Regional Livestock Auction - Ag Services Platform

$5.9M

Revenue

$1.5M

SDE

6.2x

Multiple

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Full Editorial Writeup

This is a regional livestock auction and agricultural services business that earns its keep on the unglamorous mechanics of moving cattle and other animals through a sale ring. Revenue comes from auction commissions, yardage and handling fees, and ancillary ag services, which means the company takes a clip on transaction volume rather than betting on commodity prices itself. That fee-on-flow model is the boring beauty here: producers need a place to sell livestock in good times and bad, and the auction sits in the middle collecting a toll.

The business does roughly $5.93m in revenue and $1.46m in EBITDA, a healthy ~25% margin for a transaction-volume operation. It runs out of an 80,000 SF facility with auction infrastructure, livestock handling pens, office space, truck access, and parking, all owned and included in the deal. With 21 employees and established processes, this is a built platform rather than an owner-dependent one-person shop.

The real story is the real estate. The listing values the property at $8m against a $9m asking price, meaning you are paying roughly $1m for the operating business at this stated EBITDA. That changes the entire underwriting: this is a real estate plus cash flow play with a regional moat built on producer relationships and high barriers to entry, not a pure operating multiple of 6.16x.

Why we like it

Earnings quality is anchored to transaction volume, not commodity speculation. The company collects commissions, yardage, and handling fees regardless of whether cattle prices rise or fall, which insulates the income statement from the volatility that wipes out the producers themselves. A ~25% EBITDA margin on nearly $6m in revenue signals a clean, scalable fee model.
The moat is geography plus relationships, which is exactly the kind of boring durability we want. Producers and consignors do not switch auction barns casually; they go where their neighbors go and where the buyers show up. The listing explicitly cites high barriers to entry and a long operating history, and you cannot build a regional livestock hub overnight.
Roughly $8m of the $9m ask is real estate, so you are buying an 80,000 SF facility plus the cash flow rather than an inflated operating multiple. Strip the property out and the implied operating-business price is around $1m on $1.46m of EBITDA, which is cheap if the earnings hold. The land and improvements provide downside protection and long-term underlying asset value.
The infrastructure and 21-person staff are already in place, meaning this transfers as a functioning platform rather than a project. Established processes and an experienced workforce reduce key-man risk and let a buyer focus on growth instead of triage. That operational readiness is what separates an acquisition from a turnaround.

How to improve it

Audit the fee schedule against regional comps and raise yardage and handling fees where the market allows. These are sticky, volume-based charges that producers rarely shop on price, so even a 5 to 10 percent increase flows almost entirely to EBITDA. Test increases gradually and watch consignment volume for any pushback.
Layer in higher-margin ancillary services around the existing flow of animals and producers. Think financing, insurance referrals, hauling, feed, vet coordination, and order-buying, all of which monetize relationships you already own. The listing names expanded product and service offerings as a stated growth lever.
Build out online and video auction capability to expand the buyer pool beyond who can physically show up. More bidders means higher hammer prices, which means happier consignors and more volume coming your way. Technology enhancements are explicitly flagged as an opportunity and the upfront cost is modest.
Maximize the 80,000 SF facility and acreage during non-sale days. Lease pen space for overflow holding, host equipment sales or farm auctions, or run feeder cattle programs to monetize idle capacity. The real estate is the most expensive asset you are buying, so sweat it.
Tighten data on consignor concentration and recurring volume, then formalize loyalty or rebate programs to lock in your top producers. Knowing which 20 percent of consignors drive the majority of head count lets you defend the franchise deliberately. Relationship-based moats erode quietly if you do not actively maintain them.
Explore a tuck-in acquisition of a neighboring or complementary auction barn to expand geographic reach. Consolidating a fragmented regional market increases buyer density and lets you spread fixed facility and staff costs. Geographic expansion is named as a growth path and the relationships transfer with the deal.
Pursue a sale-leaseback or financing structure on the $8m of real estate to recover capital and improve cash-on-cash returns. Given the property dominates the purchase price, separating the real estate financing from the operating entity can dramatically improve equity returns. This also clarifies the true operating economics for future buyers.

Diligence notes

Get an independent appraisal of the $8m real estate value, because it is the foundation of this entire deal. If the property appraises below $8m, your implied operating-business price and downside protection both deteriorate. Confirm zoning, environmental condition given decades of livestock handling, and any deferred maintenance on the 80,000 SF of structures.
Verify EBITDA quality and what it includes, since SDE is not disclosed and the figure may rely on adjustments. Pull three to five years of tax returns and confirm whether the $1.46m EBITDA is owner-burdened, what compensation is normalized, and whether head-count volume is stable or declining. Auction revenue can swing with regional herd cycles and drought.
Map consignor and buyer concentration to test the durability of the relationship moat. If a handful of large producers or order-buyers drive most of the volume, the franchise is far more fragile than the marketing implies. Understand what happens to those relationships when current ownership exits.
Investigate environmental and regulatory exposure tied to livestock operations and the land. Manure runoff, water rights, USDA and state animal-health compliance, and brand inspection rules all carry liability. A Phase I environmental assessment on a site with this much animal traffic is non-negotiable.
Clarify the reason for sale and the seller transition plan given the vague relinquish ownership responsibilities language. Understand how involved current ownership is day-to-day and whether the 4 full-time staff can run the barn without them. Negotiate a meaningful transition period and consider an earnout tied to consignment volume retention.
Confirm the seller financing terms and structure, since it is offered alongside conventional financing. Favorable seller paper on a $9m deal materially changes your equity check and signals seller confidence. Pin down rate, term, and any security tied to the real estate versus the operating entity.

Source

Originally listed on BizBuySell. View original listing →