Business Overview:
Gateway Business Sales (GBS) represents an asphalt paving company based in Orange County under the original ownership since 1998. Services include asphalt paving, seal coating, and striping.
Investment Highlights:
• Management estimates 80% of jobs are derived negotiated purchase orders
• The company strives for target gross profit margins of 60-65%
• Customer base consists of general contractors, private entities, and public agencies located around the core geographic marketplace including Orange, Los Angeles, San Diego, and Riverside Counties
• The Company has distinguished themselves from the market via its sterling reputation for quality workmanship, highly skilled employees, and timely project execution
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Income & Adjusted EBITDA/SDE: The Sales represented were based on a 12-month trailing period from June 1, 2019-May 31, 2020. Throughout the historical period, the company’s revenues steadily increased from $2.3 million in 2017 to $2.6 million in 2019. This represented a 6.6% compound annual growth rate (CAGR) for the period. It is interesting to note that these results almost double the US paving contractor’s industry growth rate of 3.4% during the same period. Management attributes the Company’s steady sales growth to expansion within its school district market segment, as well as a continuous effort to attain new business through either competitive bidding or negotiated work.
Sales for the base year 2020 are projected to reach $2.0 million. The primary reason for the relative stability is the mounting impact caused by the COVID-19 pandemic. Management based its current year forecast on preliminary sales estimates through May, combined with an anticipated uptick in projected business activity by the end of the year once the prevailing health crisis has dissipated and there is a return to normalcy.
Investment: The “asking price” is $925,000. The Company’s position in the market along with successful business history as well as sales growth will lead to different value perspectives among various investors. The structure will be cash free-debt free. The Sellers recognize that the current platform has opportunity for expansion.
Strategic/Synergistic Growth Opportunities: The established business methodologies are expected to yield growth going forward. Management sites growth through geographic market expansion as well as increased sales and marketing efforts. The Company offers an extensive customer base for a Strategic or Synergistic Company seeking an acquisition platform or to a buyer seeking growth, perhaps by consolidating other related businesses. The business is relocatable so a Buyer could benefit from substantial saving with overheard and operating expenses which would increase the net income.
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Property Features and Assets:
The Company operates from an office, shop, and yard totaling 26,000 square feet. The location features easy ingress and egress from the main thoroughfare, plentiful parking, modern amenities, as well as easy access to Interstate Highway 5 and close proximity to the 91 Freeway. The Sellers own the property and are willing to offer a new lease or the business can be relocated.
Market Competition and Expansion:
Expansion into regions where the Company does not currently have a strong presence is an opportunity for growth cited by management. These areas initially include further expansion into Los Angeles County as well as the Inland Empire of Riverside and San Bernardino Counties. After establishing a firm hold in its immediate market, the Company plans to expand southward into San Diego County. Management has indicated additional operations can be supported from its existing location until a satellite office could be self-sustained in the new target markets.
Reason for Selling:
Retire
Additional Details:
- The property is leased.
- The owner is willing to train/assist the new owner.
- This is not a homebased business opportunity.
- This is not a franchise resale opportunity.
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