February 2018

Featured Clients this issue:
**Details of each client below article

- Niche Service-Related Contractor #2017
- Traffic Control Company #1017
- Two Fitness Clubs In Prime Denver Locations #1617

This month our featured article discusses the current business transfer market place.  It is written by our new team member Scott Densmore and an abbreviated bio appears at the end of the article.  We are pleased to welcome Scott to our team.

The year-end numbers are in and, with the proper positioning, things are looking good for M&A in the Main Street and Lower Middle Markets. Following is some of the good news, some of the trends and forecasts, and some of the things you can do to avoid possible pitfalls on the horizon.

Transaction numbers for Small Business closings in 2017 were quite strong. Even with a slight 4th quarter drop, the industry saw record numbers this year.  BizBuySell reported almost 10,000 transactions in 2017, up more than 26.5% from 2016. Many are rightfully viewing this as good news, and feeling that this trend will continue well into the future.


These positive outlooks are backed by our changing labor force demographics. The Baby Boomers are reaching their golden years, consistently retiring, and looking to transfer their businesses to the next generation of acquirers and entrepreneurs. The number of Baby Boomer retirements is expected to hold steady above the 4,000,000 mark annually through 2028, which can be a direct contributing factor to the number of small businesses being offered for sale. The sheer number of people in this demographic segment should prove to have a great effect on the supply side of the equation. We are going to see an inevitable steady increase in the number of Baby Boomers over the age of 65, and total numbers are expected to reach over 70,000,000 people by 2029.

Another factor that drove M&A activity in 2017, and is poised to continue into 2018, is the declining number of skilled workers available in the labor force today. Many 2017 acquisitions were strategically executed in an attempt to gain talent that was otherwise hard to come by. This type of growth strategy looks good for the early adopters, but does not seem indefinitely sustainable. While the difficulty of finding skilled workers can be felt in many industries, construction in particular is not expecting to see an improvement in this situation for a while. According to a Q3 2017 US Chamber of Commerce report, "Nearly all (91%) contractors are at least moderately concerned about the skill levels of the workforce, down slightly from 94% in Q2 2017."

  • Become a high quality target for acquisition
  • Put forth effort into finding and retaining a skilled and competent workforce
  •  Develop second level managers that will help your business smoothly transition to a new owner
  • Have timely, accurate financial information prepared by an independent CPA


Start the Process

It is not uncommon to start a succession plan three to five years before you think you may want to sell your business. These years of planning often lead to a dramatic increase in your potential sales price.

Discuss your plans with a knowledgeable Intermediary. The FBB Group has been helping business owners with developing a comprehensive exit strategy since 1982. The future looks very bright for properly prepared business owners. 



The majority of our business is derived from referrals. Please consider referring our services if you encounter a situation involving the potential purchase or sale of a business.

Ronald V. Chernak
Inspiring business relationships since 1982!

Scott Densmore joins the FBB team! 

We welcome Scott as he joins our firm as a Business Intermediary. Scott served our country in Asia and the Middle East through his service in the United States Air Force and as a government contractor.  He has experience in business planning, strategic financial advising, sales, marketing and operational analysis.  His interest in business led him through business school and on to starting multiple small companies. 

Scott is a member of the Colorado Association of Business Intermediaries (CABI) and the International Business Brokers Association (IBBA).
Niche Service-Related Contractor #2017
This Metro Denver company provides services for restaurant commercial equipment, including refrigeration, Hot Side equipment, HVAC, Hood and MUA, along with plumbing and electrical services. The company does only commercial service and maintenance work, which provides consistent recurring revenue. There are over 150 clients. Gross Sales and Seller's Discretionary Earnings have nearly doubled over the past three years, and they continue to grow.  It is anticipated that 2017 will have an SDE of about $225,000. The company should appeal to: 1) a buyer already in the construction industry; 2) a buyer in a related field, such as plumbing, HVAC, or electrical contracting; or 3) an experienced business person. No construction-related licenses are required. Gross Sales and SDE shown below are for January - November 2017. 
  • Purchase Price...$695,000
  • Down Payment...$140,000
  • Gross Sales...$906,754
  • SDE...$203,992

For more information contact Ron Brasch rb@fbb.com.
Traffic Control Company #1017  
For over 20 years, this well-managed Traffic Control and Flagging Services Company has seen continued growth, due to its long term involvement with the Colorado Department of Transportation (CDOT) and various municipal projects.   The construction industry remains very strong in Colorado and this business is poised to capitalize on the state's infrastructure planning.   The owners are looking to retire, making this business a great acquisition for a regional industry buyer or an entrepreneur looking to acquire a well-established, profitable business and expand into other areas of the state.  
  • Purchase Price...$1,495,000
  • Down Payment...$385,000
  • Gross Sales...$1,341,840
  • SDE...$441,981

For more information contact Rob Amerine rob@fbb.com.
Two Fitness Clubs In Prime Denver Locations #1617
These two top-rated fitness clubs are in prime Front Range locations. Club #1 is at 75% membership capacity while the other is at 25%. This provides excellent cash flow with ample opportunity for growth. The clubs have among the best lay-outs and build-outs of any in their franchise. Their marketing is among the best in the industry, and they have an excellent reputation for superior equipment, facilities and service. Both clubs have seasoned and well-trained staff that could be managed by a single owner or manager. This would be an exceptional opportunity for an industry buyer looking to expand into one of the best markets in the country, or an entrepreneurial health-conscious buyer. There are clear synergies for acquiring both clubs, however, the seller would consider selling Club #1 only. Club #2 recently became profitable and includes substantial assets.  
  • Purchase Price...$1,670,000
  • Down Payment...$334,000
  • Gross Sales...$757,160
  • SDE...$417,190

For more information contact Gary Curran gary@fbb.com.
**Terms & Definitions

TBS (To be suggested by Purchaser) - Seller, in his/her sole discretion, has the right to accept or reject all offers.

Seller's Discretionary Earnings (SDE):  A term used to denote a business's cash flow or the amount of pretax money a buyer can expect to earn in first-year operations.

EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization):   All interest, tax, depreciation and amortization entries in the Income Statement are reversed out from the bottom line Net Income (It purports to measure cash earnings without accrual accounting, canceling tax-jurisdiction effects, and canceling the effects of different capital structures.)
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