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Case Studies

RealResults.

ProvenImpact.

At BizBuyPro, we believe in the power of informed, strategic decisions—and our case studies demonstrate exactly that. Each story showcases how our expertise in business valuation, risk management, and tailored guidance has helped clients make smart, profitable decisions. Explore our case studies to see how BizBuyPro has transformed complex transactions into successful, secure investments.

CASE STUDY #1

Purchase of a Rural Trash Collection Service

Objective:
A client engaged BizBuyPro to provide valuation services and advisory support for the acquisition of a business.

Overview of the Business:
The business under consideration was a waste management company with the following financial metrics:

  1. Purchase Price: $1.2 million
  2. Revenue: Approximately $2.0 million
  3. Owner’s Discretionary Income (ODI): Approximately $350,000
  4. Purchase Price Multiple: 3.5x

While the multiple was slightly above industry norms, it was deemed reasonable given the initial assessment. The business owned several assets, including trash trucks, roll-off dumpsters, and vehicles. Its rural location meant minimal competition, and the financial records provided were generally clean, with reasonable owner addbacks.

Due Diligence Process:
As part of our due diligence, the buyer provided the following documentation:

  • Income statements and balance sheets for the past two years
  • Corporate tax returns for the past two years

Key questions raised during the review included:

  • Worker Classification: Are employees classified as W-2 employees or 1099 independent contractors?
  • Service Scope: Does the company handle hazardous waste?

The seller disclosed that workers were classified as 1099 contractors and that hazardous waste hauling was part of their operations. 

Key Findings and Analysis:

  1. Insurance Deficiency:
    The company’s annual insurance expense was approximately $12,000, which was insufficient for a business hauling hazardous waste. A quick calculation estimated that adequate insurance coverage would increase annual costs by approximately $100,000, bringing the total insurance expense to $112,000 annually.

  2. Worker Reclassification Costs:
    Converting 1099 contractors to W-2 employees would result in additional payroll tax obligations of approximately $50,000 per year.

  3. Revised Financial Impact:
    After factoring in these adjustments, the revised ODI was approximately $200,000—significantly lower than the initially reported $350,000. This adjustment reduced the estimated value of the business to approximately $600,000, well below the $1.2 million asking price.

Outcome:
Based on the revised valuation, the client made the informed decision to withdraw from the transaction. This decision likely prevented significant financial losses, including the potential risk of bankruptcy.

Conclusion:
This case highlights the critical importance of thorough due diligence when evaluating a business acquisition. Without professional guidance, the buyer may have overpaid for the business, leading to financial distress. As the saying goes, “Sometimes the best deals are the ones you don’t make.”

CASE STUDY #2

Purchase of Plumbing Contractor

Client hired BizBuyPro to assist with finding, valuing, and closing on a business acquisition. I have a strong preference for service-based businesses because they tend to be in constant demand and offer significant potential for growth by adding additional services.

Here are the key numbers for the business in question:

  1. Purchase Price: $3.5 million, which included $1 million in real estate. This meant the actual business value was around $2.5 million.
  2. Revenue: Approximately $6 million.
  3. Owner’s Discretionary Income (ODI): Around $800,000, which resulted in a purchase price multiple of about 3.0x — a solid figure.

 

What I Liked About the Deal:

  • Real Estate: I always like when real estate is included in a business deal. This provides flexibility for the buyer, as they could later sell the property on its own, or keep it and have a built-in tenant if they decide to sell the business separately.
  • Location and Services: The business was located in a growing area and offered a variety of services—installation, maintenance, and warranties—across different customer segments, including residential new construction, residential service, and commercial service.
  • Established Track Record: With over 30 years in business, the company had a well-established presence and a solid team of staff and field technicians.
  • Room for Improvement: I was also drawn to the fact that the business wasn’t running at its full potential. In service-based businesses, I generally expect to see a 20% profit margin (around $1.2 million in profit), but this business was operating at about 13.3%, or $800,000. This presented an opportunity for growth.

 

Update:
After more than two years of ownership, the business has increased its profitability to around $1.1 million, while sales have remained stable at approximately $6 million.

Key Takeaway:
It’s crucial to remember that we never buy businesses with the expectation that we can outsmart the current owners or drastically increase sales and margins. If you go into a deal thinking there’s a lot of untapped potential, you may end up in trouble. We always base our decisions on current performance and never overpay for the hope of future improvements.

BizBuyPro’s Role:
As BizBuyPro was involved from the beginning, we were able to guide the process smoothly. We helped the client secure SBA financing through our preferred lender network, facilitated the creation of pro forma financials and loan packages, and assisted with setting up the accounting software, payroll system, sales tax permits, and legal entity. We also supported the due diligence process and stayed involved throughout the closing.

Overall, this was one of my favorite transactions. In fact, it was such a good deal that I almost wish I had bought the company myself.

CASE STUDY #3

Purchase of Electrical Contractor

Client hired BizBuyPro to help find, value, and close on a business acquisition. As always, I’m a fan of service-based businesses because they’re in constant demand and can be scaled easily by adding complementary services. In this case, the buyer quickly expanded the business by adding solar panels and whole-house electric generators to the existing offerings. As a result, sales grew by 50% within three years.

Here are the key details of the business:

  1. Purchase Price: $800,000
  2. Revenue: Around $2.0 million
  3. Owner’s Discretionary Income (ODI): Approximately $80,000, which resulted in a purchase price multiple of about 10.0x—pretty high for the industry.

The purchase also included:

  • $100,000 in accounts receivable
  • $250,000 in inventory (which should have been closer to $50,000)
  • A company that was poorly managed, leaving plenty of room for improvement.

 

What I Liked About the Deal:

  • Seller Financing: One of the most attractive aspects of this deal was that the seller was willing to finance the entire purchase at a below-market interest rate. The buyer only needed a 10% down payment, which made the deal much more accessible.
  • Upside Potential: Despite the high purchase price multiple, the business was mismanaged, which meant there was significant upside potential. The buyer could turn things around, and the improvements in efficiency and service expansion (like adding solar panels) paid off quickly.

 

Update:
2.5 years after the acquisition, the buyer is now generating over $300,000 in owner’s discretionary income—well above the initial $80,000.

BizBuyPro’s Role:
This was an off-market deal, so BizBuyPro was involved from the very beginning, ensuring a smooth process. In this case, early involvement was crucial because the seller wasn’t particularly sophisticated, and the business’s financial records were a mess, making due diligence challenging. We helped negotiate a seller note since the books weren’t in order and the financials didn’t justify the asking price. The only way the deal would happen was if the seller agreed to carry the debt, which they did.

BizBuyPro took on the task of recreating two years’ worth of financials from scratch to ensure the deal made sense and was a solid investment. Our involvement throughout the due diligence process helped make sure everything was in line before moving forward.

This deal turned out to be one of the most rewarding and enjoyable ones for all parties involved, and the buyer’s success is a testament to the value of smart, hands-on support throughout the acquisition process.