Construction Materials Supply, 16-Year Michigan Aggregate & Trucking Operation

$6.6M

Revenue

$1.5M

SDE

3.0x

Multiple

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Full Editorial Writeup

This is a 16-year-old aggregate supply and trucking operation based in Kent County, Michigan. The business combines two synergistic revenue streams: supplying construction aggregate (crushed stone, sand, gravel and related materials) and providing the trucking capacity to haul it. That vertical integration is the whole story here, because in the aggregate trade whoever controls the trucks controls the margin, and the owner has stitched both together to serve contractors in the Grand Rapids region.

The operation runs on roughly $6.6M in revenue and throws off $1.5M in cash flow, a healthy 22 percent-plus owner earnings margin that is strong for a materials and hauling business. It employs 27 people (10 full-time, 2 part-time, 15 contractors, with seasonal flex), operates from a 25-plus acre site with an 8,500 square foot building, and carries $2.7M of FF&E in the asking price plus $850,000 of inventory that is excluded. Note carefully: the $4.5M of real estate is NOT included in the $4.5M asking price, so a buyer is paying a 3x cash flow multiple for the operating business and equipment, and would separately negotiate or lease the land.

The owner is selling for health reasons and offers full training with documented processes. Positioned inside what the listing calls a $10 billion regional construction job market, the business is a boring, asset-heavy, essential-inputs operation of the kind that keeps producing cash across cycles as long as roads keep getting paved and foundations keep getting poured.

Why we like it

Earnings quality is genuinely strong: $1.5M cash flow on $6.6M revenue is a 22 percent-plus margin, and buying it at 3x means a roughly 33 percent unlevered yield before financing. Aggregate and hauling are cash businesses with predictable job billing, and the vertical integration of materials plus trucks captures margin at two points in the same transaction.
Durability comes from hard assets and geography. Aggregate pits and sites near demand are location-bound and hard to replicate, so a 25-plus acre operating site plus $2.7M of equipment gives real barriers versus an asset-light competitor. Trucks and material capacity are what contractors actually need, and switching costs rise when you can supply and deliver in one call.
The end product is recession-resistant. Roads, utilities, and site work continue through downturns via public infrastructure and maintenance spending, and aggregate is a low-cost essential input with no substitute. Demand may soften with private construction cycles but rarely disappears.
Operator advantage is clear: documented processes, a manager-supported crew of 27, and a health-motivated seller who wants a clean handoff. Seller financing is on the table, which both lowers cash-in and signals the seller's confidence in the numbers holding up post-close.

How to improve it

Nail down the real estate question in the first 30 days. Since the $4.5M land is excluded, negotiate either a long-term lease at market rate with a purchase option or fold it into a combined deal, because a materials operation without control of its 25-acre site has no durable value. Structure this before anything else.
Build a preferred-supplier program with the largest repeat contractors to convert transactional buying into semi-committed volume. Offer volume pricing tiers and reserved delivery windows to lock in demand and create the closest thing to recurring revenue this model allows.
Analyze trucking utilization and add backhaul revenue. Idle trucks returning empty from delivery are lost margin, so route optimization and securing return-haul loads (debris removal, cross-hauling for other suppliers) can lift fleet revenue without adding trucks.
Pursue municipal and DOT supply contracts to add counter-cyclical, credit-worthy demand. Public infrastructure spending is steady through downturns, and getting on approved-supplier lists diversifies away from private contractor cycles that swing with the economy.
Formalize the 15 contractors into a stable labor plan. Heavy reliance on contractors creates continuity and quality risk under new ownership, so evaluate converting core drivers to employees or signing longer engagement terms to protect delivery capacity.
Tighten pricing discipline and add fuel surcharges if not already in place. In a business hauling heavy loads, diesel volatility directly hits margin, and a contractual pass-through mechanism protects the 22 percent margin during fuel spikes.

Diligence notes

The real estate exclusion is the single most important item. Confirm exactly how the seller intends to handle the $4.5M site: lease terms, rate, duration, and purchase rights, because paying 3x for an operation you cannot house is a non-starter. Get any lease drafted and reviewed before proceeding.
Verify the $1.5M cash flow with tax returns and add-back detail. Materials and trucking businesses often carry heavy equipment depreciation, owner comp, and personal expenses in the P&L, so reconcile reported EBITDA of $1.45M against actual maintenance capex the fleet requires to keep running.
Inspect the $2.7M of FF&E and fleet condition. Trucks and heavy equipment wear out and require ongoing replacement, so get an independent appraisal, review the age and hours on each unit, and estimate the deferred capex to understand true owner earnings net of reinvestment.
Assess customer concentration and contract terms. Ask for revenue by top-10 customers, whether business is job-by-job or under any master agreements, and receivables aging, since a few large contractors leaving could materially dent that $6.6M top line.
Understand the seasonal and contractor labor structure. With 15 contractors and seasonal staffing, confirm driver availability, rates, classification risk (contractor vs employee), and how the business staffs peak season, because labor gaps directly cap delivery revenue.

Source

Originally listed on BizBuySell. View original listing →