Another Colorado business sold by Paul at Company Broker Group Denver business broker, Paul Olsen, was successful in creating an aggressive bidding war for the successful sale of this business. The business sold for more than 150% at the original asking price. Most all of the buyers commented that the sales pack it was exceptional in comprehensive and was the main reason they were willing to pay a premium for the business.
If you need a valuation for your Colorado business, please call Paul to get a free business estimate. Company broker group has more than 30 years of experience valuing Denver and front range businesses. CBG Denver business brokers will work hard to sell your business for the highest possible business price. To learn more, please email paul@companybroker.com to get a free estimate.
New Business for Sale:
Cash flow $1.1M-1.2M on 4M-5M in sales.
North Denver, the seller is age 75 looking to retire.
36 Yr. Old Public and Private Sector Niche Highway/Rd. CHEMICAL STABILIZATION, Excavation, Reconstruction Business. We are 1 of only 3 companies in the entire 5-state region that does Chemical Stabilization (CS). We are the pioneer of this technology and very simply put it allows us to re-construct large roads and highway for 40% less than all our competition, and in 1/3rd the time. Our competitors earn 15%-21% gross profits, CS provides steady gross profits of 40%-50%, and because we get the job done in 1/3rd the time, so traffic congestion is kept to an absolute minimum, which is always critical to city/county engineers. Lastly, the average life/longevity of a road surface in the Rocky Mountain Region is about 7 years, however, using CS on road surfaces increases the average life expectancy to over 20 years, which any customer would strongly prefer. In short, CS is 40% cheaper, completed in 1/3rd the time and lasts 3 X’s longer. Now that… is not very hard to sell. Literally, 10’s of millions are spent every year in Colorado alone re-constructing roads, it is fool-hardy for ALL roads/highways to NOT use CS. See details below.
Road preparation includes: Chemical Stabilization, excavating, fine-grating, soil remediation, slope-stability, trucking, water and sewer pipe/line installation, manholes, basically, every park of road building except paving.
Cash Flow –
2019 Cash Flow was 1,044,401 on sales of approx. 3,795,732
2018 Cash Flow was only 582,736 on sales of 4,066,485
In 2018 the owner was in a terrible crash with his wife and daughter. The business all-but stopped for the next 5 months as he slowly recovered, thus the big fall in sales and cash flow that year. See details below.
2017 Cash Flow was 1,205,724 on sales of 5,109,031
2016 Cash Flow was 1,208,338 on sales of 5,051,855
2015 Cash Flow was 1,208,338 on sales of 1,173.098
PLEASE EMAIL paul@companybroker.com FOR THE COMPREHENSIVE SALES PACKET AND DATAROOM WITH THE LAST 5 YEARS OF CPA FINANCIALS AND A 1 HOUR LONG VIDEO DETAILING EVERY ASPECT OF THE BUSINESS.
Sales Price and Deal Structure: The sales price is 6,000,000 with 5,000,000 of the sales price paid at closing. The seller will carry up to 1,000,000 paid over 3-4 years from a qualified buyer. The buyer Puts Down $5M at closing and get about $4.4M in assets completely debt free at the close. More specifically, at closing, the buyer will take over the balance sheet debt free including about $250K of accounts receivables), and 4.1M in heavy equipment. The equipment list has 112 pieces of well-maintained pieces including: 6 scrappers worth $500K, 4 graders worth $475K, 7 skid-steers worth $150K, and dozens of other pieces, excavators, compactors, forklifts, loaders, water trucks, tandem trucks, trailers, and everything needed to grow the business to $8M/yr. The buyer MUST HAVE no less than 1M of their OWN funds to put down on this deal for the SBA to do the deal.
Reason for sale: at age 75 and having worked since age 18 seller seeks to retire and have a new owner with fresh new energy take the business to $8M-$10M.
