It has been a great 25 year run for the founder-owner-seller of this very successful suburban Detroit non-ferrous die casting and machining business. The seller, in his late 70’s, feels it is now time to transition his business to only its second owner. His retirement could be your opportunity.

2015 revenues exceeded $11,000,000 and generated SDE (seller’s discretionary earnings – the normalized cash flow available to pay an owner-operator and service debt) of $1,600,000. The business has several niche profit centers including: (a) tooling – design and build; (b) production of high pressure castings for prototypes and/or short runs; and (c) machine castings to customer specifications. The company, which has an automotive industry concentration, offers quick turn prototypes (i.e. less than eight weeks from drawings to finished parts) and has vendor codes with several major OEM’s.

The business operates from two attractive, neighboring plants (both owned by the seller) in a desirable and well located industrial park. They can be leased or purchased (in a separate transaction). The two buildings combined are worth an estimated $3,200,000. The facilities have a combined 67,000 square feet and contain well maintained state of the art machinery and equipment. Eighty younger (nearly all employees are under 50 years old), skilled, non-union employees manage and operate the business during a single shift (40-50 hours weekly). Capacity could of course be added by adding a second shift.
To compensate for the 77 year old seller’s unwillingness to carry a decent size seller note, he has agreed to price his business quite attractively at $6,300,000 which is less than 4.0xSDE. Included in that sale price is (a) $3,000,000 of fixed assets (per a recent third party appraisal); (b) $800,000 of inventory (at cost); and (c) $1,800,000 of A/R.

The goodwill component of the sale price is a very modest $700,000. The seller plans to retain cash and retire all liabilities.

Posted Jan 19, 2016

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