This profitable and growing Company is a production and custom cabinet manufacturer serving Michigan and expanding across the country. The Company builds cabinetry to the project or owner’s specification with a significant focus on multi-family projects. Founded eight years ago, the Company manufacturers under three brands. The Company obtains work and projects through general contractors, apartment owners and developers, kitchen dealers, and residential owners. The Company maintains a go-to group of dealers that order based on catalog or specification, and the Company bids (with the help of developed general contractor and apartment owner relationships) on larger projects. The Company offers a unique lineup of colors and styles that can fulfill orders from a residential customer for a single cabinet or 6,000 cabinets for a substantial apartment owner.
The Company started marketing its products under one brand; however, the Company aimed to differentiate itself in the marketplace by appealing to multiple end markets. The three brands that the Company offers attract a different target customer by providing unique cabinet products. The Company manufactures products that are geared toward simpler and larger projects, one-off projects, and highly customized projects for the commercial, apartment, and residential markets. These brands are still developing and growing, allowing a new owner to benefit from this brand platform with a broad customer outreach/footprint and diversified target customers. All brands offer a similar product that is marketed and sold in three different ways.
The Company developed a unique niche by being big enough to deliver on larger projects but small enough to react to smaller/custom projects. The Company can execute multiple large projects and still offer custom colors, door styles, and cabinets. Other companies can do one or the other, not both high-volume and customization. The Company has built a solid reputation through this flexibility, value, service, and support.
The Company is owned by two owners (95%/5%). The majority owner is looking to sell his portion of the Company. He is a visionary for the Company and is involved with new lines and ventures, finance, and high-level sales. He considers himself a semi-passive owner, allowing his team to do their jobs. He works four to twelve hours per week and does not have an office in the Company’s facility. The Company’s minority owner is the operations manager and runs the Company on a day-to-day basis with the support of the majority owner. The majority owner is willing to provide reasonable transition assistance to allow the new owner ample time to transition into the Business. The majority owner is confident that the Company’s management team can run the Company.
Buyers will be required to have a minimum of $200,000, solid credit, and preferably industry experience to qualify for SBA 7a financing.
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The majority owner owns the Company’s facility, as well as the two adjacent buildings. All three buildings are for sale as part of the transaction. The majority owner is open to selling or leasing the buildings. All three buildings sit on a combined land area of 280,691 square feet/6.44 net acres. The buildings contain a total of 52,498 square feet of gross building area, and there is an additional 544 square feet of mezzanine level area. The Company’s facility is 3.010 acres, consisting of 32,105 square feet, and a 2,586 square foot or 5% finished ground floor office area in the building. The majority owner’s other two facilities are currently being rented out by other companies – 16,496 square feet/3,897 square feet.
(1) Outside Sales To Focus On Recession Proof Opportunities: The Company does not invest many resources into marketing or sales (no outbound marketing method and zero salespeople). If the Company were to implement marketing initiatives and hire a salesperson focused on business development, the Company could benefit greatly. More specifically, the Company could hire an outside salesperson or representative to concentrate on recession-proof opportunities. (2) Implement A Second Panel Processing Shift For Making Other Parts: The Company could implement a second shift with two machines running, not producing finished products, but making parts/components for other companies. In the past, the Company has turned down opportunities for panel processing other parts/components – some jobs being more than $1M+. (3) Add A Storage And Retrieval System: The Company could add a storage and retrieval system to help stack materials 24/7. This system offloads for sorting and stacks in reverse order based on need. The advantages of these systems are the quick and flexible handling of single panels, the decoupling of cut and material supply, and the facility of monitoring a wide range of parts and delivering them precisely to the machines connected to the stacking storage and retrieval system. (4) Outsource Alternative Products: The Company could outsource all products outside of cabinets (Ex. wooden doors) to Mexico or Vietnam to help drop costs and be more competitive in other areas, further diversifying its product offering and cutting costs. Since the Company does not have this outsourcing program in place, the Company focuses solely on manufacturing and selling cabinets. (5) Complete And Finalize The Company’s Three Brands: Although the Company has established and outlined all three of its brands, two of its brands have been put on the side and not fully finalized. The Company’s brand that is geared toward simpler and larger projects is fully running and makes up 85% of the Company’s business each year, its one-off/custom cabinetry brand has been “tabled,” and its e-commerce platform brand is just getting started with an online order platform. Once all three brands are live and active, the Company could grow significantly. (6) Robust Pipeline Activity: The Company currently features healthy pipeline activity and actionable sales growth avenues. Due to the Company’s impressive backlog, the majority owner is confident that the Company will accomplish $3.0M-$3.2M in sales for 2020 after being shut down for two months due to COVID-19.
(1) Big Enough To Deliver But Small Enough To React: The Company can perform multiple large projects and offer custom cabinetry solutions (custom cabinets, door style, and color) at a price that is competitive for small and big projects. The Company is large enough to compete on price while providing the same capabilities as all the major cabinet manufacturers; however, the Company is agile enough to produce the customer service and customization that single-family and multi-family housing/apartments require. (2) Diversified Product Line And Customer Base – Three Brands: The Company could offer three unique brands reaching a plethora of different markets, further diversifying itself in the cabinet industry. The Company could access many different markets through three unique brands but utilize the same ERP, staff, machinery, and facility to leverage synergies and efficiencies. The Company has yet to fully develop and implement two of its brands, giving the opportunity for a new owner to invest in finalizing these two brands and growing sales by offering three unique solutions. By selling into three different end-markets, the Company could be more recession proof than most cabinet manufacturers. (3) Financial Strength and Growth: The Company maintains an impressive gross profit margin above 50%, demonstrating stable operational efficiencies – robust systems, skilled personnel, and effective pricing strategies. The Company had an impressive jump in revenue (more than doubling) from 2018 to 2019 while operating at a substantial gross profit margin. While the majority owner believes that the Company will require some capital improvements to grow, the Company’s facility, personnel, and systems can operate at similar gross profit margins while increasing its top-line, resulting in steady cash flow. (4) Autonomous and Skilled Management Team: The majority owner has found an exceptional operations manager who oversees the Company’s day-to-day operations with the majority owner’s support. Supporting the operations manager is a group of experienced managers and production team. The Company’s managers are educated in the industry and have combined 23+ years of experience working for the Company. The majority owner is confident that the current team can operate the Company without much direction from ownership. (5) Trademark and KCMA Certification: The Company owns one trademark for one of its cabinetry brands and can pursue trademarks for its other two brands in the future. Additionally, The Company’s standard product lines passed the KCMA certification – allowing the Company to offer quality cabinets that have been through rigorous testing.
The majority owner is a serial entrepreneur and would like to start another company.
Ownership is willing to provide reasonable and customary transition assistance.