2020 is off to a solid start and the buyer will step in to a solid list on contracted work already teed-up: The number of contracts we have in place in April/May 2020 it’s up sharply from the same time last year. More specifically we have a $750,000 job that starts in the next few weeks for the town of Castle Rock, we have another $750,000 job starting now for Castle Plains, a $300,000 job starting now for HGI, a $400,000 job for Savage Industries (who uses us exclusively), $440,000 for a subdivision in Elizabeth Colorado, a $300,000 job for a Big ToolBox, and several other smaller jobs. In short, the seller is 100% confident business will cash flow at least $1,500,000 on sales of 5,000,000, and probably closer to 5,700,000 for 2020. In fact, a large majority of this work is chemical stabilization which is the fastest growing segment of our services and has the highest margin’s by far, 40%-50% as mentioned.
Who We Are: We are a 36-year-old comprehensive, full service road and highway construction company. We have a completely flawless history of delivering the finest quality work 100% of the time for our customers during our entire history. We have never had a bond called or left a job incomplete or below specification. In fact, we have missed only 1 deadline in 36 years, who else can say that? Are we perfect? No… we make mistakes like anybody else, but we have made it right and delivered on every project to meet customer satisfaction with zero complaints. Most projects we complete are between $200,000 – $2,500,000 or more. In the last 10 years alone, we have finished over $50M worth of road work primarily in south Denver. In fact, in our market we are the premier road-reconstruction company that cities, counties, municipalities and private sector companies use on large and difficult road projects because it requires enormous equipment and resources to complete. Only 2 other companies in our market have the equipment and the experience to work on these difficult surfaces, let-alone meet the timeline.
The newest technology, CHEMICAL STABILIZATION: During the last 10 years we have introduced and dramatically expanded the use of the newest road and highway construction material/process – chemical stabilization. This new process is starting to revolutionize road reconstruction because of its incredible cost and time savings to our customers and we completely dominate here. In fact, chemical stabilization is now approximately 50% of our gross sales and with gross profits of nearly 50% for this product/service, we are killing it. (More on this below since this is now “our hook”.)
What We Do: Roads and highways are critical to all of us since they are primarily the way we get around in day to day life. Everybody understands what road paving is and that it’s important to upgrade, expand, and replace existing roads and highways as well as build new ones where there is growth in the state. We all see paving companies working when we drive during road construction, laying down a new surface for us to drive on for several years to come. However, we do NOT do paving, we do everything before paving/asphalt is installed, which is the final step in the new road or highway construction.
Our company does every critical step prior to paving so that the paving company can come and install a well-graded flat surface to drive on. We have over $4,000,000 (included in this sale) worth of equipment that is designed to extract an enormous amount of dirt, and replace it with gravel and road base and other final finished materials to provide the perfect service for the paving company to lay down on. Road preparation includes excavating, grading, subgrade, fine-grating, soil remediation, slope-stability, trucking, water and sewer pipe/line installation, manholes, and all general forms of earth work. 50% of our sales come from chemical stabilization, 20% road demolition, 20% excavation, and 10% water and sewer line installation.
Our Steady and Long-Standing Customers Include: dozens of city and county municipalities, state entities and private sector work. We do road construction and reconstruction for many cities including Parker, Castle Pines, Monument, Aurora Lakewood Castle Rock, Colorado Springs, as well as counties such as Arapahoe, Elbert, Denver, and Douglas. About 80% of our work in city/county/state municipalities and 20% is commercial or industrial.
The “current way” roads are reconstructed or replaced: Most road-reconstruction companies have gross profits of only 15%- 25% because of the enormous cost of hauling away old road waste material to be recycled and replace it with new material. In fact, one of the largest costs in our industry is hauling away up to 1 foot of excavated dirt and material to either a dumpsite or a recycling center (which is very costly to deposit into) and then haul in replacement road base and gravel from a far-away quarry. Just think of how many truckloads or 1000s of tons of material that need to be hauled away and replaced for a road 1 ft. deep and 5 miles long, for example. How much wear and tear on large trucks is this? How many man hours spent driving, and the incredible cost of hauling in new road base or gravel from a quarry at over $25/ton? This is how roads have always been stripped down and reconstructed after 5-10 years of wear and tear and to a large extent this is how our competition does things today, which is why they operate on such thin margins.
