The Business: Angling for a new entrepreneurial opportunity? Then consider this well-established distributor of fresh and frozen seafood. During its nearly 22 years of operation, the owner managed to finance the company's growth entirely from cash flow, largely by concentrating on two profitable niches: national retail-supermarket and restaurant chains. (He throws smaller would-be customers -- the kind that demand too much attention for too little revenues -- back for someone else to catch, which helps keep profit margins in the 22% to 30% range.) This company's bait includes an international network of 60 high-quality suppliers and 300 regular customers. Its 12,000-square-foot warehouse and shipping facility isn't part of the deal but can be leased from the current owner for $7,000 a month. The founder is ready to retire, but his four managers and 40 or so other staffers should swim along with a new owner.

Price: $2.25 million. With $600,000 down, a new buyer should qualify for a $1.5-million preapproved Small Business Administration loan package, with the remainder financed by a seller's mortgage.

Outlook: Although U.S. seafood consumption is no longer rising as rapidly as it did during the early 1990s, there are still a few ways this leading distributor could increase its catch. Four marketing staffers currently handle all growth efforts, but a new owner could add hires and create a Web site and national marketing catalog. The way to catch the biggest fish in the sea? Go where the profit margins are greatest: concentrate on boosting sales to hotel chains, a lucrative customer base that currently lags behind restaurants and supermarkets for this distributor.

Price Rationale: There's no doubt that this seafood purveyor is priced at appetizing levels. Distributors currently sell for about 30% of annual sales. In this company's case, that could justify a price tag of up to $3.9 million. Why the discount here? The need to buy or lease a warehouse facility as well as freezers and other equipment, on top of the sale, lowers the deal's value somewhat. But the inventory, worth an estimated $120,000 at press time, partially offsets the additional cost. Still, a prospective buyer must be capable of swallowing -- and digesting -- a big bite here.

Pros: A sunny locale, a thriving business, and a product that's actually healthful for your customers. This deal is definitely the catch of the day.

Cons: You'll be swimming with the sharks if you don't boost cash flow to cover the business's first-ever debt load and increased real estate costs.

Financials
Gross Revenues Recast Earnings*
1997 $14,600,000 $448,075
1998 $13,400,000 $419,000
1999 $13,300,000 $514,000

*Before interest, taxes, depreciation, and owner's compensation.
Note: Each fiscal year ends in June of the following calendar year.


Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Bill Russell, Southeast Business Partners, at 800-784-7820.


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