New Deals - 31 Oct 2023

By SMB Deal Hunter

Today’s Sponsor

Hello SMB Deal Hunters!

I sent out a poll last Thursday asking how many of you had acquired a business from a deal I shared in my newsletter…

The results are in: In the past 6 months, at least 8 of you have bought a business from the deals I’ve shared 🔥

That makes me even more excited than usual to share 5 new deals worth checking out.

Today’s issue is sponsored by Virtual Gurus, the platform that vets and matches you with the talent you need to scale your business.

Advertisers: Want to promote your business to my community of 12,000+ entrepreneurs and investors? Replyadvertise” and I’ll share my media kit.

1/ Medical Facility Commercial Cleaning

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $1,500,000
📊 Revenue: $7,300,000
📅 Established: N/A

💭 My 2 Cents: I really like commercial cleaning businesses because they come with contracts and recurring revenue. But until now, I hadn’t heard of one with a high barrier to entry. This company specializes in cleaning and disinfecting medical facilities, which requires rigorous certifications. This is a great niche because it’s recession-resistant (hospitals are open regardless of the economy!) and the industry is growing quickly because of increasing healthcare expenditure leading to medical facility expansion. Stickiness seems to be taken care of with 70% of the clients under 2-5 year contracts and 96% of revenue coming from repeat customers. Client concentration likewise looks to be okay with 300+ clients, although I do wonder if any of them account for more than 10-20% of revenue. And both of these positives seem to play out in the numbers, as revenue has been fairly stable over the years. The only thing I’m not sure about is their sales process (must be a long one), although I do know there is an opportunity to grow by upselling the existing clients on buildings and facilities management services like window washing and floor stripping.

2/ Corporate Gifting eCommerce Business

📍 Location: New Jersey (Can be run remotely)
💰 Asking Price: $3,600,000
💼 EBITDA: $867,460
📊 Revenue: $2,303,003
📅 Established: 1985

💭 My 2 Cents: For 37 years now, this company has offered specialty gift baskets, premium alcohol brands, and custom bottle engravings to primarily B2B customers (60% of sales). I love that it’s an eCommerce business that focuses on B2B, as corporate orders have an extremely high AOV (can be as high as $30k) and lots of repeat revenue. It’s also nice that they have 3 full-time managers and a contractor. I do want to know how they acquire these B2B customers and what the repurchase rate on those customers is, as well as how much of the business is seasonal (basically, how much of the revenue is from Q4?). If there is a reliable method for landing new B2B clients, then this could be an exciting business to acquire with the holidays coming up.

3/ Commercial Landscaping And Mowing Company

📍 Location: Manatee County, FL
💰 Asking Price: $2,900,000
💼 EBITDA: $817,576
📊 Revenue: $5,161,991
📅 Established: 1996

💭 My 2 Cents: This business does commercial landscaping and mowing on a contract basis. It’s a simple business with a recurring revenue model, as corporate and commercial property owners require year-round landscaping services (especially in warmer climates like Florida). I also like that they’ve been around for 27 years (likely meaning a good local reputation) and that the owner is retiring and leaving behind an 81-person team. If you’re reading this newsletter, this should be music to your ears. The key to this deal comes down to one word: contracts. How many clients do they have? How long are the contracts? What percentage of those contracts renew? And how long does the average client stay on for? What you want to see are long contracts with clients that frequently renew.

In Partnership With Virtual Gurus

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4/ SaaS eCommerce Logistic Management Solution

📍 Location: New Jersey, US
💰 Asking Price: $7,000,000
💼 EBITDA: $1,400,000
📊 Revenue: $3,600,000
📅 Established: 2017

💭 My 2 Cents: This SaaS is an eCommerce logistics management solution and claims to be absentee-run. I’m always skeptical of absentee claims, but with 20 full-time employees, it’s definitely possible. If it’s true, that would make for a very easy transition. Otherwise, this business has the usual SaaS benefits: fantastic margins and recurring revenue. And it’s listed at a reasonable multiple, which is always a plus. I also like that the owner is retiring but is still willing to offer seller financing and stay on as a partner. It looks like a pretty good deal, but any buyer should first dive into some basic due diligence like pricing, customer count, churn/retention, and differentiation.

5/ Subscription Box Service For Fitness Enthusiasts

📍 Location: N/A
💰 Asking Price: $1,800,000
💼 EBITDA: $418,253
📊 Revenue: $1,181,000
📅 Established: 2016

💭 My 2 Cents: This business delivers paying subscribers a curated selection of 5-8 fitness products every month. It’s a clever way of capitalizing on a booming market, as the fitness industry is growing at a CAGR of 10.46% between 2022 and 2027. The company sells DTC and on Amazon, and 65% of sales come from subscribers, which is great (recurring revenue, baby). Retention is solid ($900 LTV and average subscriber length of 16.84 months), the margins are superb for an eCommerce company, and the AOV of $55 is more than adequate to scale this thing. I want to know what the customer acquisition costs and marketing efforts look like, but otherwise, this appears to be a good company listed at a fair multiple.

🐦 The Best of SMB Twitter (X)

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The 6 options for leaping into SMB entrepreneurship (link)

A repeatable employee compensation structure (link)

Make sure to budget for the J Curve (link)

Don’t play business on hard mode (link)

Everything you ever wanted to know about closing conditions (link)

Home run deals are out there, you gotta just keep searching (link)

Some great reads on sabbaticals (link)

The best way to turn around an underperforming business (link)

An explanation of the SBA’s new guidelines on partial ownership (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.

On last week's call, we walked one member through the steps he needed to take in due diligence for an e-Commerce deal he has under LOI.

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. Want me to review a deal you’re working on? Sign up for a 1-on-1 coaching call.

🤝 Advertise in SMB Deal Hunter

Want to promote your business to my community of 12,000+ entrepreneurs and investors? Replyadvertise” and I’ll share my media kit.

📚 What I’m Reading This Week

Pitch Club — A newsletter that does deep dives on early-stage startups and goes out to 25,500+ early adopters, founders, Angel Investors and VCs. 

It’s run by Rohan Chheda, an angel investor and real estate developer.

I really enjoy getting Rohan’s deep dives into early-stage startups in my inbox every week.

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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.