Plumbing Business
Business Overview
Founded in January 1990, this highly reputable plumbing business serves northeastOhioresidences and small businesses. The company is engaged in the following services: 1) standard plumbing repair, including faucets, toilets and fixtures; 2) sewer and drain cleaning including installation and repair; 3) maintenance services; 4) appliance installation and repair (excluding electronic repairs); 5) well services, including pumps, pressure tanks and pipe repairs; 6) water heater repairs and replacement; 7) water and drain line repair and installation; 8) gas line leaks and new installations; 9) water softener and water purification installations; 10) kitchen and bath remodeling work.
The company’s customer base consists mostly of residential homeowners, but also includes landlords, home warranty insurance companies, small businesses, and retail maintenance companies that cater to the plumbing and service needs of large retail establishments and restaurants. Via retail maintenance companies, the seller has done work for BJ’s Wholesale Club, Kohl’s, TJ Maxx, The Disney Store, Loew’s, ARDA, and NEW (National Electronic Warranty which services whirlpool water heaters) as well as other major retail chains. Many customers are repeat customers. TheAkronarea Better Business Bureau has assigned the company an A- Credit Rating.
Approximately 50% of the company’s business comes fromSummitCounty, 45% from surrounding counties, includingPortage,MedinaandStarkCounties, and approximately 5% from Cuyahoga, Geauga andLakeCounties.
The company employs four full time plumbers and uses a contract plumber for overflow work as needed. The company employs two dispatchers and two office staff on a part time/flexible scheduling basis. The owner manages the operations and does not personally take on plumbing jobs. All employees are non-union.
Fixed assets include three trucks as well as plumbing equipment. The plumbing equipment includes four sewer machines, three sink machines, one jack hammer and one hydrojetter/power washer.
The company advertises in all phone directories serving the above mentioned counties. Additionally, the company advertises in local newspapers and publications and has two websites through the Yellow Pages.
Investment Considerations
This business represents a good opportunity for a buyer to purchase an established business with a good customer base and enables a strategic buyer to expand their existing market. Listed below are the primary benefits to a buyer of this business:
- The business has been established for well over 20 years and its name is well known throughoutSummit,Medina,Portageand Stark counties (while the company was established in 1990, the owner had been using the company’s name in the marketplace since 1986);
- The company has a strong customer base with numerous repeat customers;
- The company’s workforce is non-union and has many years of experience in the plumbing business (the owner has only hired well experienced plumbers with at least 5-10 years of experience);
- The company has been profitable over the past three years during a very difficult economic period;
- The owner is selling all of the trucks and plumbing equipment identified above with the business.
Financial Information
Actual Actual Actual Actual
Date 12/31/07 12/31/08 12/31/09 12/31/10
Period 12 Mos. 12 Mos. 12 Mos. 12 Mos.
Total Net Revenues $1,015,586 $970,287 $783,239 $872,623
Net Income $217,859 $101,262 $ 91,228 $152,348
Free Cash Flow* $319,452 $207,646 $157,196 $217,019
* Net Income plus all non-cash, discretionary and non-recurring expenses (includes the addback of owner’s compensation).
- All financial data is taken from the company’s 2007-2010 actual tax returns.
Future Strategies for Growth
Actions that could be taken by a buyer to grow this company’s revenues and net income include the following:
- Expand the company’s business in the Cleveland area (the company currently has a relatively small portion of its revenues coming from the Cleveland area and the company has recently been receiving more calls from homeowners and businesses in Cuyahoga County and the surrounding counties);
- Increase advertising through direct mail and other electronic mediums;
- Solicit more restaurants due to the high demand among restaurants for plumbing services;
- Target more home warranty business through direct solicitation of insurance agents and advertising in the claims pages of the Directory of Contractors and Insurance Agents;
- Cross sell other services, such as HVAC services, to the company’s existing customer base;
- Solicit homeowners to sign maintenance agreements covering plumbing and/or other services for a specific period of time (this is already being done by some other plumbing companies);
- Networking with the Home Builders Association, Landlord’s Association and other groups to increase business;
- Hire a night shift plumber for jobs from 10pm to 7am.
Reason for Sale & Transition Plan
The owner wishes to retire from the day to day running of the business. He wants to provide a smooth transition of the business to a new owner and is open to discussion regarding his continued involvement post closing and on any basis will be available post closing on a consultancy basis.
Price & Terms
The minimum asking price for the business is $400,000 (owner is willing to consider up to 50% seller financing). The price includes the company’s customer list, existing business, any inventory, three trucks and plumbing equipment (which includes the four sewer machines, three sink machines, one jack hammer and one hydrojetter/power washer mentioned earlier). Any cash on hand at the time of closing is not included.
