***Special Note: In a victory for small business buyers, the recent $900BB stimulus bill directs the SBA to pay the first 6 months of new SBA 7(a) loans approved between February 1 and September 30, 2021 (up to $9,000/month). Our advice: Don’t wait. Find a quality business and get moving quickly. Banks will be busy this year and buyers that wait until July/August will likely lose out.
A unique opportunity to acquire a diversified manufacturing and wholesale distribution business like this does not come very often, so act quickly!
This business opportunity is comprised of two companies. Company A is a wood box and pallet manufacturer serving mainly manufacturing businesses with a diverse customer base. Company B is a mulch distributor and wholesale business. The Companies are highly profitable and, as essential services providers, have remained fully operational during COVID-19.
Company A was founded in 1960 but acquired by one of the current owners in 1975 and is now family-owned and operated. Company A manufactures various shipping container products: pallets, skids, crates, boxes, corner posts, stakes, and custom products tailored to customers’ needs.
Company B was established in 1995 when the family developed a method to minimize the wood waste produced by Company A, repurposing the waste, and grinding it into mulch. Company B uses a water-based method with a non-chemical colorant to produce colored mulch products and offers several natural mulch options. The full control of the manufacturing process resulting in a superior product allows for a larger realized margin than competitors can achieve. When demand for mulch is diminished in the winter season, Company B offers salt products, keeping itself in operation year-round.
While the two Companies have traditionally operated as separate entities, the Owners believe that combining them into one could leverage operational efficiencies and synergies to grow the combined bottom-line.
After 46 years, the Ownership family members are ready to transition out of the Companies as a package deal (they are willing to consider selling the Companies separately). The Owners are also flexible with the real estate. The Owners are happy to assist the buyer(s) with a flexible transition process, but they seek to retire shortly.
The new owner(s) could jump into the Companies full-time or hire management personnel to run the Companies.
**Note: The Financial Information in this overview reflects the combined financial information of the two Companies.**
Number of Employees: 12
Year Established: Company A: 1960 and Company B: 1995
Facilities: The Owners own the Companies’ 4 operational buildings through a related trust. Included is a 1,104 square foot office building, a 5,720 square foot storage building and heat chamber, box room and pallet assembly buildings with a combined area of 9,150 square feet, and a 4,800 square foot sawmill building. The properties are available for sale or lease.
Total Building Size: 20,774 square feet with 2.2 acres or 96,780 square feet of land.
Support/Training: Ownership is willing to provide reasonable and customary transition assistance.
Reasons for Selling: Retirement.
Seller Financing Available: Yes
Seller Note: Limited Seller-Financing Available for Qualified Buyers
2020 Inventory: $191,248
(1) Efficient/Synergistic Business Models: Company B takes advantage of low material cost because it uses a by-product of Company A’s manufacturing process. Company A not only saves the cost of waste removal, but it also benefits from the additional revenue brought in by Company B.
(2) Customized Manufacturing Process: Company A offers custom products and services that customers have a hard time finding elsewhere. Company B’s customized production process permits Company B to sell its products at a higher price because of its unparalleled mulch quality.
(3) Diverse Capabilities and Revenue Streams: The Companies each offer robust and diverse revenue streams individually, but when combined, their revenue diversity is only stronger. On average, 60% of Company A’s revenue is made up of wood box sales and 40% from wood pallet sales; various subproducts and subservices further diversify each revenue segment, so the market demand can always be met. Company B’s revenue is split roughly 50%/50% between various mulches in the warm seasons and salt products in the cold seasons, making sure the entire year is covered.
(4) Scrap Utilization to Generate Revenue: Company A’s raw material is received with steel strapping issued internally for moving and storing cut lumber. All steel strappings are recycled, and some revenue is generated. Both Companies combined generate less than three yards of landfill waste each week. All by-products of lumber and timber waste from Company A are utilized by Company B for its production of mulch products.
(5) Outstanding Team, Reputation, and Customer Service: The Companies have achieved a strong reputation in their industries through consistent production of quality products at affordable prices, delivered in a timely manner. The Companies have earned a steady and loyal customer base. In addition, Company A’s long-standing, concrete relationships with its suppliers have given the suppliers a complete understanding of Company A’s needs, enabling the suppliers to deliver on Company A’s requests more consistently.
(1) Implement Used Pallet Sales to Double Revenue: Used pallet demand continues to grow greater in the United States because of the “Go Green” wave and cost optimization options. While Americans are willing to pay more for eco-friendly products, used pallets are often priced lower than new pallets. This factor only further incentivizes customers to purchase used pallets. Company A currently has no operations in the used pallet portion of the industry. With effort and a little time, the operations’ expansion into used pallets could double Company A’s pallet revenue with few additional fixed assets.
(2) Add an Outside Salesperson and Take on Second Shift / Utilize Facilities’ Extra Capacity: Company A currently turns down work because its employee base does not have the time to take on more customers. However, Company A also only runs one shift when the facilities can run two shifts. The new owner(s) could develop a strategic plan to add a second shift and hire the staff to operate the facilities at full capacity.
(3) Continuing Automation / Eliminate Labor-Intensive Work: As the two Companies have grown, they have gradually begun to use systems of automation, minimizing physical labor. There is still room for further automation, and these opportunities only become more apparent with the economies of scale of a larger operation. This reduces the variable cost and ramps up production speed, continuing to develop and improve outputs.
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