New Deals - 2 Nov 2023

By SMB Deal Hunter

Author

Helen Guo
November 02, 2023

Today’s Sponsor

Hello SMB Deal Hunters!

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

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

Today’s issue is sponsored by Michael Anderson from Steadfast Fitness. Michael is offering a special opportunity for SMB Deal Hunter readers to invest in the expansion of his fitness franchise locations.

1/ B2B Air Freshener eCommerce Business

📍 Location: United States
💰 Asking Price: $3,490,000
💼 EBITDA: $593,000
📊 Revenue: $2,200,000
📅 Established: 2019

💭 My 2 Cents: This is a B2B eCommerce business that sells customized air fresheners to car washes, which is funny because I literally just bought an air freshener at a car wash last week. The B2B reorder rate is a solid 42%, the AOV is an incredible $4,800+, the margins are very strong, and the growth is absolutely booming (87% this year compared to last). I love that they collect payments upfront before production, as money stuck in inventory is usually a killer for eCommerce businesses. There are also multiple low-hanging fruit growth opportunities here. You could start a DTC subscription car scent program (I personally know one that does very well and offers a scent of the month club). Or, even more obviously, you can land more car wash accounts. I’m not sure if they currently have a B2B sales team, so this could be excellent for someone with a B2B sales background.

2/ IT Solutions Company

📍 Location: Roanoke County, VA
💰 Asking Price: $10,500,000
💼 EBITDA: $1,440,351
📊 Revenue: $7,094,623
📅 Established: 1992

💭 My 2 Cents: If there are two things I love, it’s family-owned businesses that have been around forever and MSPs with sticky B2B clients. Luckily for us, this deal is both. It’s an MSP that’s been in business for 30 years, is partnered with Oracle (the 2nd largest software company), and specializes in PeopleSoft solutions (PeopleSoft is what large corporations use to manage HR). I love that they have over $7M in recurring revenue, but I do wonder exactly where this revenue is coming from. How many clients do they have, how long do they stay on, and do any of them account for more than 10-20% of revenue? These are all questions that need to be answered before any offer is signed. If everything checks out, then there is a cool opportunity to grow through their proprietary low-code development platform which enables companies to build SaaS apps with fewer resources, a market that’s growing at a rapid 28% CAGR.

3/ Amazon FBA Seed Business

📍 Location: US
💰 Asking Price: $1,399,000
💼 EBITDA: $469,082
📊 Revenue: $2,422,377
📅 Established: 2016

💭 My 2 Cents: This is an Amazon FBA business that sells seeds. Sounds silly, but gardening is in. Search volumes for keywords like wildflower seeds are steadily trending upward. Besides being hot right now, I like that seeds have a low shipping weight and strong retail markup. I also like that Amazon restricts seed sellers from outside the US, as competing with Chinese FBA sellers is the bane of any Amazon entrepreneur’s existence. Things are growing quickly with a 71% increase in YoY revenue and a 117% increase in SDE, but there are definitely opportunities to continue scaling while simultaneously mitigating the seasonal aspect of the business. You could add gardening products like fertilizers and tools, start marketing specific seed packets for weddings and other celebrations, or do more keyword research using a tool like Jungle Scout or Helium 10 to really zero in on what people are looking for.

Invest In Fitness Studios Led by An Experienced Operator

I recently asked Michael Anderson, an entrepreneur with a strong track record in the fitness industry who currently runs two fitness studios (including the top studio) in a well-established fitness franchise, to let SMB Deal Hunters invest in his next deal. 

Michael agreed—He’s now offering an investment opportunity in the transformation of four under-performing gym locations he has under LOI, with a goal of turning them profitable within 6-12 months.

Michael is leveraging the operational practices that have proven successful in his existing locations to turn these additional locations around.

This investment presents a deal structured with a 10% preferred return for investors, a yearly profit share, and a promising return on cash invested upon a strategic sale.

He is raising $500,000 to support the acquisitions and operations.

A thriving industry, strong projected returns, and an experienced operator with a successful track record? This is certainly an opportunity worth exploring.

Click Here to Learn More 👉

4/ 15-Year-Old Pet Storage E-Commerce Business

📍 Location: Remote
💰 Asking Price: $3,100,000 + Inventory
💼 EBITDA: $876,471
📊 Revenue: $4,722,103
📅 Established: 2008

💭 My 2 Cents: It’s true: Pets are the new children. No wonder this eco-friendly pet storage and furniture e-Commerce business has been so successful (and was even included in the Inc 5000 in 2021). This business is primarily focused on selling on online marketplaces. They’re on 34 different channels, including Amazon (65%), Chewy (10%), and Wayfair (9%). What I like is they already leverage a 3PL, which makes a transition to a new owner easier. However, I’d want to understand what the product pipeline looks like and how involved the seller is in the product development process. Given most of the sales are on marketplaces, the business probably doesn’t have a good handle on its repurchase rates (though Amazon now shares this info). At the minimum, I’d still want to know what AOV is and what their CAC is (or ACOS on Amazon) to understand if there‘s room to scale or spin up a DTC arm of the business.

5/ Commercial/Residential Plumbing And Heating Service

📍 Location: Greater Seattle Area, WA
💰 Asking Price: $2,300,000
💼 EBITDA: $833,239
📊 Revenue: $4,051,115
📅 Established: 2002

💭 My 2 Cents: Plumbing and heating services are top-tier recession-resistant businesses. You’re going to shell out if your toilet is broken or your office is cold, regardless of the economy (not to mention that people will often upgrade their plumbing and heating to save money over the long term). The commercial space is especially great because compliance with health and safety regulations frequently requires functional plumbing and heating services, which ensures a baseline level of demand. Judging by the fact that they have work through 2024, there is clearly no issue with demand. I really like that they have a team of experienced plumbing technicians, as that is usually a hard position to hire for. I would want to dive into what the clientele (how many and are they under contract?) and revenue (how much is recurring vs one-time?) look like, but otherwise, this appears to be a pretty safe bet.

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On our call today, we discussed how to structure a seller note for a deal one member has under LOI.

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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.

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📚 What I’m Reading This Week

The Business Academy by Sieva Kozinsky

Sieva is the founder of Enduring Ventures, which is one of the best in the game when it comes to business acquisitions (they own 17+ businesses).

Once a week, he shares an email with his favorite tweets, a cool investment opportunity, or an interesting business insight.

I look forward to his emails every week, and I 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.