Business for Sale, Would I Buy It? | Bus Charter

In this series, CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses up for sale and see if Matt would be interested in buying them.

Video Transcript: 

This is today’s “Would I Buy This Business”, it is a 35-year-old bus charter business. I’ve actually looked at some of these in the past for due diligence projects. People have come to me with this kind of business before. I also looked at one that was a school bus business and that was good in the sense it had government funding and a pretty consistent business. Nobody else was gonna come and try and start a competing school bus business in that area. But it also you know comes with challenges just like this one does I’m sure. No. 1 being your drivers have to be there when you need them to be there, and if your driver doesn’t show up you have a lot of problems. So then you have to have a backup solution for that and you have to have reliable people and you have to even, I guess, as the owner be ready to once in a while jump behind the wheel if you can’t find anyone else to drive the bus for you, cause literally that is the business. 

So let’s look at the numbers here. So gross revenue is $1.08 million [specifically $ 1,081,566]. So it’s about $85,000 a month if they’re not too seasonal. Cash flow 397,000 [specifically $397,685 ], so right about  40%, 39% profit, which is solid for a business like this. Or any business for that matter. And the asking price is a random number of 1,326,458. So they took the idea of using a multiple I guess and took it very literally and used maybe that cash flow number to do a multiple of 3 point something, a little over three. Which is a reasonable price for the business, but you know normally people would round that to like 1.3 million or 1 2 9 9. So they’ve got a random asking price, but I won’t hold out against them. 

Alright, so what is this – business come with, so it says, fixtures and equipment $737,000. That is interesting. What you see with most businesses is there’s not much in that category. They want a million dollars for the business, there’s $20,000 of assets maybe 50,000, everything else is goodwill. In this case, they’re asking 1.3 million but 737,000 of that is represented by actual assets, presumably buses that you can hold on to. So for some reason, you paid the money to buy this business and things didn’t work out you can recover a lot of your investment just by selling the equipment, if you know, assuming that’s the right price of that equipment. So that gives you a lot more collateral than you get in most businesses and gives you more security. And honestly, if I was selling this business, I would as the broker, probably advise the seller to ask more. Because they’re really selling the business, in this case, for only about $500,000, barely over one times cash flow. Because all the assets that you’re getting are transferring at cost. So that makes this business even better of a deal from a risk standpoint and a price standpoint.

Let’s see if there’s any other information in here that is helpful. Company has a list of repeat customers, all which don’t make up more than 5% of sales, diversify their sales. That’s good so they’re saying they’re not just have couple big customers they’re doing charters for all the time. List of drivers who provide great safe service. Owner has decided to retire, alright. Here established 1988 15 part-time drivers and 1 mechanic. They’re renting real estate a lot for parking the buses and maybe a little repair shop. And yeah, says furniture fixtures and equipment are included in the sale price. So if you’re interested in this kind of business it’s pretty straightforward. It’s not gonna be replaced by Amazon or AI anytime soon, even self-driving buses I think are still quite always off. This could be a solid business to own. It’s based in Ohio. That’s a kind of business you’d have to be there at least somewhat to run. You could probably make it absentee at some point but you’d wanna start off being there. It’s fairly priced and it comes with a lot of collateral. So overall I’d say this is a solid deal and I would definitely consider this as an investment if I was looking to buy a business and able to go to Ohio for a while.