Acquisition Opportunity

Wastewater Treatment Company

BUSINESS OVERVIEW

Empire Business Associates, a Northeast Ohio merger and acquisition firm, represents a Wastewater Treatment Company located in Northeast Ohio that is available for acquisition.

The Company’s products and services include the design, installation, and product knowledge support of wastewater treatment systems, pollution prevention systems, and process water purification systems. Through established joint ventures, the Company also provides equipment fabrication, analytical and treatability testing services, and turnkey projects. They currently sub out their fabrication work, although this work could be brought in house.

The Company’s products include both new and reconditioned equipment, with approximately 70% of equipment sales new and 30% used equipment. Repair and replacement parts and system maintenance are also a steady source of sales. The Company’s owners estimate that approximately 75% of sales are complete systems, with the remaining 25% of sales in parts and repair work. The Company also has its own proprietary inclined plate clarifier and filter press lines. Complete systems can be either custom designed or packaged. Systems can consist of wastewater tanks, belt skimmers, holding and storage tanks, filter press, clarifier, pumps, and control instrumentation.

The Company has a base of over 500 customers, approximately 85-90% of whom are repeat buyers, and over the last five years no single customer accounts for more than 5% of the total Company’s sales. The Company’s major customer segments by industry include:

• Metal finishing – Painting, Powder Coating & E-Coating segment – appx 60%
• Metal finishing – Plating Industry – appx 20%
• Miscellaneous Industrial, including Plastic Coating, Mining, and Biological Treatment Industries and other miscellaneous – appx 20% of sales

The majority of the Company’s customers are small to mid-size manufacturers that are subcontractors to major manufacturers and corporations. The Company has an outstanding reputation in its field as a provider of high quality systems at very competitive prices. The Company utilizes a consultative selling approach to differentiate itself from its competitors, and builds long-term relationships by partnering with its customers to provide wastewater and water purification treatment systems that best meet its customers’ needs.

While the Company’s current sales and profit levels have provided the owners with a very good living for many years, they both readily admit that the Company’s sales and marketing efforts to date have been limited, consisting primarily of the Company’s web site, referrals from individuals working in affiliated industries, networking, and repeat sales from the Company’s base of 500 customers. The owners believe that a more intensive and targeted marketing effort could easily double the Company’s sales and profits.

The Company offers the new owner the opportunity to acquire a well-established business with an outstanding reputation within its industry. The Company is well regarded as a provider of competitively priced high quality products and services and its consultative selling approach. The implementation of a strong marketing plan will provide opportunities to increase sales and profits in nearly every market segment. The combination of the Company’s reputation, its established and loyal customer base, and an enhanced marketing program will enable the new owner to take this already excellent business to the next level.

INVESTMENT CONSIDERATIONS

The Company offers the buyer the opportunity to purchase a well-established business with an outstanding reputation within its industry. The many benefits of acquiring this business include:

• The Company has excellent name recognition and is highly regarded in its field as a provider of high quality wastewater treatment and water purification systems at very competitive prices.
• The Company has differentiated itself by utilizing a consultative selling approach, in which the Company partners with its customers to help them identify the best system to meet their needs within their budget. The Company’s ability to offer customers both new and reconditioned equipment is another competitive advantage the Company enjoys in an industry in which few of its competitors are willing to offer customers these options.
• The Company’s flexibility and consultative selling approach has enabled the Company to build and maintain a steady core of repeat sales in the repair and replacement parts segment of the business, which accounts for approximately 25% of the Company’s sales.
• The Company has a customer base of approximately 500 companies, 85-90% of whom are repeat buyers. Over the last five years no single customer accounts for more than 5% of the total Company’s sales.
• The Company’s high rate of referrals from individuals in affiliated industries is a further testament to the high degree of regard that the Company enjoys within its field. These referrals, along with networking by the owners and Company sales manager, have been the main methods of marketing that the Company has utilized.
• The Company has an established base of fifty suppliers, many of whom have worked with the Company for nearly 30 years.
• The Company’s marketing efforts to date have been modest, so a new owner with a strong marketing plan can realistically expect to increase sales and profits in a relatively short time frame.

FINANCIAL INFORMATION

Seller’s Discretionary Earnings

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:

• Putting an Added Sales & Marketing Focus on the Powder Coating & E-Coating market segments, both of which have grown dramatically over the past ten years
• Additional Focus on Marketing to the Plating Industry, which has declined in the number of companies but has a lot of aging equipment; plating industry survivors will have a serious need for updated and enhanced wastewater treatment systems, which could represent a niche marketing opportunity that the Company is well-positioned to capitalize upon, particularly with its ability to incorporate reconditioned equipment into its custom designed systems
• Increase Marketing Focus on Steel Pickling and Anodizing Market Segments
• Explore Niche Market Opportunities in States and Regions in which Water is Expensive – in these situations, opportunities exist to provide water purification and water recycling systems (such as micro-filtration and reverse osmosis systems), which can be less expensive and more cost-effective for manufacturers than wastewater treatment systems
• Add Two Additional Sales Representatives to increase sales and marketing efforts and take advantage of the above-mentioned market opportunities
• Attend More Industry Trade Shows to increase the Company’s visibility and enhance networking and referral opportunities
• Advertise in Industry Trade Journals, including painting, powder coating, E-Coating, plating, and general metal finishing industry publications
• Update and Enhance the Company’s Marketing Literature and Brochures
• Regular and Ongoing Maintenance of the Company’s Web Site

REASON FOR SALE & TRANSITION PLAN

While the owners both still enjoy working in the business and are willing to remain involved following the sale as commissioned sales representatives, they both wish to reduce their day-to-day involvement in running the business and would like to have more time to spend with their families and to pursue other interests. They would like to see the Company sold to someone who can take the business to the next level of growth, and will be available to assist in an orderly transition between owners. This includes the divulgence of any and all proprietary knowledge necessary to operate the business and preparation of the Company’s customers, suppliers, and employees to facilitate a smooth transition. The owners are committed to helping the new owner in every way possible to succeed, and their willingness to remain with the Company as commissioned sales reps following the sale of the business will be a strong advantage for the new owner.

PRICE & TERMS

The Company is a C Corporation, and each of the two owners own 50% of the Company’s stock. The sale of the Company will be structured as a stock sale transaction. The price of the Company is $1,450,000 which includes the following assets of the business: machinery and equipment, used inventory, goodwill, customer base and other going concern values attached to the company. Those assets not included in the sale of the business are the real estate, accounts payable, accounts receivable and cash.

The purchase of the real estate is optional. The owners would prefer to lease or a lease with an option to buy. They will consider selling the building along with the business.