New Deals - 3 Oct 2023

And a special opportunity...

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.

But before we continue, I wanted to invite you to a special opportunity…

For the first time ever, I’m bringing on a select group of investors from this community to invest passively in a deal my company D&H Group is under LOI to acquire.

My team and I do all the work and send you a check every quarter. For this deal, our minimum check size requirement is $100K.

If you’re ready to turn cash into cashflow, reply “invest with Helen

Today’s issue is sponsored by JXT Group, a boutique digital marketing agency run by Menachem Ani, a Google Ads expert I’ve been personally following for years.

Want to promote your business to my community of 10,000+ entrepreneurs and investors? Replyadvertise” and I’ll share my media kit.

1/ Profitable Pet Food Brand

📍 Location: Los Angeles, CA (Relocatable)
💰 Asking Price: $1,240,000
💼 EBITDA: $650,000
📊 Revenue: $3,640,000
📅 Established: 2002

💭 My 2 Cents: Americans spend a lot of money on their pets. $137B(!) in 2022, to be exact. And considering that 80% of pet owners say they treat their pets like children, this trend isn’t slowing down anytime soon. This pet food brand sells single-ingredient dog bones and is being sold at an under 2x EBITDA multiple (you almost never see this). I also always love coming across a Fulfilled By Amazon (FBA) brand that sells subscriptions, and this company fits the bill with a very solid $1.5M in subscription revenue last year and an impressive 30% year-over-year growth rate. However, I would want to see their Subscribe & Save Forecasting Report and the Subscribe & Save Performance Report to verify the subscription growth and get a picture of what churn and LTV look like. If I were to buy this brand, I’d focus on two key growth opportunities: increasing ad spend (total advertising cost of sales is under 6%) and growing a DTC subscription service.

2/ Full-Service InsurTech Marketing Firm

📍 Location: Southeast, USA
💰 Asking Price: N/A
💼 EBITDA: $543,000
📊 Revenue: $1,970,000
📅 Established: N/A

💭 My 2 Cents: Agencies are a dime a dozen these days, but this company serves a fascinating niche by working with insurance agencies. I like that it’s been growing steadily (CAGR of 16.3% from 2019 to 2022), has a very high 42.2% profit margin (as is usually the case with agencies), and operates on a monthly recurring revenue model (but I want to know how sticky clients are - recurring revenue is only good if customers stick around). One thing I’d want to dig into is how they acquire customers. Is it via outbound? Paid advertising? Referrals? Once you know this, you can dial in the sales and marketing efforts and possibly expand into adjacent industries that are less saturated like legal services and real estate.

3/ Multi-Line Powersports Dealership

📍 Location: Arizona, USA
💰 Asking Price: $5,995,000
💼 EBITDA: $1,670,000
📊 Revenue: $14,000,000
📅 Established: N/A

💭 My 2 Cents: This company sells powersports vehicles such as motorcycles and ATVs. Powersports are an attractive industry for reasons beyond being super fun, as it’s been growing quickly in recent years ($36.27B in 2022) due to people’s post-COVID itch for outdoor fun. And this business’s home base of Arizona has an especially strong powersports scene with plenty of trails and a long riding season. I also like that this business enjoys a variety of revenue streams (vehicle sales, parts, accessories, services, and apparel), has the potential for recurring revenue (powersporters are often loyal to specific brands), and that it’s being sold by a retiring owner with a dedicated staff. With some focus on B2B growth by selling vehicles to tour operators and resorts, this business can scale quite quickly.

In Partnership With JXT Group

Ready to upgrade your Google Ads game?

Strong digital marketing is often the difference between failure and success for SMB owners. But finding the right partner to help scale your ads? Not so easy.

That’s where JXT Group comes in.

JXT Group is a Google Premier Partner Agency (a top 3% Google Partner agency) started by Menachem Ali who I’ve been following for years now for PPC wisdom.

