❇️ New Deals - 5 March 2024

A medical billing company, martech SaaS company, and 3 other interesting finds.

Author

Helen Guo
March 05, 2024

Today’s Sponsor

Hello SMB Deal Hunters!

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

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

Today’s issue is sponsored by Steed, a team of tax specialists that ensures you pay the absolute least in taxes.

📣 I’m taking on 5 clients to help find off market deals in the next 90 days using our proven process. Reply “off market” if you want to work together.

1/ Medical Billing Company

📍 Location: Midwest
💰 Asking Price: $2,250,000
💼 EBITDA: $580,000
📊 Revenue: $1,800,000
📅 Established: N/A

💭 My 2 Cents: Medical billing is one of my favorite businesses (and I know you guys love them too). What these businesses do is provide services that facilitate the billing process between healthcare providers and insurance companies. It typically involves a lot of paperwork and meticulous data management, which is why many healthcare providers choose to outsource this task to specialized businesses like the one you are currently reading about. The result is an incredibly high-margin business, as they take a percentage of collected revenue and can offshore a lot of the billing and coding work. This company has the expected strong margins, as well as a very nice stable client base across the US and expert long-term employees. I would like to understand client retention, what niche they are in, and if there are client concentration issues, but otherwise, this looks like a great business at a great price.

2/ Martech SaaS for Car Dealers

📍 Location: Remote
💰 Asking Price: N/A
💼 EBITDA: $1,292,894
📊 Revenue: $3,837,482
📅 Established: 2012

💭 My 2 Cents: This is a marketing technology SaaS business that measures and monitors visitors' behaviors on a website, predicts where they are in the buying process online, and offers them incentives, resulting in significantly more leads from the existing website traffic. SaaS businesses are obviously great because they come with a ton of recurring revenue, and I especially like that this business operates in a niche with strong tailwinds: car dealerships. The online car market is projected to reach $563.8B in 2028 with a strong CAGR of 11.1% from 2023 to 2028. This company already has a strong 10+ year track record with over 900 clients. Still, I would want to know how much annual client churn there is as this would give me an understanding of how good the software product is. The business is fully remote and the owner’s son is open to continuing to work with the company in some capacity, which will make the transition much easier. Ultimately, it’s a great opportunity for someone with a B2B sales background to tap into the roughly 70,000 car dealers nationwide. And since it’s a SaaS business, the margins are only going to improve as the business grows.

3/ Medspa

📍 Location: Northern California
💰 Asking Price: N/A
💼 EBITDA: $717,129
📊 Revenue: $2,145,393
📅 Established: 2001

💭 My 2 Cents: Regular readers know that I love medspas. People really care about their health and looks these days, so medspas have high demand, tons of repeat clients, and strong margins. This particular medspa has been in business for over 20 years and has over 10,000 active patients. Considering they’ve been around for so long, I’d bet many of these patients are extremely loyal. However, I’m curious how they define “active” and how much the average patient spends with them a year. I’d also want to understand what percent of sales come from one-time treatments versus treatments that require regular maintenance (i,e, botox, fillers), with an obvious preference for the latter. I like that there are 6 employees and a retiring owner, but I’d need to know how involved the owner is in injections and treatments. If all of that checks out, then there are clear growth opportunities here through offering additional treatments (and upselling them to existing clients) as well as expanding digital marketing efforts to drive new leads.

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4/ Painting Service

📍 Location: New Jersey
💰 Asking Price: $1,300,000
💼 EBITDA: $458,897
📊 Revenue: $789,064
📅 Established: 2000

💭 My 2 Cents: This is a painting company that serves both residential and commercial clients. What attracted me to this deal is how strong the margins on it are (50%+ net). I also like that they have commercial clients (property management companies, homeowners associations, etc.) because these customers often come with maintenance contracts. Of course, I would want to know what percent of this firm’s clients are commercial (regular maintenance) vs residential (less regular maintenance). What’s great is the business comes with a team of 5 and the owner is ready to retire but is willing to stay involved for a 6-month transition, allowing time to transition any relationships. Everything seems ready to scale, which is not too difficult for a painting service because you can subcontract a lot of work out. You could also grow by offering related services like power washing, which often leads to painting projects or is requested alongside painting.

5/ Roofing Repair Company

📍 Location: Nebraska
💰 Asking Price: $5,500,000
💼 EBITDA: $1,251,429
📊 Revenue: $7,588,638
📅 Established: 1956

💭 My 2 Cents: I love roofing repair companies because they are essential boring businesses with a lot of repeat revenue. If you have a leaky roof, you don’t have much choice but to get it fixed ASAP, especially because insurance most likely will pay for it anyway. This roofing company is located in Nebraska, a state known for its bad hailstorms. To highlight how bad the hail is, approximately 95% of its hailstorm customers return year after year (!), with 5% involving full roof replacements. I like that they’ve been in business for almost 70 years, which is a huge advantage because nobody wants their roof repaired by a roofer who might not be around the following year. What’s also unique is the business is in its second generation of ownership, which shows me that the business can transfer to new ownership successfully. There’s clearly a lot of demand for the company’s services (they have about 2 years of work booked!) and there’s still a lot of room to grow geographically into neighboring states. Or, if you prefer to focus on Nebraska, you could lock in preferred vendor status with local insurance companies as this would provide a huge referral source.

🐦 The Best of SMB Twitter (X)

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Turning 3 failing roofing companies into $3M/month in just 6 months (link)

How to make your SBA deal move faster (link)

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🤝 Vendors and Lenders

I’m committed to helping the SMB Deal Hunter community close more deals, faster. Click on any of the links below and I will make a personal introduction to folks I trust.

SBA 7(a) Lender: The most common way to finance an acquisition up to $5M purchase price with 10% (give or take) down with the help of a government-backed loan. My preferred lender Elyse will help you out.

Non-SBA Lender: Best for smaller deals if you want to avoid the hassles of SBA. My preferred lender Grant and his team are the only private lenders I know who offer acquisition financing with long payback periods without any collateral requirements. Note: You must have great credit.

Quality of Earnings Provider: I always recommend conducting a QoE during due diligence to uncover any red flags. Get introduced to my preferred QoE provider that offers top-tier financial due diligence without breaking the bank.

Legal Counsel: A must-have on your team to help get a deal to the finish line. Get introduced to legal counsel with experience closing SMB deals that won’t rack up your legal bill.

See you Thursday!

P.S. Whenever you’re ready, here are a few ways for us to work together:

1. Want me to help you find a business to buy in the next 90 days and handhold you through closing your first deal? Apply to work with me.

2. 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 investing in. Reply “LP” and I’ll share more.

3. Interested in selling your business? I’ll help you connect with buyers from the SMB Deal Hunter Community.

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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.