Business plan
Purchase the existing business with current assets,liabilities, and accounts receivable that from current ownership, for the sum of $1,500,000
Cash to owner $1,000,000
Owner to finance $500,000 over ten years @ 5%
Borrow $3,500,000 to fund acquisition, and to payoff current line of credit of $1,200,000 and other accounts payable liabilities of approximately $600,000 plus maintain operating funds with remaining $700,000 of borrowed equity.
ACCOUNTS RECEIVABLE TOTALS $1,500,000
WITH $275,000 IN DOUBTFUL ACCOUNT
Spinoff Bangor construction operations for $300,000 (or best offer)
Spinoff Concrete Coring Operations-nh for $250,000 (or best offer)
Spinoff concrete coring operations -bangor for $150,000 (or best offer)
Sell Bangor real estate (not owned by corporation) to maintain personal cash reserves of $350,000- (currently owned 50/50 with owner.
Reduce annual indirect costs as follows:
Eliminate 3 salaried sales staff and convert to commission based. save $195,000
Eliminate coring manager due to sale save $75000
Eliminate all shared maintenance on owners' real estate holdings save $140,000
Reduce leases by $60,000(my real estate)
Reduce Bangor operating expense due to sale -saves $200,000
Reduced advertising expenses due todivision spinoffs- saves $50,000
Reduced Insurance burden due to spinoffs
saves $85000
total savings on indirect costs will be $805,000
These reductions will only decrease sales from the current mix by $1,400,000 and effect the gross profit by only $362,000, for a net annual savings of $443,000 direct to the bottom line.
$2008 sales were at $14,000,000, although our loss on the year was $300,000 due to an unexpected drop in revenues in the 4th quarter, and dismal results from bangor ,coring and certain non-performing residential oriented sales personnel that have already been eliminated. In the first quarter of this year,forced we have reduced our forces by 25%.
We are lean and mean and our current 2009 backlog sits at $4,500,000 before our bid season is in full swing.
Once we have proven the soundness of this business plan without the overly agressive influence of existing ownership, we will expand the geographic coverage of our core businesses that include:
Plumbing; $1,000,000 in revenue
Remodeling$1,500,000 in revenue
Electrical $750,000 in revenue
Insurance loss restoration $5,000,000
Franchised systems $1,000,000
Long term care renovations $ 2,000,000
Commercial service contracts $450,000
industrial renovations $1,000,000
The owner is ready to divest, and the timing is right for me to acquire this business.
What do you think is my best resource to fund this acquisition? On a good year, we realize a 8-10% net profit.
www.pmmackaygroup.com
