❇️ New Deals - 5 Dec 2023

A music rights management service, streetwear eCommerce brand, and 3 other interesting finds.

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Hello SMB Deal Hunters!

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

Looks like the state-run liquor store (with the quasi-monopoly) I featured was a big hit.

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

Today’s issue is sponsored by DealPipe, a new service that helps you find off-market deals.

1/ Classical Music Competition Business

📍 Location: New York (Remote)
💰 Asking Price: $1,800,000
💼 EBITDA: $650,000
📊 Revenue: $1,300,000
📅 Established: N/A

💭 My 2 Cents: This is without a doubt one of the more interesting businesses I’ve come across recently. It’s a unique niche business, which I always love to find, especially when they have 50% net profit margins and are selling for under 3x EBITDA. So what’s this niche? Well, it’s the music competition business. This specific business is the largest classical music competition in the states, hosting 9 annual competitions with 1,500 participants. If you’re curious how music competitions work, then you’re in luck, because I went down a rabbit hole. Participants apply online by submitting videos of themselves playing their instrument (and pay an application fee for each category they enter). Then, a jury picks the winners (this all happens virtually). Winning is all about prestige, and not about money (in fact, participants who win usually have to pay for their own medals/certificates!). For some competitions, like this one, the winners get the opportunity to perform live. For example, this company holds more than 30 concerts at the most prestigious venues, where they can charge for tickets and land sponsors (another revenue stream). It’s a very cool business, and I like that they have a strong SEO presence and have been growing steadily for the last 10 years. I also like that it’s operated fully remotely, and that the owner is retiring and willing to offer some seller-financing. Everything seems set up for a buyer to step right in without skipping a beat.

2/ Music Rights Management Service

📍 Location: N/A
💰 Asking Price: $20,000,000 - $30,000,000
💼 EBITDA: $2,400,000
📊 Revenue: $15,700,000
📅 Established: N/A

💭 My 2 Cents: We’re going back to back on the music companies today. This is a music rights management service featured on the 2023 Inc 5000 list for the second straight year as one of the USA's fastest-growing companies. Besides the steady growth (EBITDA increase from $2.2M in 2021 to $2.7M in 2023) and team of 18, what caught my attention was that the company generates 100% of its revenue from monthly recurring services. It turns out that offering music rights management, UGC monetization, and digital music distribution to independent artists, songwriters, and music rights holders is a pretty lucrative business. I like that the owner wants to stay involved, which is a great sign of faith, but before I could take a leap of faith, I’d want to see what client retention and the sales funnel look like.

*This is a sponsored listing

3/ Streetwear eCommerce Brand

📍 Location: Remote
💰 Asking Price: $3,300,000
💼 EBITDA: $1,005,319
📊 Revenue: $5,249,482
📅 Established: 2018

💭 My 2 Cents: Usually, when I see a fashion brand with over 10,000 SKUs, I’m passing. But 90% of this business's orders leverage POD (print-on-demand), which is great for cash flow because it means not all their cash is tied up in inventory. The brand also collaborates with influential designers and tastemakers in the $185 billion streetwear market, which is a super smart way to leverage their followings for low-cost marketing. I love that they have a one million-strong email list, as this makes it much easier to launch new products. I also like that despite shipping from abroad and having 23 employees, the brand still maintains very solid net profit margins (especially for an e-Commerce business). So, I’m officially intrigued. However, it’ll be important to dig into basic metrics like AOV, LTV, repurchase rate, and CAC.

In Partnership With DealPipe

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4/ Rehab And Pain Management Center

📍 Location: New York
💰 Asking Price: $1,800,000
💼 EBITDA: $825,000
📊 Revenue: $2,700,000
📅 Established: 1991

💭 My 2 Cents: This is a rehab and pain management center that’s been in business for over 30 years. It’s near a major regional hospital, has 25,000 active patients, is staffed by 16 employees including a physician, chiropractor, and three physical therapists, and focuses on non-medication treatments like chiropractic care and joint mobilization in a state-of-the-art 8000 SF facility. The owner is retiring, but you’ll want to dig into what their role is. Because it’s so close to the hospital, the practice likely benefits from a lot of referral business, which is great. I’d like to understand how much capacity they have remaining, what the waitlist is like to get seen, and how hard it is to hire additional medical staff in the area (there’s a nationwide medical staffing shortage). If staffing isn’t an issue, expanding to 7 days a week from the current 5 is an obvious growth opportunity. Overall, this looks like a pretty nice opportunity, and you don’t need to be a medical professional to capitalize. All you need to do is leverage the MSO model, which is a vehicle by which non-physicians can legally own an entity that supplies administrative support to a medical practice’s operations.

5/ Metal Recycling Company

📍 Location: Pennsylvania
💰 Asking Price: N/A
💼 EBITDA: $2,030,000
📊 Revenue: $12,535,000
📅 Established: N/A

💭 My 2 Cents: Here we have a 75-year-old metal recycling business, which is an essential service for industries like construction, automotive, and electronics and benefits from strong ESG tailwinds. Interestingly, the original owner sold the business to the current owner, who then smartly expanded its offerings and attracted commercial clients with over 100 roll-off units currently placed. The seller’s willingness to offer partial seller financing definitely juices up the deal, but I’d first want to understand what contracts are in place with clients, what the industry breakdown of clients is, and client retention rate.

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See you Thursday!

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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.