CHEMICAL STABILIZATION: In recent years we have introduced Chemical Stabilization (CS) which is now about 50% of our gross sales. Instead of 15%-21% gross profits as stated above, we earn closer to 50% gross profits with CS. In fact, we are the only company in our market that has the equipment and experience to use the approach for our customers and they are loving it. Over the last 5-10 years our customers are swiftly moving toward CS to eliminate all the extra steps and costs required to replace a road, as mentioned above. More specifically we have been working closely with local engineers who are employed by your customers to dramatically step-up the use of CS which allows us to achieve the same result for them as above with 30% lower cost overall, and a typical job can be completed in 1/3rd the time. Time-savings is critical on road projects because roadwork dramatically increases traffic congestion, and if you can complete a 5-mile stretch of road for instance in 2 weeks, vs. 6 weeks, you can see how much the city or county would love that because of the avoidance of unneeded bottleneck traffic. Every day you can cut from road work projects is EVERYTHING to the city/county. Exactly what CS is beyond the scope to this offering, but simply put, instead of hauling tons of materials off and back on to the site, CS is mixing chemicals such as dry cement, Quick Lime, or Fly Ash into the road and then mulching it into the existing road to create a solid base that hardens swiftly into a perfect new surface that pavers can lay onto as the final step. This might sound easy, so why isn’t everyone doing this?
In summary, and as stated above, the average life/longevity of a road surface in the Rocky Mountain Region is about 7 years, however, using CS on road surfaces increases the average life expectancy to over 20 years, which any customer would strongly prefer. In short, CS is 40% cheaper, completed in 1/3rd the time and lasts 3 X’s longer. Now that… is not very hard to sell.
The seller is a very honest and no BS kind of guy. He has gone on record to say that the demand for this product is almost infinite in the entire 5-state region. Almost no one is doing it, and over the next 5-10 years it will catch on and we are absolutely the leader in this industry. Throughout this write-up I have mentioned doubling the business to $10M/yr. many times, however, the seller knows that the opportunity is literally between $50M-$100M/yr. if someone wanted to bring this product to many cities and counties in the region. Not to sound cliché, but “this product would sell like hot cakes”.
Over the past 5-10 years the jury was not out yet on the success and practical use of chemical stabilization. Today, we have dozens of customers including city engineers who fully “get it“ in terms of the cost savings, time savings, and longevity of this product vs. the expensive and time-consuming approach involving enormous amount of cost in material hauling. One would ask, why would there be only 2-3 companies in the entire 5 state region that can do this kind of work? Well, first of all, it’s highly technical and other companies have tried it and have screwed up major jobs. In fact, one of our competitors has fallen out of the bid hat in Colorado because he screwed up a $2.5M job last year. Also, the equipment is very expensive and therefore capital is often a barrier to entry. Lastly, it takes great experience to create these mixtures in very specific proportions for the product to work properly and last upwards of 20 years. We have the recipe and materials down to a complete science and our field crew runs everything without any owner oversight or involvement, all 3 of our supervisors who run these jobs make well-over 100K/yr., we have the best in the trade. See owner for details here.
PLEASE EMAIL paul@companybroker.com FOR THE COMPREHENSIVE SALES PACKET AND DATAROOM WITH THE LAST 5 YEARS OF CPA FINANCIALS AND A 1 HOUR LONG VIDEO DETAILING EVERY ASPECT OF THE BUSINESS.
We are “Essential” during Coronavirus: In addition to our services being “essential” during the coronavirus era, what we do is also recession proof and completely inelastic. You have to have the services we provide for society to function on a day to day basis. Our business has held up solidly since the coronavirus hit because we’ve been designated as essential service by the government, therefore, the near-term performance of the business is protected. In fact, the seller is confident that he will finish the year with approximately 5.5 million in sales with a cash flow of at least $1.5 million. However, during the long term our business is completely recession proof because as mentioned above we have to have roads, and those roads need to be maintained and often completely rebuilt, at a certain frequency. In Colorado that frequency is greater than most other states in the country because of our extreme weather conditions. (see below) Finally, we have no customer concentration problems and are spread nicely among many different entities to ensure we always have work during any economy. Also, there really is no seasonality to our operation or monthly sales since we can operate all-but say 15-20 days/yrs.
