By joining a national network, a buyer could unbox growth at this moving company.
Business for Sale
The business: Simply put, the owner of this moving business is ready to move on himself. He was "just a guy with a pickup truck" when he founded the company 20 years ago. Today his business books 700 jobs a year, 95% of which are residential. It boasts five moving vans, 10 to 15 full- and part-time employees (depending on the season), and 8,000 square feet of leased storage space in a warehouse building. The owner recently established a second company, also included in this deal, in the freight-transportation business. The two big rigs he added to his fleet have helped him win larger jobs -- most memorably, a several-hundred-mile move for a couple whose belongings filled an entire tractor-trailer.
According to the owner, a buyer could readily increase revenue through an affiliation with a national van line like United or Atlas. In these arrangements companies typically keep their own name but co-brand their trucks and marketing material. In return they receive job referrals and have access to more trucks. Therefore, a buyer who followed this strategy would be able to take on still more large, lucrative jobs, possibly in the commercial sector. The seller refrained from pursuing this opportunity himself because he didn't want to make the investment to add storage space. The business is now on the market, he says, because he wants to reduce his workload and explore a new, unrelated venture.
Pros: Times may be tough, but housing starts and sales of new homes remain strong. Though the weak economy may lead people to schlepp their sofas on their own, those with a certain amount of stuff will always rely on movers. And while movers that focus solely on corporate business are struggling in this economy, those that have diversified into residential moves, storage, and freight transport, as this company has, are faring better.
Cons: You just need to open your Yellow Pages to see how many competitors you'll have -- at least 85 in this particular market. Expenses like insurance, workers' compensation, and truck maintenance can make for a heavy load. The seller estimates he spends more than $40,000 each year on insurance alone. And because most people move to new homes infrequently, repeat customers are few and far between.
Price rationale: Moving businesses can be priced in a variety of ways, based on a percentage of revenue or as a multiple of cash flow. By either of these metrics, this business is very fairly priced at 45% of revenue or more than twice cash flow. Four moving vans, two rigs, a dump trailer, and a front loader, which the seller owns, are included in the price.
The bottom line: Fair. The industry is extremely competitive, with low barriers to entry. But with two decades in the business and a solid reputation in what can be a shady industry, this company should keep on trucking for the foreseeable future.
A Midwestern Moving Company
*Earnings before interest, taxes, depreciation, and amortization. **Projected.
December 2002 A moving company in the Mountain states with revenue of $147,000 sold for $175,000
October 2002 A company in the Southeast with revenue of $586,000 sold for $487,000
September 2002 A company in the Southwest with revenue of $1.6 million sold for $940,000
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 Fred Yarborough at Yarborough Associates, an affiliate of the Business Brokers Network, 859-292-2439.