Railroad Construction for Sale at $5.9M

Priced at or below the benchmark multiple and coverage clears the 2.0x Bulletproof threshold. The margin runs well above the benchmark, which is the part to verify first.

This is a construction / contractor business listed at $5.9M, generating $10M in annual revenue and $3M in seller's discretionary earnings. At a 1.97x cash flow multiple, the asking price is within the 3.00x Bulletproof threshold and below the 3.40x benchmark for construction / contractor businesses. The profit margin is 30%, well above the 12% benchmark for construction / contractor businesses, about 2.5x the category figure.

We ran this deal through the DealScore Pro Bulletproof Calculator to see how it holds up across all five scoring criteria. Here is the full breakdown.

Deal Snapshot

Key Metrics
Industry
Construction / Contractor
Asking Price
$5.9M
Revenue
$10M
Cash Flow (SDE)
$3M
Cash Flow Multiple
1.97x
Industry avg: 3.40x
Profit Margin
30%
Industry avg: 12%

The deal snapshot tells a clean story. Revenue of $10M produces a 30% margin, well above the 12% benchmark for construction / contractor businesses, about 2.5x the category figure. The 1.97x multiple is within the 3.00x Bulletproof threshold and below the 3.40x benchmark for construction / contractor businesses.

Financing Overview

Using the standard 80/10/10 SBA deal structure (80% SBA 7(a) loan, 10% seller financing, 10% buyer down payment), here is what this acquisition looks like when financed.

SBA Financing Breakdown
Total Acquisition Cost
$6.2M
Purchase price plus SBA guaranty fee and closing costs. The three financing slices below are shares of the purchase price only.
Down Payment
$590,000
SBA Loan
$4.7M
10-year term, ~10.5% rate
Seller Note
$590,000
Typically 2-year standby, then 5-year amort
Cash Required at Closing
$2.1M
Down payment plus $177,000 closing costs plus $1.3M working capital reserve
Annual Debt Service
$901,148
Post-Debt Cash FlowBefore replacing the owner’s role
$2.1M / year
DSCR
3.33x
Bulletproof minimum: 2.0x
Stress Test (20% Revenue Drop)
Passes
Still covers debt at $8M revenue

Why the Numbers Matter

The headline number most buyers fixate on is the asking price. But the asking price alone tells you almost nothing about whether a deal is worth doing. What matters is what happens after you finance it.

The post-debt cash flow of $2.1M per year is what is left after every loan payment on the figures entered. On a $590,000 cash investment, that is a strong return, and it is well above the $100K minimum threshold that the Bulletproof standard requires. This figure is calculated before any cost of replacing the owner’s own role in the business. Where the seller is also the person producing the revenue, a buyer should subtract what it would cost to hire that role before treating this as take-home pay.

The DSCR of 3.33x means the business generates $3.33 for every $1 of annual debt payment. SBA lenders require a minimum of 1.25x. The Bulletproof standard requires 2.0x. This deal clears both with room to spare, which means you have a real safety margin if revenue softens or costs spike unexpectedly.

The stress test is where many deals that look good on paper fall apart. We model a 20% drop in revenue and check whether the business can still cover all debt obligations. This deal passes. Even at $8M in revenue (down from $10M), the cash flow still services the debt. That is the kind of resilience you want in a financed acquisition.

Industry Context

📈 How This Deal Compares to the Construction / Contractor Industry

Construction / Contractor carries an SBA default rate of 6.8% against a 5.1% all-industry average. That is a statement about the category rather than this listing, but it does mean the coverage and stress-test figures carry more weight than the headline multiple.

Demand is partly discretionary and moves with the local economy, the service radius is local, and licensing keeps the competitive field narrow. Trailing earnings reflect a backlog that may already be spent, so a buyer needs to see signed work ahead rather than work completed behind.

Multiple
1.97x
Avg: 3.40x
Margin
30%
Avg: 12%
Default Rate
6.8%
All industries: 5.1%

Combined with a deal that performs well on the fundamentals, this is the profile lenders like to fund.

Strengths and Risks

✓ What Works

  • Strong DSCR of 3.33x clears the 2.0x Bulletproof minimum
  • Fair pricing at 1.97x earnings
  • Strong post-debt cash flow of $2,098,852 per year
  • Survives a 20% revenue decline stress test

⚠ Watch Out For

  • Key-person risk: verify the current owner's role in daily operations
  • Lease terms and renewal risk
  • Margin of 30% is 2.6x the 12% industry average. Verify whether a market-rate manager salary sits in the expense base. If the owner is the labor, SDE is overstated and every figure below it moves.

Who This Deal Is For

Best fit for:

Owner-operators with industry experience or management background who want a business that cash flows from day one.

First-time buyers looking for a straightforward acquisition with solid fundamentals.

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10.0 / 10
Bulletproof Verdict
This deal scores 10.0 out of 10 on the Bulletproof standard. The entered DSCR of 3.33x is above the 2.0x Bulletproof threshold. Operational risks should be validated in due diligence.

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Frequently Asked Questions

Is $5.9M a fair price for a construction / contractor business?

At 1.97x seller's discretionary earnings, this asking price is within the 3.00x Bulletproof threshold and below the 3.40x benchmark for construction / contractor businesses. The Bulletproof threshold and the category benchmark are two different yardsticks, and this deal sits inside the stricter of the two.

What is a good profit margin for a construction / contractor business?

The benchmark profit margin for construction / contractor businesses is approximately 12%. This listing operates at a 30% margin, which is well above the 12% benchmark for construction / contractor businesses, about 2.5x the category figure. That is a comparison against category medians, not a verdict on this listing.

Can I buy a construction / contractor business with an SBA loan?

Yes. Construction / Contractor businesses are commonly financed through SBA 7(a) loans using an 80/10/10 structure: 80% SBA loan, 10% seller financing, and 10% buyer down payment. For this $5.9M deal the down payment is $590,000, but cash required at closing is $2.1M once closing costs and a working capital reserve of $1.3M are counted. SBA lenders require a minimum DSCR of 1.25x, but conservative buyers target 2.0x or higher. This deal's 3.33x DSCR comfortably clears both thresholds.

How much do construction / contractor business owners actually make?

Owner earnings vary widely based on revenue, pricing, and operational involvement. This construction / contractor business generates $3M in seller's discretionary earnings (SDE) before debt service. After SBA financing under the 80/10/10 structure, the buyer would take home approximately $2.1M per year. That post-debt figure is the number that actually matters for a financed acquisition, because it reflects what ends up in your pocket after every loan payment is made.