1847 Holdings Signs LOI to Acquire 40-Year Construction Contractor with $29 Million Backlog

Core Viewpoint - 1847 Holdings LLC has executed a non-binding Letter of Intent to acquire a specialty wood framing and carpentry contractor in Southern California for $6 million, structured primarily with seller financing tied to performance, aiming to enhance shareholder value without diluting existing equity [1][4][9]. Group 1: Acquisition Details - The acquisition price is set at $6 million, comprising $1 million in cash at closing and a $5 million seller-financed contingent promissory note, with an interest rate of 6% annually [4]. - The seller-financed note is contingent on the Target achieving a GAAP operating income of $2.65 million or greater in either fiscal year 2026 or 2027 for full vesting [4]. - The Target has a historical average annual revenue of approximately $19 million and an average adjusted operating income of about $1.7 million over the three fiscal years ending December 31, 2024 [2][5]. Group 2: Financial Performance and Strategy - In 2025, the Target experienced a temporary decline in revenue and reported an unaudited operating loss of approximately $1.2 million due to a strategic decision to decline lower-margin projects [2]. - Following this strategic reset, the Target has secured approximately $29 million in new contract awards, indicating strong future revenue visibility [3]. - The acquisition implies a valuation of roughly 3.5 times the Target's average operating income prior to 2025 [5]. Group 3: Shareholder Impact and Financing - The transaction structure significantly limits upfront capital risk for 1847, aligning the sellers' financial outcomes with the long-term success of the business [6][9]. - 1847 is in discussions with financing sources to fund the cash portion of the acquisition on a non-dilutive basis, aiming to complete the transaction without issuing additional common equity [7][9]. - The CEO of 1847 Holdings emphasized that this acquisition aligns with the company's strategy of identifying established businesses with strong market positions that have experienced temporary disruptions [8].