Business for Sale, Would I Buy It? | Asphalt Repair

In this edition of “Would I Buy This Business For Sale”, we have a leading spray injection asphalt repair company. Based on the picture it looks like a big truck that sprays stuff 

into all the cracks on the street. Well, definitely a service that is needed out there. Let’s see. So the asking price is 1.2 million. Cash flow 465,000 on revenue of 1.1 million. And then it says EBITDA 285,000. So that’s profit before they add back the benefits that the owner gets from the business. These round numbers are always a little concerning to me. 1.1 million is your gross revenue? I guarantee it’s not a perfectly round number. Neither is your cash flow of 465,000. When you see numbers like that it either means the broker is being lazy. Or the seller doesn’t have particularly good books. Or for some reason, they’re rounding things. But I would go with probably don’t have great books or great records or they’re just estimating from an incomplete year. I always prefer to see listings with an exact number. That tells me even if they’re wrong, they at least pulled it from something that is accurate to the point where they would have it down to the last decimal place. Though right off the bat you know this formatting doesn’t inspire great confidence in the business. But let’s see what else it has to say. They also don’t list an equipment value. So I imagine those trucks are not cheap. But how many of them do they have? 

Business well positioned for sale. Diversify client based. strong field manager supervisors. Been with the company for over 10 years. As a seasonal business that only operates during the months of April through December, owners have the flexibility to take off winter months. Okay, I didn’t notice where it was located, if it’s said. Oh, Michigan. So maybe you can’t do these kinds of road repairs in Michigan in the winter. Which can make it a little harder. A seasonal business has the challenge of what you do with employees. It’s one thing for the owners not to get paid from January through March, but what do you do with your employees? If they’ve been around 10 years do you just not pay them for three months a year and just hope that they figure out how to do their savings? Or do you keep paying them even when they’re not working? So seasonal build business is always a little more challenging. 

The company also owns a building. Cool. Doesn’t say how many trucks they have, or what those trucks are worth, or whatever. It says it does work with municipalities and counties and commercial parking lots. So when you’re working with cities and you’re working with the government it can 1 be good cause it can sometimes pay a little better. But on the other hand, it can take longer to get paid and be harder to get contracts and things. So businesses that work with governments have pros and cons like anything else. I’d wanna know what the split is between how much work they do for cities and counties and how much they do for private payers, who generally make decisions faster and be easier to work with. But then also more likely to switch vendors.