Swan Corporate is pleased to take to market a well-established and profitable domestic, commercial and industrial electrical installation company serving Cornwall, South West England and Southern England.
Established in 2005, our client has built a company which delivers stable turnover and impressive profit margins over time. Turnover has topped £300,000 on average in the last three years. A recent drive to reduce input costs has driven gross profit much higher to an industry-leading 47.01%. Adjusted EBITDA also touched 30% in the last financial year. The company often works 3-4 months booked in advance.
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The company enjoys a great reputation in its area. One of the most exciting aspects of this business for us is the healthy balance of main contractor and subcontractor work which delivers two significant and stable sources of revenue. The company’s services are in such demand because of the quality of work it performs – there is no sales and marketing function currently within the business.
And it’s these facts that, to us, make our client a great opportunity. The business is cash generative and, at most times, its bank balance is in six figures. The hiring of a marketing and sales professional with responsibility for finding new business could be covered by existing cash flows. If this person was provided with the data and support required, they could expand our client’s market presence across the more lucrative public and private sectors bringing in new revenues.
The current owner enjoys running the business but has no desire to grow it. He would like to sell it to someone who could take the business much further.
Highlights
• £300,000 turnover in FY 2021 with an adjusted EBITDA of 29%
• Record gross profit of 47.01% in last full financial year
• Long-standing on-going relationships with main contractors
• Highly cash-generative business
• Company workload often booked up for 3-4 months in advance.
• High margins and positive cash flows mean that any proposed expansion by a new owner could be largely self-financing
• 17 years’ reputation built up in South West and Southern England
• Including VAT, average monthly inflows of cash to the bank account of just under £30,000
• Ideal opportunity to build the business by introducing marketing campaigns and sales reps.
Sources of revenue
36.5% of the firm’s revenue comes from three commercial clients sub-contracting on their own jobs. Jobs are ordered by main contractors like these on an ad-hoc basis. There is no contractual obligation on these companies to award all completable work to our client. Rather, they return time and time again over many years because of the company’s reputation, experience and commitment to excellence in service provision.
In the 17 years since our client’s business was founded, he has provided services to thousands of homeowners and business owners. A healthy proportion of turnover comes from returning customers, especially those moving home or business premises, as does revenue from new customer recommended to the firm by existing clients.
Low fixed cost base
In addition to the owner, there is one full-time member of staff, the office manager who is in charge of accounts management, job scheduling, general admin and accounts payable.
Electrical work carried out by the company is done exclusively using a pool of trusted subcontractors our client has dealt with for many years. In an earlier part of the company’s history, full-time electricians were retained to complete jobs. Over time, this switched to a sub-contractor-only workforce which greatly reduced fixed costs and absenteeism. While profit margins are smaller on jobs in general, profitability across the company is higher because of lower fixed costs.
Enquire
A new owner will benefit from working with the established list of main contractors that are responsible for a large proportion of the company’s turnover. Rapid growth will be achievable by leveraging the goodwill residential and commercial clients have towards our client’s recognisable brand in marketing campaigns. The company has never employed someone before whose sole purpose is revenue generation and existing account management and yet achieves impressive, stable turnover despite that fact.
We expect interest in our client to be brisk so we politely invite you to get in touch to receive a copy of our client’s business information memorandum.
