Dominick Fimiano is ready to sell his baby, Classic Pizza Crust. His son and most senior employee, Anthony, is also part of the package.
Fimiano's 10-year-old business manufactures and sells frozen pizza dough and crusts, as well as fully dressed pizzas. Its clients include schools, hospitals, bowling alleys, and amusement parks -- places with small kitchens that need menu items that are easy to reheat and serve.
In 2003, Classic Pizza Crust moved into a modern manufacturing facility and borrowed $700,000 to buy new machinery. The company has been growing ever since, and more expansion is possible, Fimiano says, but at age 70, he is ready to retire. "Our customers are begging us to do more for them, but I just don't have the appetite to go further into the hole," he says, referring to his still-substantial debt.
Anthony, 31, is the father of two small kids and is unwilling to take on the business's debt. So the Fimianos are looking to find a buyer who is happy to keep Anthony on the payroll after his dad pays off the company's debt from the proceeds of the sale.
|Company Financials||Gross Revenue||Discretionary Cash Flow||No. of Pizzas Sold|
*Projected year-end figures.
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$1.2 million, which includes kitchen equipment. Fimiano will use the proceeds of the sale to pay off the company's debt. A buyer would assume the lease on a 10,000-square-foot building, for which the company is set to pay $9,300 a month in rent.
The price is equal to three times discretionary cash flow (and less than one times sales) -- an amount that's "right in the ballpark for a frozen specialty food business," says Wayne Quilitz, a valuation analyst in Clearwater, Florida, who has priced similar deals.
Americans spend $30 billion on pizza each year. The company has solid relationships with distributors in Florida, and it is close to securing a deal with a cruise line, says Fimiano. Its facility is big enough to accommodate triple the volume it now produces.
The company has spent very little on marketing in recent years. Because of uneven profits, an SBA-backed buyer could have a hard time getting this deal approved. And there's Anthony: The founder's son is a key employee. Will he and a new owner get along?
To take quick advantage of the company's unused capacity and thus recoup the investment, a buyer should probably have experience in the food service industry. "This is not a business where you can call in a few days a week to see how things are going," Fimiano says.