Call for the explanation for the poor financials of 2018: very serious crash put the seller out of work for 5 months.
There Are No Negative Disclosable Items: The company is in excellent standing. There are “no ghosts in this closet”! As stated above, after completing 1,000’s of jobs we have NOT had 1 complaint for unsatisfactory work that we did not immediately fix on our watch and our dime. We have never had an OSHA violation, and never been sued. We have always had an excellent safety record with just 1 claim in the past 10 years and our MOD. RATE is just .79, which means we enjoy a significant discount for our insurance premiums, which a new owner will benefit from for many years to come. We take worker safety very seriously and the seller is 100% committed to sign for Reps and Warranties that provides for a solid protection of the buyer in these areas.
Little working capital needed since the seller will leave $250,000 in solid accounts receivables for the new owner. Separately, the business has a solid pipeline of work of over $2,000,000 of contracted work that the new owner will step into at the date of closing to ensure a solid 6-8 months of work already teed-up. The company is in the finest position ever for a smooth and orderly transition to the new owner. 2019 was up substantially, compared to 2018, and 2020 looks even better.
The seller is age 64 and has been working his entire life since age 18. He has made no attempts to grow the business or get new work. He just cherry picks the jobs he wants with the customers he likes, which is just a small subset of the work that he is solicited to do each week. The seller is home-free from a financial standpoint and therefore he has been complacent and has not attempted to grow the business at all. In fact, he has been the bottleneck holding the business back (in the $4M – $5M gross sales range) and turns down more than half the work he is asked to perform. He is now looking for some new blood and fresh energy to come in and take what he has built to the next level by simply taking on more work.
Here is the real opportunity here and the greatest part of the value to the new owner, the fact he has the name and the reputation and the customer base and also the equipment to bring the business to $8M-9M they just need to pick up the phone and take more of the work they are being asked to bid, by existing customers who love them. The company is in a wonderful position with almost unlimited demand for its road building services, the current owner does not want to widen the spicket and take on more work since he is looking to retire.
Needless to ‘say, the new owner would not have to do any proactive sales or marketing efforts to grow the business to $8-$10M in sales… They have all the work they want without ever having any sales efforts in the past or professional branding, they don’t even have a website. This business has grown based on name and reputation and excellent performance of every job ever completed.
Long-standing relationships will our main customers: We have an incredible 36-year reputation working in our market largely for 3-4 surrounding counties. We do not work for general contractors as we are the general contractor in our process and that we control the entire process and of course are in the highest net profits at about 18%. Smaller competitors do just segments of the overall operation and therefore are subject to the whims of the general contractor and smaller profits. Not us. We are completely turnkey/vertically integrated to be able to do every aspect of the job. Our customers love us for this because it’s one-stop shopping for them and this way they have one point of contact and one person to go to if something isn’t right, the buck stops with us. We have an excellent “rhythm” working for our long-standing customers who trust us year-after-year to reconstruct roads in our market. In short, highways and roads have a life expectancy of about 7 years in Colorado before they need to be completely reconstructed and there are only 2 other decent competitors in our market that we truly compete with for this work.
About 95% of all the work we’ve done has been in a 15-mile radius of South Metro Denver. However, the same customers we serve have projects throughout the entire front range that we are asked to pursue all the time and would be a lay up to get, but the seller has just kept the business confined to the small radius for whatever reason. The new owner would have an immediate ability to double the sales by taking on more work with existing customers outside of this market all the way from Fort Collins to Colorado Springs and beyond. We have the reputation and the customer relationships, and of course we have the equipment and the excellent employee base for a new owner to expand the business swiftly and as stated above would need very little new equipment to grow the business to 9 or $10 million a year in sales.
