Residential Restoration & Remodeling Co

This business is under a Letter of Intent which expires June 30th.  It allows me to continue to market this for future back up but does not allow me to set up any meetings or phone calls.  I can answer questions and will update the earnings every month, but the owner can’t engage.  I will let you know if it falls through.  Jeff

The sales price was just lowered to 660K.  2023’s revenues were 3.4M with 298K in earnings.  2022 had 2.56M in revenues and 319K in earnings.  The sales price is 660K now which is only 2.21 times their 2023 earnings. 

The company has had steady growth and expects that to continue with several ways for the new owner to increase the growth rate. They do 40% restoration and 60% remodeling work which includes both interiors and exteriors depending upon the year.   They have 9 employees who work in an office and many non-employee workers considered independent contractors who do the construction work.   The 40% restoration is driven by insurance agents they’ve developed relationships with, mitigation companies or asbestos testing/abatement companies, additionally some insurance claims come from their other advertising. They are not part of any third party administrators, “TPA’s”.  The insurance restoration work is year-round with frozen pipes in the winter, hail in the spring/summer, fire, sewage backups all year round, along with storm damage.  Their mix of restoration and remodeling diversifies their revenue streams and makes the company somewhat recession proof.  They are not dependent on hail or other events like many similar companies.  Their revenue growth has been steady and proves this point.  850K in 2020, 1.2M in 2021, 2.6M in 2022, and 3.4M in 2023.   They have recently added employees based on increasing demand for their services.  They expect 2024 to be another record year regardless of the economy, interest rates, hail, etc. 

They do basement finishing, bathroom remodels, kitchen remodels, to name just a few of the types of projects for interiors. For exteriors they do windows, doors, roofing, gutters, siding, woodworking, finishing work, painting, decks, and flatwork. The company is adding Fix & Flips this year.   The owners did a test run Fix and Flip this year personally and it turned out to have the biggest profit margin of the work they did last year.  They have a realtor looking for the next one who only gets paid if they decide to buy one of them.  The company will be adding that this year which will increase both revenues and profits.  Keep in mind that they used their subs for the work last year which did not help the company.  This year they will.  The company has a 4 month backlog in exterior work and a 2 month backlog in interior work of their normal work.  This is significantly above the same time last year.  

The owners spend 35 to 40 hours a week working for the business.  The other employees are an interior production manager, two project managers, an exterior production manager and an office manager. There is also a part-time office assistant who works approximately 25 hours/week. Neither the owners or any of the employees do any of the actual work themselves. All work is being subcontracted to workers who the company has a long lasting relationship with.

The business owns two vehicles that are used for the business by the employees.  They also have office equipment and supplies and some small equipment.  The total of this is estimated to be over 49K.  This is partially because their “subs” carry their own insurance and use their own equipment.

The Sales Price is 660K with the Seller willing to carry 10% to 15% of it for a qualified buyer.  This will qualify for an SBA loan for a qualified buyer. This means that if the buyer carries 10%, that leaves 600K which a bank will provide 90% of, with the buyer providing 10% in a traditional SBA loan.  Working capital is estimated to be less than 54K which means the 10% down payment of 60K plus 54K in working capital is only 114K which is all that it will take to buy this business if the bank considers you qualified.  The sales price includes all assets.

Growth Potential:  The company only uses 2% of their revenues for advertising which is very low and should be increased.  The sellers believe that there are many ways to grow this company including doing not just restoration but also large loss catastrophe work, mitigation, which often has higher profit margins.  Another way is to develop more relationships with key referral partners such as insurance agents and/or Realtors. They also can add search engine optimization to their website.  Add a website for just insurance work.  They currently get referrals from 4 insurance agents, and the new owner should prospect real estate agents for more referrals.  They also have little social media marketing.

No construction experience is necessary but would be extremely helpful and some banks may require it.  The class “C” GC license is carried by the other original founding partner who is no longer vested or has any controlling interest in the company (He was bought out in 2018). This other individual is willing to allow the use of his construction license which is mostly for permitting and licensure and with certain parameters being met the new owner can use his license for 2 or 3 years post-closing with compensation and insurance.  They will both offer a full transition including training up to 60 days. He is willing to stay on for up to 6 months post-closing to assist with the transition/sales for an agreed amount of compensation. She is willing to stay on remotely part time for up to 12 months.

A buyer will get a business that has work in progress, contracted work, and work being in various stages of bidding and approval.  In other words, this business will not change the day of the closing, with work being done consistently through the closing date.

Location:  Southeast Denver Metro