Acquisition Opportunity

Machine Rebuilder

BUSINESS OVERVIEW

Empire Business Associates, a Northeast Ohio merger and acquisition firm, represents a company that specializes in the re-manufacturing, retrofitting, and servicing of shop floor and tool room machines and equipment that is available for acquisition. Founded in 1987, the company is located in Northeast Ohio and enjoys an excellent reputation for providing complete “one-stop shopping” for electrical, electronics and mechanical machine tool service.

The company operates out of a 10,000+ sq. ft. modern facility that is equipped with two overhead cranes with 25 ton capacity and clearance of up to 25 feet.  The company’s full range of services includes rebuilding, retrofitting, field service, field installation and instruction, remanufacturing, CNC troubleshooting, ball bar calibration, preventative maintenance programs, and machine relocation, realignment and installation. On remanufacturing jobs, the company offers a one year new machine warranty, and the company fully supports all shop machines with technical support, parts, supplies, tooling, and field service.

Some examples of types of work the company has done include:

• Lathes – a wide variety of reconditioned, used, and rebuilt lathes. Some equipment the company has serviced includes: Cincinnati Milacron, LaBlond, Clausing, Farrel, Morisiki, Traub, Kramatorsk, Hugh Smith, Wotan, and Warner & Swasey.
• Grinders – the company provides new, used, and rebuilt parts for all precision grinding machines. Some brands serviced include: More Jig Grinders, Springfield Grinders, Okuma Grinders, ELB Grinders, Kellenburg Grinders, Monoset Grinders, Mattison Grinders, Blanchart Grinders, Norton Grinders, Churchill Grinders, and Surface Grinders.
• Milling – machine rebuilding, repair & retrofitting, including: DeVlieg, Mazak, Wotan, Dixi, Makino, Ingersol, Cincinnati Gilbert, Maho, Kitamura, Butler, Omni, and Bridgeport machines.
• Unit Rebuilding – transmissions, cross slide assemblies, gear box assemblies, turret and bearing assemblies, index drums, index cams, and barrel cams.
• Electrical and CNC Retrofits – including Fanuc, Fagor, MDSI, and Siemens controls.
• Custom Design Work – the company will work with the customer to design and build custom machinery to meet customer needs and manufacturing specifications.
• The company’s customer base of over 250 companies includes machine shops located throughout the United States. Sales in terms of breakdown by category include:
• Rebuild & Retrofit (both Mechanical & Electronic) – Approximately 60%
• Rebuild, Mechanical Only – Approximately 30%
• Miscellaneous, Service & Field Service Work – Approximately 10%

The company has an outstanding reputation and enjoys a high degree of repeat business. The company differentiates itself from its competitors by offering its customers one-stop shopping, doing all work in-house (vs. contracting out certain types of work), providing a high level of customer service and support, including field support if needed, and guaranteeing all work. The company has in fact experienced an increase in sales over the past two to three years due to several competitors going out of business. The owner believes that the company’s outstanding reputation, high level of support, and ability to provide customers with one stop shopping have contributed to the success and longevity of the business.

The company’s marketing efforts over the years have been modest, as the owner had a number of established business contacts when he began the business twenty years ago. Most of the company’s sales are from word-of-mouth advertising and repeat sales from the company’s loyal customer base. A modest increase in marketing efforts could have a significant impact on the company’s sales and profits.

The company offers the new owner an outstanding opportunity to purchase a well-established business with an outstanding reputation, a built-in customer base, and high growth potential with the implementation of a modest marketing effort. In addition, the owner is willing to remain in a sales consulting capacity to assist the new owner, if desired, in taking this company to the next level.

INVESTMENT CONSIDERATIONS

There are numerous benefits for the buyer, who purchases this well-established business, including:

• The company has been in business over twenty years and enjoys an excellent reputation within the industry.
• The company has a customer base of approximately 250 customers, and enjoys a high degree of repeat sales.
• The company has differentiated itself by providing one-stop shopping, doing all work in-house (vs. contracting out certain types of work), providing a high level of customer service and support, including field support if needed, and guaranteeing all work.
• The company’s sales are on the upswing, as it has been able to take advantage of consolidation within its industry.
• The company’s marketing efforts have been limited, so even a modest sales and marketing effort could result in increased sales and profits for the new owner.
• The owner is willing to stay on, if desired, to assist the new owner in a sales consulting capacity.
• The property on which the company is located is large enough that the size of the facility could be doubled, if desired.

FINANCIAL INFORMATION

FUTURE STRATEGIES FOR GROWTH

There are a number of strategies that could be implemented to help take the company to the next level. These include:

• Hiring a Sales Representative with hands-on experience in this industry (the owner is willing to work with the new owner and/or a newly hired sales rep in this capacity)
• Increase Internet Advertising to increase the number of “hits” when companies search for these services
• Improve the Company’s Web Site and Purchase a Domain Name
• Increasing Staff
• If Needed, Building Expansion – the property is large enough that the company’s square footage could be doubled

REASON FOR SALE & TRANSITION PLAN

The owner of the company is nearly 70 years old and would like to retire in order to pursue other interests. He is willing to remain after the sale of the company, as deemed necessary, for a reasonable period of time during which an orderly transition between owners can take place. This includes the divulgence of any and all proprietary knowledge necessary to operate the business and preparation of the company’s customers, vendors, and employees to facilitate a smooth transition. The owner is committed to helping the new owner in every way possible to succeed, and is willing to remain with the company in a sales consulting capacity to train and/or assist the new owner, if desired, following the transition period.

PRICE & TERMS

The price of the company is $500,000.00, which includes the following assets of the business: customer list, office equipment, production machinery, raw material, finished goods, fixtures, supplies, goodwill and going concern values attached to the company. Those assets not included in the sale of the business are the cash, work-in-process, accounts receivable. The company will be responsible for the accounts payable and short and long term debt.

Purchase of the real estate is preferred, though the owner owns the real estate and would be willing to provide a lease with an option to buy. The 10,000 sq. ft. plant and 2 1/2 acres of land should appraise for $850,000.00. The operating company is leasing the facility at $5,000.00 a month.