Colorado has a never-ending demand for major road reconstruction due extreme temperature swings (rapid freeze-thaw), high UV radiation due to being mile-high, and overall traffic volume because of explosive growth. It is well-documented in Colorado that the average life of a road before it needs major reconstruction is about every 7 years because of the factors stated above. Other states roads’ last twice as long, and therefore the demand for our services is twice what other states need. Colorado stands at 1 mile in the air and the altitude, the UV radiation, and of extreme temperature swings is very damaging. Temperatures can change from 60° 1 minute, and 20° three hours later. Road surfaces don’t last long in these conditions. This is one of the greatest benefits of being a road builder in Colorado. In fact, we have rebuilt some of the same roads 3 or 4 times over the past 20 years or so.
The best employees and equipment: It’s been said “a company is as good as its employees and it’s equipment.” We have the very best of both, and have spared no expense on either. We already mentioned we have 16 of the best workers in the field that need no oversight, but in terms of equipment we have always invested heavily here. In fact, we spend well-over $250K/yr. maintaining and upgrading our equipment and the buyer should know that they are getting the most well-maintained equipment in Colorado, which is worth no less than $4M quick sale value at market
The Most Valuable Assets Included in the Transaction: is NOT the $4.1M in equipment or the working capital left behind. It’s the incredible list of long-standing customers that send an enormous amount of steady work to us all the time unsolicited. About 50% of work is negotiated; we don’t even have to compete or bid for it – it is ours if we want it. Over the years we have done absolutely no sales, marketing or business development efforts to obtain the $5M/yr. in sales we get.
A new owner would not need to go out and do any proactive sales and marketing efforts to drum-up new work, they would simply reach out to our steady customers and let them know we want to increase the volume and take on more projects. The seller has gone on record to say that it would be a layup to grow the business to $8M-10M in our new facility without any additional equipment to speak of. The seller is confident that the business would cash flow $2.5M on sales of $9M since all of the fixed costs are covered at the first $2.5M or so, and the only significant variable costs are materials and labor.
Reason for Sale and Smooth Transition: To ensure a smooth and orderly transfer of all responsibilities and relationships the owners will stay on for whatever length of time it takes to ensure that the new owner is completely acclimated and nothing gets dropped in the transition. The owner has a clear interest in an optimal transition to the new owner because he is carrying a good portion of the sales price to be paid over 2-3 years, as well as a legacy he built and wants to ensure thrives for many years to come. He DOESN’T want to see it fail. Further, the seller is completely committed to be available even for a year or longer to the new owner for some of the critical situations where you need a “little gray hair in the room” as he puts it, to secure some of those bigger deals that the new owner may not be able to bring down because they simply haven’t been around that long. The seller would be fine and even excited to be available for 1-2 years since he isn’t moving anywhere and would love to help where he can. “The deal has to work for everybody”, he says.
Growth Projections for the Region: Economic growth projections for the next 5 to 10 years for the South Denver to Colorado Springs area is nothing short of explosive. If you don’t live in Colorado you would not know that Denver, Fort Collins, Colorado Springs and everything in between has been nothing short of the fastest-growing region in the country for the last 10 years in particular. Denver and Colorado Springs in particular have been off the chart for construction and population growth. It is beyond the scope of the sales package to go into detail, but we have an excellent diverse economy, wonderful weather, higher education levels, and it is just a wonderful place to live overall, and of course the approval of recreational and medical marijuana pioneering certainly gave the region a shot in the arm. It is no secret that we were in the longest economic expansion nationally (until Coronavirus), and although nothing good lasts forever, when things to slow down nationally, Denver and Colorado Springs as well as the entire Front Range are expected to continue to buck the trend and grow for many reasons. It’s also clear that city and county municipalities are very friendly to construction and there is virtually unlimited land in which to sprawl in both of these major metropolitan areas.
Licenses and Permits: Initially, the new owner needs no specific licensing or permits in Colorado, the company has all licenses needed to operate going forward. However, within the first 1-2 years the new owner would need to transition the licenses to themselves, but the seller will keep his license active for the company until this transition is complete.
Please email if you have any specific question(s), path forward, or have potential interest in a phone all or face-to-face meeting with the owner/seller.
Paul Olsen
At closing the buyer gets over $3,000,000 in assets, inventory and accounts receivables, Debt Free.
30 Yr. Old Comm./Resid. HVAC & Air Duct Cleaning Service Business 
25 Yr. Old Niche, absentee-owned, 