to understand from the outset, just how well and how profitably this company does what it does. We want to justify to you our valuation of the business, the resulting sale price and the components to the sale price, and we'll begin that process with an explanation of the Sales History of the Business, over a good period of time; in this case, from its foundation. It's a very steady, solid and profitable business.

Part of this Business began in 1989 and another part was founded in 1998 by current ownership; 22 years. In 2006, that same owner of this Company purchased the 1989 business, a smaller but synergistic business, and in 2010 the two were merged. Then again in 2017, the Company purchased another much smaller business, but with a great product, now merged in as well.

Years 1998 thru 2010: The owner's 1998 business grew from zero; from start-up to annual sales of about $3.3 million in seven years, and then added the 1989 business in the 2006 acquisition, and it came with $1.1 million in annual sales. Then, within three years, sales of each of the two entities had been doubled, and the two merged at the end of 2010. In this presentation, the two are reported from 1998, and sales of the third entity added in, beginning in 2018.

Years 2011 thru 2017: The Company lost a good deal of its focus, beginning in 2012, as the Owner (a serial entrepreneur) became involved in and quite focus on activity apart from that of this Business, and such involvement continued until into 2015. During the period, there were unsuccessful attempts to turn management of the business over to others; a commonly difficult maneuver for small business. Other adjustments were attempted as well, but without success as well. In 2015, the distraction was closed down, with losses that did adversely impact this Company's cash flow and it took the Company a couple more years, through 2017, to recover. But it has recovered, and as you can see from these monthly graphics, has significantly leveled the former annual cycle and the Business is growing again, with earnings back up as well.

Years 2018 and 2019: Sales increases over those of 2017 came due in large part simply to the renewed attention of the Company's owner/operator in 2016 and 2017, to the fundamentals, such as pricing, product line, customer services, inventory levels and the funding to support those levels. Then 2019 sales further increased in part on the completion of website upgrades and redesigns.

Then came 2020: In the fall of 2019, the 2020 forecast was about $8,650,000; effectively a continuation of the 2018, 2019 growth trend. But then, customers and entire market sectors were suddenly shut down in March of 2020. Projects in progress in March were postponed; some remain postponed today. But at the same time, demand in other sectors actually increased, due in part to those same shut downs, and the Company is enjoying a stronger better year than had been forecast. 2020 sales are now projected to close the year at about $9,400,000.

As at October 31, 2020, 10 months current year to date sales are $8,096,000, generated through sales to more than 5,200 unique customers in 2020, 164 of which accounting for 50% of such ytd sales; 13 accounting for 25% of ytd sales. The below tables report those same stats over the last 10 years; 2011 thru 2020; from the time the two entities merged at the end of 2010. The line graph compares the shape of the sales totals at the end of each year, compared to the shape of the earnings annually, compared to the number of unique customers for the year.

And a further graphic illustrating the 10 year cash flow trends of Sales Volume, Earnings, Cash on Hand, Line of Credit Employed levels, Accounts Receivable and Accounts Payable.

Products types and sales of such are largely split between consumer retail and commercial retail; each currently accounting for roughly 50% of total annual sales. The business has been profitable from the beginning. Product mix has shifted over the time as the business has continued to developed and strengthen its product line, each product and service not necessarily unique in an of itself; there are like competitors in every field, but a good balance is being achieved and the annual cycle illustrated below, is being leveled while growing overall.

The Company is now growing again, in 2018, 2019 & 2020, and is forecasting continued growth for 2021, again very much in a continuation of the 2018, 2019 trend, with 2020 being an outlier. 2021 planning is in place with the early decisions with regard to scheduling and placement of purchase orders for 2021 inventory deliveries, now with some in place and others in process.

2021: 2021 has also been forecast for internal purposes to continue on the 2018, 2019 trend line, and while that is obviously as questionable as 2020 has become in hindsight, it seems a best estimate for today. The facts are, there are projects postponed from last March that will be reinstated at some time; probably some time in 2021. There is a known pent up demand as well in other sectors that will be unpent at some point; probably also sometime in 2021. So, it is thought that 2021 might well end up greater and more like 2020 than that forecast. Nevertheless, the plan on paper is a continuation of the 2018-2019 trend line; with 2021 sales forecast at about $9 million.

The chart below is NOT a forecast of the next 5 years, but it does set out the Sales, Cost of Sales, Operating Expenses and normalized EBITDA from 2015 until Oct 31, 2020; and it does show an annualize 2020, based on adding an estimation for the last two months of 2020, at the cycle average of last 2 months in the cycles of each of 2015 thru 2019. ... those numbers all set out the upper table and of course illustrated on the left end of the graph. The lower table and right end of the graph simply follow the trend line begun in 2018 & 2019. The Company does forecast and project a year and more out, but for its own budgeting and planning purposes. This is not such a forecast beyond 2021, but meant to demonstrate the logic, going into 2021 and knowing the uncertainty that exists, of following the dotted line at least to 2021, as a reasonably conservative estimate.

The business is non-union and employs 30 +/- semi skilled workers, most whom have been hired and trained on the job, working alongside co-workers. The business typically employs 10-11 office personnel; Sales, IT, Bookkeeping and Administration, and employs 20-22 in Production, Warehousing, Shipping and Receiving.

Business Premises are leased premises; leased from the owner of the business at a reasonable fair market rate. The business currently occupies about 40,000 sq. ft. of a 48,000 sq. ft. total, which is currently quite adequate, but there is more space available and there are other storage (warehousing) facilities also available in the yard. Most of the production tools and equipment are relatively unsophisticated. Offices are pleasant and quite spacious but otherwise unremarkable. It is intended that such business premises will be available for lease by new ownership indefinitely, or potentially, available to purchase at some time in the future.

On the otherhand, the business could be relocated to almost anywhere in the US, given availability of facilities and capable, dependable workers.

The Owner/Seller founded this business in 1998 and has now been working this business for 22 years; a very long time for a person who is a serial entrepreneur.

Also, during the 22 years, the owner has established and/or become engaged in other endeavors and his wish now is simply to free himself in order to do so more effectively. ... Furthermore, on a very personal note, the Seller now has his first grandchild and would just personally like to free himself also for more family time. This business now seems in the way of that. The owner has previously attempted to turn day to day management of this Business to others, more than once, but in the end he has not felt comfortable taking his hands off the controls. That is just not his style and it has not worked out in the past and his decision is to sell.

The owner has no reason to sell, other than he just doesn't want to commit the time and energy to this business anymore, for reasons explained, and honestly, ... its been 22 years. There is no real urgency, but now that he has finally made the decision, he'd like to do so quickly. Price and Terms of Sale have been structured to make the acquisition for the right Buyer, quite easy and favorable; ... 50% vendor takeback, bankable working capital, small cash to close and a strong sustainable cash flow sufficient for the business to pay for itself quickly.

While he would like to free himself for other interests, the owner is prepared to remain engaged in the business for a reasonable time, even an extended period of time, in order to assist the business in a strong transition into new ownership and thereafter to provide such reasonable assistance as may be requested by new ownership from time to time. In addition, the business is well staffed with very capable, long time employees who know the business and all of its operations and the various functions necessary to the business. Over the years the Company has enjoyed a particularly dependable and cooperative group of very good employees and has treated these employees friendly and well in return. It is NOT anticipated that there would be an exodus of employees resulting out of the sale, assuming new ownership would not bring adverse changes to their experience in the business.