40 Y/O Southwest Pavement Preservation Company
Company-Owned Fleet, Strong Reputation for Quality Work, High Growth Market
The Company focuses primarily on the application of pavement preservation material which became popular as a road maintenance process in the 1960s. Another application process was first introduced in the 1980s, making it an established road resurfacing technique.
The market for pavement preservation treatments is growing every year. Their major metropolitan area in the Southwest is an advantageous location, because urban sprawl supports ongoing road maintenance needs in the future.
The Company has a consistent, stable and diverse customer base that includes city, county and state governments with contracts ranging from three to five years.
Based on a strong reputation and track record of quality work that is on-time and on-budget, there is significant upside for an ambitious operator, especially as the markets for pavement restoration continue to grow in the service area.
The business model is established, as the Company has been a respected member of the greater metropolitan area construction industry community for over 40 years. The Company has a lean management structure and builds out work crews based on business volume. There is substantial financial upside possible by adding crews to absorb added business volume.
80-90% of the Company’s revenue derives from government contracts and 60% of which are multi-year agreements. The Company saw 35% in YoY top line growth between 2019-20. Audited financials reflect consistent, stable revenue and profitability with strong cash flow.
The Company has a highly experienced management team, stable operational systems, and proven processes that will make a seamless transition to new ownership.
Purchase Considerations
Located in the Southwest, the Company provides pavement preservation services to their clients, namely slurry seal and micro surfacing.
The Company has been in operation since 1981. It has a highly experienced management team, stable operational systems, and proven processes that will make a seamless transition to new ownership.
The Company started with private contracts for residential areas and parking lots. But as the state, and other city and county municipalities adopted their techniques, 80-90% of the Company’s revenue today is derived from government agency contracts including several awarded based on best value rather than lowest bid.
Facilities include the lease of a seven-acre yard that houses the corporate office and turnkey repair-and-maintenance facility.
The Company’s competitive advantage comes from the experience of their personnel and their equipment fleet. Barriers to entry for new competitors are high. New crews are difficult to start and the combination of machines needed to perform a job can cost more than $1.8MM per project.The Southwestern U.S. provides opportunity for year-round application. Both products contain water for mixing. In cooler temperatures, the evaporation process takes longer. These factors provide the firm with near year-round application potential.
The Company has more than 100 pieces of equipment including trucks, trailers, sweepers, vacuums, pavers, front-end loaders, tankers, forklifts, and other related equipment. Among this inventory are 18 specialized vehicles (14 truck-mounted application machines and 4 continuous run machines) and 12 nurse units to support the continuous run machines, which are vital to starting and implementing slurry crews.
From the standpoint of systems, processes, personnel and an established, long-term customer base, the Company is well-positioned to scale and serve as a platform company with an impressive array of potential expansion initiatives.
Negotiable