Industrial Equipment Rental and Repair Company
This case study examines a niche industrial equipment rental and repair business specializing in the short and medium-term leasing of generators, compressors, pumps, scissor lifts, and other mobile power and pneumatic equipment used in construction, manufacturing, and emergency response scenarios. The company also provides on-site repair, maintenance contracts, and logistics for large clients needing equipment replacement or uptime guarantees.
Located in a secondary metro area with a strong base of manufacturing and construction clients, the company has operated for 26 years and has become the go to regional supplier for portable industrial equipment. With a service radius of approximately 120 miles, it maintains a fleet of 340 rental units, a 6-bay repair and inspection center, and 5 mobile service trucks for field dispatch.
Annual revenue is $6.8 million, with adjusted EBITDA of $1.26 million. About 68% of revenue is from rentals, 22% from repair/maintenance contracts, and 10% from equipment sales. The EBITDA margin is high due to the combination of recurring rental income and owned asset utilization, along with profitable service contracts.
The business is an excellent fit for SBA 7(a) acquisition due to its cash flow profile, real asset base, repeat customers, and service contracts that provide recurring revenue. The buyer will need to carefully manage fleet maintenance schedules, technician certification, and route logistics while exploring sale-leaseback options on the owned real estate to boost liquidity or support further growth.
SBA 7(a) Deal Structure Proposal
A potential structure leveraging SBA 7(a) and optional real estate carve-out:
Business-Only Purchase Price: $4.25 million (3.37x EBITDA)
SBA Loan: $3.19 million (75%)
Buyer Equity Injection: $425,000 (10%)
Seller Financing (Subordinated): $637,500 (15%) with 6-year amortization, 12-month interest-only
Optional Real Estate (Facility) Add-On:
Real Estate Price (if acquired): $1.15 million
504 Loan Option: 50% SBA 504 + 40% bank + 10% buyer equity
Protections on the seller note should include:
20% clawback if rental utilization drops below 65% over the trailing 90 days post-close
Earn-out incentive if buyer retains 90% of service contract clients within first 6 months
Additional bonus if buyer grows fleet to 400+ active units within 12 months
Seller to stay on for 6–9 months in consulting role focused on vendor relations, technician training, and major client introductions.
Revenue Breakdown and Client Segmentation
Client base consists of:
Commercial construction companies: 42%
Manufacturing and warehousing operations: 28%
Local municipalities and utilities: 18%
Disaster relief and emergency contractors: 12%
Revenue segmentation:
Equipment rentals: $4.6M
Generators (gas, diesel, tow-behind)
Compressors
Scissor lifts
Pneumatic and hydraulic tools
Maintenance & service contracts: $1.5M
PM schedules for manufacturers
Emergency breakdown contracts (24-hour response)
Technician dispatch programs for municipalities
Used equipment sales: $680K
Refurbished units retired from fleet
Off-cycle inventory liquidation
The top 30 clients generate 51% of revenue, with no client over 6%. Most contracts are 6- to 18-month term rentals with scheduled equipment swap-outs and servicing windows. Repeat clients reorder through dedicated reps.
Fleet and Facility Overview
The business owns:
340 rental assets with an estimated FMV of $3.8M (fully depreciated book value ~$1.4M)
6,200 sq ft owned facility with 6 repair bays, part storage, and dispatch center
5 mobile service trucks with diagnostic and field repair capability
Yard space for up to 500 pieces of equipment
Facility could be retained or carved out in a lease-back, creating $1.15M in liquidity for growth or debt paydown.
Fleet tracking is managed via GPS-embedded RFID units and Fleetio. Maintenance records are digitized. Buyers should confirm clean title for all assets and inspect deferred maintenance risk.
CapEx recommendation:
$250K–$300K for 20–30 newer units to replace underutilized older machines
$25K–$35K for CRM and digital dispatch upgrades
$15K for website overhaul and mobile booking capability
Labor and Field Operations
Current staff includes:
5 field techs (W-2, CDL certified)
3 in-house repair specialists
2 fleet managers (dispatch + logistics)
2 admin/customer reps
1 GM/COO managing ops
Technicians receive OSHA-30 training, site safety certification, and are incentivized via uptime metrics and field ticket completion bonuses.
Field service performance:
92% response within 4 hours
88% first-visit repair rate
70% of service clients have multi-year renewals
Buyers should retain all techs through 12-month tenure bonuses and consider rolling out profit-sharing linked to machine uptime and fleet utilization.
Marketing and Sales Infrastructure
The business relies on a legacy referral network and recurring customer orders. Marketing spend is <$2,000/month.
Post-close growth levers include:
CRM implementation (e.g., HubSpot or Zoho) for pipeline tracking
Reactivation campaign for lapsed equipment users (200+ accounts on file)
Cross-sell rental clients into maintenance programs
Digital ad campaigns for “equipment rental near me” and “industrial equipment repair + [city]”
Sales reps are compensated on base + commission with gross profit and contract duration targets. Add-on revenue for equipment delivery, insurance waivers, and field diagnostics contributes to strong ARPU.
Financial Performance Summary
Revenue: $6.8M
COGS (labor, parts, equipment depreciation): $3.75M
Gross Profit: $3.05M
SG&A (facility, insurance, admin): $1.79M
Adjusted EBITDA: $1.26M (18.5%)
Rental margins: ~55%
Service/contract margins: ~62%
Equipment sales margins: ~30% (after refurb cost)
AR aging is clean. Most rentals are auto-billed monthly with credit card or ACH on file. Service contracts billed quarterly in advance.
Compliance, Risk, and Insurance
Fully compliant with:
OSHA equipment servicing protocols
DOT for trucks and field gear
Environmental disposal rules for oils and hydraulic fluids
Insurance:
$2M general liability
$1M commercial auto
$1M umbrella
$500K inland marine coverage for fleet
Buyers should review equipment lease agreements, liability waivers, and ensure all serials and asset IDs are reconciled.
Working Capital and Transition Needs
Payroll float: $110K
CapEx for fleet upgrade: $250K
CRM and tech stack: $30K
Facility refresh: $15K
Seller consulting: $35K
Ideal Buyer Profiles
Construction-adjacent operators (e.g., crane, scaffolding, heavy equipment firms)
Business owners with rental/lease model experience
Investors seeking physical asset-backed, contract-recurring cash flow
Family offices looking for long-term B2B service operations with low capex post-close
Post-Close Execution Plan
Retain GM and fleet team, execute customer continuity communication
Launch new equipment acquisition plan for top-requested units
Standardize pricing and preventative maintenance calendar
Build out client success roles to upsell service and emergency contracts
Explore regional expansion or route clustering for better truck deployment
Conclusion
This industrial equipment rental and repair company offers stable, asset-backed recurring revenue through a defensible regional brand. Its rental model delivers cash flow consistency, while its service division provides margin enhancement and stickiness. SBA 7(a) financing makes the acquisition feasible with limited equity outlay, and sale-leaseback or 504 options on the facility add strategic liquidity. For the buyer willing to expand fleet productivity and cross-sell maintenance, this is a platform-caliber acquisition ready for regional scale.
