New Deals - 16 Nov 2023

A content marketing agency, event rental provider, kids educational mobile app, and 2 other interesting finds. Plus, a special announcement from Helen!

Author

Helen Guo
November 16, 2023

Today’s Sponsor

Hello SMB Deal Hunters!

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

Looks like a lot of you want to bear down for storm season (and who can blame you with that AOV)!

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

Today’s issue is sponsored by Roast My Deal, a new service I’m now offering where I share a 15-minute private video review of a deal you’re working on in under 48 hours.

Want to promote your business or deal under LOI to my community of 16,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.

1/ Content Marketing Agency

📍 Location: N/A
💰 Asking Price: $2,200,000
💼 EBITDA: $733,825
📊 Revenue: $1,328,743
📅 Established: 2017

💭 My 2 Cents: This is a six-year-old marketing agency priced very reasonably at 3x EBITDA. A big reason I like marketing firms is the margins, and this one doesn’t disappoint with a 50% net profit margin. This agency uniquely caters to companies operating under the Entrepreneurial Operating System (EOS), which I like because it’s not a saturated market (and all my entrepreneur friends absolutely swear by EOS; if you’re not familiar, Traction by Gino Wickman is a good place to start). The majority of its business focuses on content marketing, specifically B2B thought leadership strategy and content creation, which is nice because it isn’t performance-based. Unlike ads where you can get fired for poor performance, it is very hard to measure “results” in content marketing and it usually takes time to see any. This results in stable client relationships as evidenced by their 22 active clients on retainer, with fees ranging from $2,000 to $10,000, and an average client tenure of over 19 months (which is very solid for a marketing agency). Additionally, its status as a Platinum-level HubSpot agency partner adds to its prestige in the CRM space, making this agency an overall attractive buy.

2/ Event Rental Provider

📍 Location: Southeast, US
💰 Asking Price: N/A
💼 EBITDA: $1,058,000
📊 Revenue: $3,417,000
📅 Established: N/A

💭 My 2 Cents: Event rental businesses are a favorite of mine for their high margins, repeat customers, and strong referral relationships (aka, free marketing) with other vendors. Usually, I share chair and tablecloth rental businesses, but today I have something spicier. A company offering game rentals like arcade games, VR gaming, and photobooths, which I’ve actually been seeing a lot at “cool” events lately. I like that they are a preferred or exclusive vendor for many corporate event planners. I also like that since they’ve been in business for 20+ years, they likely have a lot of strong corporate relationships. But what really sets this business apart is its impressive growth: 67.1% CAGR from 2020 to the trailing twelve months ending July 31, 2023. And I don’t think it’s all tapped out yet. If you establish more partnerships with event planners and corporations that host events and expand geographically, then there is definitely still room to run here.

3/ Kids Educational Mobile App

📍 Location: Missouri, USA (Remote)
💰 Asking Price: $18,000,000
💼 EBITDA: $2,851,671
📊 Revenue: $3,139,702
📅 Established: 2010

💭 My 2 Cents: This is a remote opportunity with a very established educational mobile gaming app for kids aged 3-13. It has clear product-market fit, as it has over 50 million downloads, 250,000 5-star reviews, and partnerships with Amazon, Contixo, and Clevertouch. Recurring revenue from its 85,000 paid subscribers accounts for 95% of revenue, which is awesome. But I do want to better understand the conversion rate of non-paying users to paid subscribers and the churn/retention metrics. Marketing is currently all organic through its high app store ranking. This is great for two reasons. One: it means there’s a moat here because it’s hard to get so many reviews. Two: it means there's a significant opportunity to explore paid marketing strategies. I can easily see how you can grow revenue by simply raising the price for a paid subscription. This really seems like a great opportunity, but I’d advise any prospective buyer to first dive into what the game development process is and what the current team looks like.

In Partnership With Roast My Deal

Want to get my feedback on your deal?

The most common request I get in my inbox is for feedback on the deals you guys are working on.

As one reader put it, “Since this could be a life-changing decision, I have to ask: can you take a minute and look at it?”

I’ve taken a few one-off coaching calls to help. But the thing is, I charge $1000/hour for a call. And that’s not palletable for most people…

That’s why I’m excited to announce the launch of Roast My Deal.

Roast My Deal is a new service I’m now offering where I share a 15-minute private video review of a deal you’re working on in under 48 hours filled with personalized and actionable advice.

And between now and Nov 26, I’m offering a special launch deal for anyone who signs up for a roast (if you’re still searching, know that you can use it anytime in the next 3 years).

Move forward on your deal with confidence (or pass and save hundreds of thousands or millions of dollars AND months of your time on a bad deal).

Get Roasted 👉

4/ Online Legal Services Company

📍 Location: Minnesota, US
💰 Asking Price: $5,000,000
💼 EBITDA: $572,417
📊 Revenue: $1,771,366
📅 Established: 2014

💭 My 2 Cents: This company provides online employment law advice through a subscription model. They offer unlimited, 24/7 access to licensed attorneys across all 50 states through a secure portal and mobile app, with the promise of responses within two hours. They also supply attorney-drafted employee documents, policies, procedures, and federal and state employee handbooks. I’ve literally never heard of a business like this before, but I’m definitely intrigued because employment law is a $23B industry that is always relevant and recession-resistant. If anything, recessions are a boom for the industry because of issues like layoffs, restructuring, and disputes over benefits. Plus I love the subscription model. However, as is the case with all subscription businesses, it’s important to dig into key metrics like pricing, churn, and lifetime value.

5/ Detroit Tour Company

📍 Location: Detroit, MI
💰 Asking Price: $2,300,000
💼 EBITDA: $809,269
📊 Revenue: $1,396,007
📅 Established: 2015

💭 My 2 Cents: You probably don’t realize it, but Detroit's tourism industry is booming. About 19M people visit Detroit and they spend an estimated $6B (and it’s growing quickly). They don’t call Detroit "America’s greatest comeback city" for nothing. This Detroit tour company capitalizes on this opportunity by offering 2.5-hour guided tours that appeal to a wide audience. Because it has no physical location, the company has an extremely low overhead and insanely high margins. I also think there’s a lot of room to grow. I just came back from Amsterdam where I did multiple walking tours with the same company. You can do the same thing here by opening up new programs.

🐦 The Best of SMB Twitter (X)

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🤝 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 next Tuesday!

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 landing page roast.

📚 What I’m Reading

Chartr

Every day, Chartr shares data-driven insights into business, tech, entertainment and society.

But what makes it different? It’s a visual newsletter.

Today, they shared a fascinating chart showcasing the difference in life expectancy between men and women in the US (spoiler: it’s grown to its widest point in almost 25 years!).

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

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Disclaimer

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.