UNDER LOI: Tech–2482: Consistently Profitable, High Quality Geotech Lab in the North East

UNDER LOI
Tech-2482: Consistently Profitable High Quality GeoTech Lab in North East

Experts in Solving Difficult Test Cases


THIS BUSINESS HAS BEEN QUALIFIED FOR SBA LOAN – CURRENTLY WITH SPECIAL STIMULUS INCENTIVES

Great News for Small Business Buyers: The recent $900B stimulus bill directs the SBA to pay the first 6 months of new SBA 7(a) loans approved between February 1 and September 30, 2021 (up to $9,000/month). In addition there are lower closing costs. It is important to act fast to receive these loans as bankers are extremely busy with the deal volume currently and you may lose out if you wait till August or September to apply for the loan.


Gross Revenue: $1.83M EBITDA: $496K Asking Price: $1.8 M
Asset Value: ~$500K Lab Area: 14,000 Sq. Ft.
(Leased)
Staff: 15 people
… Offered Debt Free … 27% EBITDA Margin … Consistently Profitable

This leading Geotech lab in the North East performs a variety of testing that includes routine index testing to sophisticated state-of-the-art test procedures. Its clients include governmental agencies, consulting engineering firms, and construction contractors. The Laboratory is known for its expertise and the scope of testing offered, and many other geotechnical laboratories send their advanced testing to the Lab for these reasons. It is also one of the few laboratories experienced in cyclic testing used in earthquake analysis and machine loadings. As a result, they receive samples from international clients and sites.

compression testThe Lab performs testing in accordance with a quality assurance plan based on ASTM, ISRM, AASHTO and in-house test procedures.  They participate in the AASHTO resource proficiency program (formerly AMRL) and the lab is validated by the U.S. Army Corps of Engineers and accredited by AASHTO. The Lab provides the analyses and collaboration clients need when making geotechnical performance evaluations. The Lab’s staff members are active in the ASTM technical committee D-18 on Soil and Rock and this expertise also allows them to provide clients with consulting on test interpretation and validation.

The Lab has relatively limited local competition. It has not done much marketing as the sellers have treated it as a lifestyle business. An ambitious buyer can expand the business by scaling up and hiring more people as the current test equipment and physical facilities already have extra capacity for expansion.

GOOD MANAGEMENT TEAM

In mid-2018, the Lab hired two senior managers in preparation for sale of the Lab to ensure a smooth transition for the new buyer. One of the current owner can stay through the transition for a year or more depending on what the buyer would want, help hire another senior engineer to replace him, and can also be available for longer-term consulting.

STRONG FINANCIALS

In 2019, the lab posted a solid revenue of $1.83 M and an EBITDA of $496K with a very healthy 27% EBITDA margin. The performance remained strong in 2020 despite the pandemic as this is an essential business. The lab had a revenue of $1.74M in 2020 with an EBITDA of $464K.

The business did slowdown somewhat in the third quarter of 2020, as some of the government work shut down but came back strong towards the end of the fourth quarter. The lab got some large contracts (a $400,000 contract covering two years of work, a $70,000 contract from a client is expected to follow up with two additional contracts in February and April of 2021, and several sub-$10,000 contracts. So, some lost revenue of 2020 will be more than made up in 2021 based on these renewed activities. Were it not for slight COVID-related slowdown in the second half of 2020, the lab would have done much better in 2020 compared to 2019.

2020* 2019 2018 2017
GROSS REVENUE $1.74M  $1.83 M $1.79 M 1.51 M
ADJUSTED EBITDA $464K $496 K $647 K $521 K

*Slight Covid slowdown in the second half of 2020 depressed the revenue slightly but the lab got very busy during the last two months of 2021 and this revenue is on track to being more than made up in 2021

KEY FEATURES

  • Long and successful track record
  • Strong year to year financial performance – strong profits and great margins
  • Great Facility – central location, ample space and infrastructure, capacity for growth
  • Solid reputation for solving difficult test situations
  • Comes Debt free

REASON FOR SALE

The owners are wanting to slow down but are looking for the right buyer who can take advantage of the growth opportunities that are available and take the Lab to the next level, while still maintaining the high standards that the Lab is known for.

ASKING PRICE

This business has been solidly profitable year after year and has posted solid numbers over last several years. There is plenty of growth possible. It is offered debt-free at $1.8M, a fair multiple of 2019 EBITDA of $496K.

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