New Deals - 24 Oct 2023

By SMB Deal Hunter

Author

Helen Guo
October 24, 2023

Today’s Sponsor

Hello SMB Deal Hunters!

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

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

Today’s issue is sponsored by Portless, the go-to platform for e-commerce shipping.

❇️ Special Opportunity: Want to invest passively into a cash-flowing business I’m buying? Reply “Invest with Helen” and I’ll share more.

1/ SaaS Add-On For Adobe Software Program

📍 Location: N/A
💰 Asking Price: $4,000,000
💼 EBITDA: $754,213
📊 Revenue: $952,212
📅 Established: 2012

💭 My 2 Cents: This SaaS business is an add-on for Adobe, which I like because of Adobe’s status as a leader in the creativity software industry and continued growth ($4.89B of revenue in Q3, which represents 10% year-over-year growth). Like most SaaS businesses, the profit margins are incredibly high and the majority of revenue comes from annual subscriptions, which is always nice to see. These benefits intrinsic to SaaS usually lead to very high multiples, but this business is only selling for a 5.3x EBITDA multiple. The year-over-year SDE has grown 17% in the last year, which is not great for a SaaS business but solid considering the owner only works 5 hours a week and the rest of the team is part-time. Before buying, I’d want to understand the cost of a subscription, how often subscribers churn, and what the LTV of a subscriber is, as those stats are super important for a SaaS business.

2/ Three Tutoring Centers

📍 Location: Houston and Central Texas, Texas
💰 Asking Price: $2,390,000
💼 EBITDA: $622,049
📊 Revenue: $2,155,508
📅 Established: 2007

💭 My 2 Cents: I am a strong believer in in-person tutoring. In a country where grades and test scores are continuously dropping, kids have a variety of different learning styles, and college admissions are getting almost comically competitive, parents are going to continue to shell out to ensure their kids stay ahead. What’s cool about this after-school tutoring business is that the current owners actually acquired it themselves in 2007, and growth has been up only since then. I like that there are directors and teachers at each of the three locations and that they are located in densely populated areas near schools and lots of middle-upper-class working families. This is a good opportunity for anybody, but it’s an especially good opportunity for someone who isn’t a digital marketing wiz, as corporate handles this as part of the franchise fees.

3/ Portable Toilet Business

📍 Location: Ontario, Canada
💰 Asking Price: $5,900,000
💼 EBITDA: $936,008
📊 Revenue: $3,292,482
📅 Established: 1958

💭 My 2 Cents: Port-o-potties aren’t just lifesavers in desperate times, they are also a great boring business with awesome margins. This portable potty company comes with commercial service and supply contracts, which are great because many portable toilet companies rely on one-time outdoor events like concerts and festivals for revenue, which is the exact opposite of recurring revenue. This makes it very important for any buyer to know what percent of revenue comes from contracts vs one-time events. From my conversations with port-o-potty companies, one of the key factors to success is keeping the toilets in pristine condition. So, I’d want to know what the service/maintenance team looks like, how much the company spends on repairs, as well as who manages these repairs. I’d also want to know what percent of the business comes from those fancy trailers you see at weddings vs the single toilets you see on street corners, as the margins are often better on the trailers.

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4/ Profitable Nail Salon

📍 Location: California, USA
💰 Asking Price: $1,999,999
💼 EBITDA: $900,000
📊 Revenue: $3,655,517
📅 Established: N/A

💭 My 2 Cents: Nail salons are a beautiful business because they are simple and come with a lot of re-occurring revenue (many nail salon customers go every 2-4 weeks for maintenance). Plus, the industry as a whole is expected to grow at an 8% CAGR from 2023 to 2030 due to a growing emphasis on personal grooming. On top of strong tailwinds, I like that with this business there’s a full management team in place and the seller is willing to stay on, which could be a huge asset considering the seller has started 13 other successful nail salons. One thing I would want to dig into is the reputation of the business via online reviews. Reputation is everything in this industry. If the reviews are meh, you’re going to have a really hard time growing (although this doesn’t seem to be the case here, judging off the numbers). If everything checks out, this is an opportunity to get into a large and growing market at a great price, with an opportunity to expand through adding on services like massages.

5/ Staffing Firm Specialized In Temp Placement

📍 Location: Nevada, USA
💰 Asking Price: On Request
💼 EBITDA: $766,000
📊 Revenue: $7,193,000
📅 Established: N/A

💭 My 2 Cents: This company is a staffing firm specializing in temporary and permanent hourly positions primarily for the industrial, office, and medical sectors. They have a highly experienced team in place (good) and long-term contracts in place with their larger customers (very good). I especially like that they focus on per-diem (as needed) nurse staffing and medical contracts. Short-term medical work is growing in importance because it gives healthcare facilities maximum flexibility and saves costs during the slow seasons. On the flip side, medical providers like temp work because they often get paid better than full-time employees. Basically, this staffing firm is filling a huge shortage in the healthcare system that’s not going away, which presents a nice opportunity to grow. I also like that there’s an opportunity to grow into new geographic locations like Las Vegas.

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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.

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📚 What I’m Reading

Everyone always asks how I stay up-to-date, so here are a few of my favorite newsletters. Click on the below links to sign up in one click (all free):

  • GirdleyWorld — Business buyer and Holdco owner Michael Girdley shares lessons from building a $100M empire.

  • Frameworks & Finance by Kurtis Hanni — Join 25k+ business owners and leaders learning financial statements and growing their businesses every Thursday.

  • Sieva Kozinsky's Newsletter — The founder of Enduring Ventures shares weekly insights from his experience buying 17+ cash-flowing businesses.

  • The Sweaty Startup — “Boring business” entrepreneur Nick Huber who sold his 7-figure service business and now runs a self-storage portfolio shares actionable insights with entrepreneurs and investors.

  • Houck's Newsletter — Tactical advice every week from an a16z-backed founder on how to build, grow, and raise capital for your startup.

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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.