No wonder they’re featured in leading publications like Search Engine Land and on leading industry events and podcasts like SMX Advanced, Optymyzer, PPC Town Hall, and Foxwell Founders.

JXT Group works both with eCommerce brands (i.e. Modular Closets, Casely, Lulalu, Layer8) as well as service providers who want to generate leads.

If you want to see whether there’s an opportunity to scale your business further with Google Ads, I recommend getting a 100% free audit from them. Worst case, you walk away with some opportunities you can implement yourself.

Get a Free Google Ads Audit 👉

4/ HVAC And Plumbing Company

📍 Location: Wichita, KS
💰 Asking Price: $4,000,000
💼 EBITDA: $1,111,000
📊 Revenue: $3,985,000
📅 Established: 2013

💭 My 2 Cents: When you’re buying an HVAC company, you want to find one that has revenue coming in from both residential and commercial jobs. The reason being is that steady income from commercial contracts can help fill the gaps during the seasons when residential HVAC isn’t in as high demand (typically spring and fall). With a 60/40 split between residential and commercial revenue AND a 60/40 split between HVAC and plumbing revenue, this business is pulling in profits all year long. I also like that the owner is retiring and there’s a preexisting staff of 9. However, given how hard it is to hire good HVAC technicians, I’d want to know what employee turnover and the hiring process look like. I’d also want to dig into how much of the revenue is on a recurring basis, although I’m pretty optimistic on this front due to the business not taking new construction work (which are always one-time jobs). New leads have come primarily via SEO and word of mouth, so there’s a clear opportunity to continue growing with paid advertising. Overall, it’s a solid business at a reasonable price.

5/ Respected CPA Firm

📍 Location: Sacramento, CA
💰 Asking Price: $1,550,000
💼 EBITDA: $600,000
📊 Revenue: $1,378,816
📅 Established: N/A

💭 My 2 Cents: I love CPA firms. These babies are absolute cash cows, rake in tons of recurring revenue, and are as recession-proof as a business gets (rain or shine, people and businesses always need accounting services). A CPA firm trading at a 2.58x multiple will always catch my eye. I like that it’s been around for 40 years, it’s growing an impressive 42% year over year, it has a HNW clientele, and there’s a team in place to ensure a smooth handoff, including an owner who wants to stay on as an employee for several years. On the surface, this business looks like a great opportunity, but it will be important to dig into the state of its client relationships to see how long the average customer sticks around. A high churn rate would likely mean the quality of service is poor, which would obviously make growing this business much more difficult.

🐦 The Best of SMB Twitter (X)

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Everything you believe about management is a lie (link)

If you’re a searcher, make sure your website includes this (link)

8 sober thoughts on personal guarantees from someone who’s taken multiple millions of dollars in PGs (link)

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Never buy a business without a seller note. Here’s a common structure (link)

A 60-day process to deliver impactful change to your business (link)

11 lessons from Jeff Bezos (link)

🧠 Join the SMB Deal Hunter Mastermind

If you want to be part of an active community for serious acquisition entrepreneurs and investors, apply here.

We share insights, ask questions, and collaborate in bi-weekly Zoom calls and a Slack channel.

Spots are limited and will be released on a first-come, first-served basis to qualified applicants.

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. Know someone ready to sell their business? Scout a deal for me and I'll make it worth your while! I pay finders fees of $25,000 to $200,000+, all you have to do is make the introduction.

5. Want to pick my brain? Sign up for a 1-on-1 coaching call. These are 1-hour calls where you can ask me anything.

🤝 Advertise in SMB Deal Hunter

Want to promote your business to my community of 10,000+ entrepreneurs and investors? Replyadvertise” and I’ll share my media kit.

📚 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):

  • 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.

  • Your Next Breakthrough — Every Monday, Mark Manson (the author of #1 NY Times Bestselling author of The Subtle Art of Not Giving a F*ck) sends an idea, a question, and an exercise that could spark your next breakthrough.

  • First Class Founders — Learn proven strategies to grow your business each week from today's top entrepreneurs

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

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