New Deals - 14 Nov 2023

A storm shelter manufacturer, aftermarket auto parts e-Commerce store, commercial painting biz, and 2 other interesting finds.

Today’s Sponsor

Hello SMB Deal Hunters!

Thanks for all the great feedback from the deals I shared on Thursday!

Apparently a lot of you want to get into the health and wellness affiliate business (no shocker with those margins!) 💪

I’m excited to share 5 new deals worth checking out.

Today’s issue is sponsored by Rejigg, a new platform that features exclusive off-market SMB deals.

Want to promote your business or deal under LOI to my community of 15,000+ entrepreneurs and investors? Replyadvertise” and I’ll share my media kit.

1/ Storm Shelter Manufacturer and Distributor

📍 Location: Southeast, US
💰 Asking Price: $3,900,000
💼 EBITDA: $623,258
📊 Revenue: $1,788,290
📅 Established: 2008

💭 My 2 Cents: Amidst a rising tide of natural disasters, particularly severe storms (the most common natural disaster over the last decade), this 15-year-old storm shelter manufacturing and distribution company is a really intriguing deal. The company has strong demand with a backlog of 200 orders, a high AOV between $6,000 and $8,000, and impressive margins, indicating substantial room for growth and advertising. It is also buoyed by recent tax incentives in several Southern states (up to $3000!), which is always a nice tailwind. I also like that it has a full team with 3 managers and 12 employees. And this is all despite a temporary setback in 2022 due to supply chain issues. The financial hiccup opens an unusual opportunity for prospective buyers as the seller is offering a 49% seller note. That’s already a pretty sweet deal, but who knows, maybe you’ll be able to negotiate something even better.

2/ Aftermarket Auto Parts Manufacturing and eCommerce Businesses

📍 Location: Colorado, US
💰 Asking Price: $1,850,000
💼 EBITDA: $880,000
📊 Revenue: $3,500,000
📅 Established: 1935

💭 My 2 Cents: These are 2 businesses that together manufacture and sell after-market specialty products to 4-wheel automobile enthusiasts, which is poised to grow 6% in the next decade to $24.5B. The first business (company A) fabricates custom products for regional customers and company B, which then sells to retail customers. The ultimate breakdown of revenue comes out to half B2B and half B2C. All of the orders come online, with half placed by national wholesalers and preferred authorized dealers. With Company A focusing on B2B relationships and Company B catering to individual consumers, the diversity in sales channels is a major strength. It’s also great that the business has been around for a looooong time and one owner is willing to stay on for a year-long transition. I’m very curious what the B2B repurchase rate is and what the sales process is for landing these B2B customers. This seems like a great opportunity for someone with a B2B sales background to come in and really scale things up. Finally, the sale includes equipment and real estate, making asset-backed lending a viable option.

3/ Commercial Painting Business

📍 Location: Minneapolis Area, MN
💰 Asking Price: $1,600,000
💼 EBITDA: $620,216
📊 Revenue: $3,175,608
📅 Established: 2002

💭 My 2 Cents: This is a 20+ year-old commercial painting business servicing HOAs and property managers. Unlike the seasonality of residential painting, commercial painting for HOAs and property managers is more consistent and often scheduled well in advance because they constantly require painting services to maintain and update their properties. In other words, lots of repeat business. Key factors for potential buyers to consider include the percentage of revenue from repeat customers, the existence of long-term contracts, and any client concentration risks. If the business comes with strong repeat and loyal customers, then the asking price is very reasonable, especially considering that there’s a team of 49 already in place.

In Partnership With Rejigg

Hunting for Off-Market SMB Deals?

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1) A $1MM EBITDA call center servicing plumbing, HVAC, funeral homes, and other service businesses.

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4/ Amazon FBA Business In The Beauty Niche

📍 Location: US and Canada
💰 Asking Price: $2,006,911
💼 EBITDA: $573,408
📊 Revenue: $2,409,336
📅 Established: 2019

💭 My 2 Cents: This is a four-year-old makeup and beauty FBA brand that sources from three suppliers in China and has 27 SKUs. Remarkably, it really stands out in the competitive cosmetics market, as its top SKU is the #1 bestseller in its category with a 4.3-star rating from around 34,000 reviews. The brand shows a healthy 30% year-over-year growth and stability in historical sales, coupled with a promising base of 1,500 subscribe & save customers, although I do want to look into the retention numbers on that. Financially, the brand maintains a solid 24% net profit margin, and there is probably room for improvement by transitioning from costlier air shipping to sea freight.

5/ Real Estate Brokerage

📍 Location: Virginia (Relocatable)
💰 Asking Price: $2,750,000
💼 EBITDA: $1,175,000
📊 Revenue: $8,323,135
📅 Established: N/A

💭 My 2 Cents: This is a real estate brokerage operating in 15 states with over 200 agents. Obviously, this is not the kind of recession-resistant business I usually list here, but the asking price is too low (2.3x EBITDA) not to take notice. I like that it has an established brand, client base, and network. I also like that the broad range of state offerings mitigates market concentration risks and provides a strong foundation for expansion. Some things I’d want to dig into deeper are if any agent represents more than 5-10% of revenue, agent retention, and how hard it is to hire new agents, as these are all crucial in a sector where success hinges on agent performance. I’d also want to know how hard it is to expand to other states, as that’s a clear growth opportunity. Finally, I’m curious about what their agent onboarding, training, and support look like, as having that optimized is critical to success as the business scales.

🐦 The Best of SMB Twitter (X)

Two rules to never lose on a business acquisition (link)

If you want to get into an industry, do this one very underutilized thing (link)

The tech stack for acquiring a business (link)

How to use the Forgivable Promissory Note to offer higher offers with reduced risk (link)

The role of earnest money in small business M&A (link)

Why the seller shouldn’t pay EIDL loans prior to closing if you (the buyer) are getting bank financing (link)

4 proven business models you can start today (link)

The basics of solid SEO for local businesses (link)

Pitch your outcomes to raise your revenues (link)

Optimize for easy (link)

🤝 Vendors and Lenders

I frequently get asked by you guys for recommendations on SBA lenders, quality of earnings providers, and legal counsel.

I’ve decided to streamline this to help the SMB Deal Hunter community close more deals, faster.

Fill out this form and I will personally make introductions to folks I trust within 24 hours.

See you Thursday!

P.S. Whenever you’re ready, here are a few ways for us to work together:

1. Invest with me in cash-flowing SMB deals. I’m bringing on a select few investors from this community into businesses I’m buying and operating. Reply LP” and I’ll share more.

2. Join the SMB Deal Hunters Mastermind, a community for serious acquisition entrepreneurs and investors where we share insights, ask questions, and collaborate in bi-weekly calls and a Slack channel. Want in? Apply here.

3. Interested in selling your business? Get an offer from me.

4. Want me to review a deal you’re working on? Sign up for a 1-on-1 coaching call.

📚 What I’m Reading

Case Studied

Every week, Case Studied shares an interesting case study that pushes me to think outside the box as a marketer.

One of my favorites is their breakdown of how Brex ran one of the most successful billboard campaigns for $300k.

I’ve learned a lot from Case Studied and think you will too.

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This publication is a newsletter only and the information provided herein is the opinion of our editors and writers only. Any transaction or opportunity of any kind is provided for information only; SMB Deal Hunter does not verify nor confirm information. SMB Deal Hunter is not making any offer to readers to participate in any transaction or opportunity described herein.