New Deals - 29 Aug 2023

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Hello SMB Deal Hunters!

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

Today’s issue is sponsored by WebAcquisition.com, an M&A agency focused on online business due diligence.

1/ American Made Leather Products eCommerce Business

📍 Location: Remote
💰 Asking Price: $1,825,000
💼 Cash Flow: $461,474
📊 Revenue: $1,939,366
📅 Established: 2015

💭 My 2 Cents: This 8-year-old company operates 3 distinct brands on Amazon, eBay, and their own DTC Shopify site. They're a Made in USA brand that works with Amish artisans and embraces rare exotic leathers to create various leather products. I like that the business has doubled its earnings over the last 4 years. The repeat purchase rate is 28%, which is not bad but likely could be improved with new product launches and starting an SMS marketing program. I’d want to dig into the split across the various sales channels and understand key metrics like AOV, LTV, and CAC. Bonus: This business is SBA pre-approved.

Click Here To View The Listing »

2/ 3PL Company Servicing Niche Market

📍 Location: New York
💰 Asking Price: $14,000,000
💼 Cash Flow: $3,600,000
📊 Revenue: $11,560,000
📅 Established: 1980

💭 My 2 Cents: This 40+ year-old 3PL has a niche focus, servicing distribution companies that provide electrical, plumbing, and general building materials to construction companies and contractors. What I like is these customers tend to have high-volume needs with deliveries to several project sites on a daily basis, which means steady revenue. I also like that they have a team of 18 drivers with an impressive average tenure of 7 years. I’d want to dig into whether there is significant client concentration in any of their 100 active customers. While the 30% operating cash flow margins are impressive, I’d want to understand what the true replacement cost would be for the (retiring) owner of the business.

Click Here To View The Listing »

3/ Aggregate & Dirt Recycling

📍 Location: San Diego County, CA
💰 Asking Price: $5,850,000
💼 Cash Flow: $1,560,000
📊 Revenue: $3,730,000
📅 Established: 1995

💭 My 2 Cents: I had no idea dirt was such a cash cow. This 30-year-old business is an asphalt, concrete, and dirt recycling and brokerage business. What initially caught my attention is that they have long-term contracts with government agencies and utility companies. But here’s what’s more interesting: California aggregate reserves are unable to supply current demand and are expected to be depleted within 22 years. Recycling is the best alternative. Plus, California has very strict environmental regulations on handling, disposing, and recycling construction aggregates. Permit processing can take up to 6 years and cost hundreds of thousands of dollars. This creates a high barrier to entry!

Click Here To View The Listing »

4/ IT Managed Service Provider

📍 Location: Los Angeles, CA
💰 Asking Price: $2,475,000
💼 Cash Flow: $900,000
📊 Revenue: $2,100,000
📅 Established: 1998

💭 My 2 Cents: MSPs are getting rolled up left and right by PE, and for good reason (just look at the margins!). I was excited to come across this deal that’s trading at a very attractive multiple. This company offers comprehensive IT Managed Services to clients long-established clients locally and nationwide. I’d want to dig into the contracts they have with these clients and ensure there is no severe client concentration. What’s interesting is the current owner (who is retiring) is not accepting new accounts, so there is definitely an opportunity for a hungry new owner to grow the business with its existing infrastructure and team.

Click Here To View The Listing »

5/ Wholesale Distributor of Landscape Supplies

📍 Location: Texas
💰 Asking Price: $6,700,000
💼 Cash Flow: $1,400,000
📊 Revenue: $4,800,000
📅 Established: 2000

💭 My 2 Cents: This company distributes various landscaping supplies and materials to commercial and residential clients. I like that B2B sales to landscapers, homebuilders, outdoor renovation companies, etc. make up 70% of their sales. These commercial customers come with reoccurring revenue, which I prefer. On top of that, since the business has been around for 20+ years, their B2B relationships are likely to be very solid (but I’d definitely dig into how sticky these customers are and how sales by customer vary YoY). The profit margins are nearly 30%, which is very impressive for a distributor.

Click Here To View The Listing »

🐦 The Best of SMB Twitter (X)

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See you on Thursday!

-Helen Guo
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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 (all free):

• 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.

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

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

• The PyQuant Newsletter — Join traders & quants from Goldman Sachs & JPMorgan. Real Python code for algo trading & market data analysis twice weekly. Read in 5 minutes or less.

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⏪ Catch Up On Recent SMB Deal Hunter Issues

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• August 22, 2023

• August 17, 2023

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