- SMB Deal Hunter
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- New Deals - 5 Oct 2023
Today’s Sponsor
Hello SMB Deal Hunters!
Thanks for all the great feedback from the deals I shared on Tuesday! One of them went off the market almost immediately (so make sure you move quickly!).
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 year. 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 Rejigg, a new platform I came across that features exclusive off-market (!) SMB deals.
Want to promote your business to my community of 10,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.
1/ Subscription-Based Streaming Video On Demand Company
📍 Location: N/A
💰 Asking Price: $6,600,000
💼 EBITDA: $1,101,859
📊 Revenue: $4,267,555
📅 Established: 2016
💭 My 2 Cents: Are you in the mood to channel your inner Steven Spielberg? If so, this is the listing for you. This streaming video on demand (SVOD) produces and distributes TV shows, movies, and documentaries built for the military veteran community. The fact that the company targets veterans (who are very passionate) and that all the revenue is subscription-based are both big pluses. I also like how strong the EBITDA margins are and that there are 316,000 free accounts waiting to be converted, which is a low-hanging fruit for growth. However, before diving in, I’d want to get a good look at what retention (customer LTV and churn), content creation, and the team look like. It’s not cheap to produce high-quality content and it’s not easy to retain customers. There’s a reason that Netflix and Hulu are the only two profitable streaming giants, after all. You’re going to want to make sure that customers aren’t coming out faster than they are coming in and that there’s a team and process in place to help produce addicting content.
2/ Online Media Company Focusing On Military Defense And Foreign Policy News
📍 Location: N/A
💰 Asking Price: $3,750,000
💼 EBITDA: $1,008,712
📊 Revenue: $1,750,000
📅 Established: 2012
💭 My 2 Cents: Sticking with the military theme, this company produces news for people interested in military culture, foreign policy, and national defense. The content includes books, articles, podcasts, and videos. I like that 80% of the revenue comes from subscriptions, that the retention rate is 90%, that they have a strong social media following and 370,000+ email subscribers, and that the team is exceptional, with each serving an average of 10 years in the military. Because they’re on various mediums, I’d want to better understand the revenue breakdown so that I know where I should focus my marketing and content efforts. But, ultimately, with such strong metrics (57% profit margins and 370,000 subs are nothing to sneeze at) and an owner who is willing to stay on in an advisory capacity, this seems like an exceptional opportunity.
3/ Database Managed Services Provider
📍 Location: Southeast, USA
💰 Asking Price: N/A
💼 EBITDA: $2,072,982
📊 Revenue: $5,994,993
📅 Established: N/A
💭 My 2 Cents: The cool companies these days outsource their database management for significant cost savings. It’s why database management services are now a $63.4B market. Boasting 95% gross profit margins, an over 95% retention rate (makes sense, nobody wants to have to change their database MSP), and thousands of databases worldwide, this company absolutely kills this niche. I especially like its recurring revenue model, and I especially especially like the potential to turn its proprietary software into a standalone SaaS product. With one owner set to retire and the other owner willing to stay on, everything looks to be set for immediate success under new ownership.
In Partnership With Rejigg
Hunting for Off-Market SMB Deals?
I recently came across a new platform called Rejigg that features off market SMB deals that are $500k-$10M in revenue.
They have an in-house team doing outreach everyday, finding owners who are excited to meet with buyers.
Their team adds 7-10 new proprietary deals every week (and because these deals are off-market, they aren’t listed on competitive marketplaces like Bizbuysell).
Here are two interesting deals I found today that speak to the quality of the platform:
1) A fundraising event platform doing $3MM in revenue with over 75% repeat revenue and 35-40% margins.
2) A subscription cooking products & recipe box with $1MM in annual EBITDA and a whopping customer LTV of $403.
No wonder searchers who join Rejigg often have a dozen meetings with owners in their first month!
4/ eCommerce Supplement Brand
📍 Location: N/A
💰 Asking Price: $3,600,000
💼 EBITDA: $1,250,000
📊 Revenue: $5,500,000
📅 Established: 2020
💭 My 2 Cents: This company offers supplements for people into fitness and nutrition. And, even though it’s only been around for 3 years, it’s already landed partnerships with big players like GNC and Gold’s Gym. I really like that all web traffic has come organically, as that means there’s a huge opportunity to grow through paid marketing. I would also open up an Amazon FBA sales channel, as that is where a significant amount of people buy their supplements. I also like that the owner is open to continuing to manage the company in exchange for some equity. At a reasonable 2.88x multiple, this looks like a good buy for those looking for something really hands-off. However, because the supplement market is fairly commoditized, I’d first want to double-check that the brand and product are truly differentiated.
5/ Branding Agency With Prominent University & Healthcare Clients
📍 Location: N/A
💰 Asking Price: $2,000,000
💼 EBITDA: $457,052
📊 Revenue: $2,589,703
📅 Established: 2014
💭 My 2 Cents: I have a soft spot for branding agencies because they’re not sales performance driven. It’s not like a marketing agency where a client can fire you because Facebook ad costs are too expensive. And this branding agency is doing very well within its university and healthcare niche, as it has a bunch of really impressive clients, including Columbia University, Mount Sinai Health System, and Syracuse University. With 75% of the revenue project-based, I’d want to know how much of this revenue is re-occurring and from repeat clients. The last thing you want is to have to land new client after new client. I’d also want to see if there are any client concentration issues. Having a single client generate more than 15-20% of sales puts you in dangerous waters. Finally, even though there’s a full team in place, I’d check to see what the owner’s role is and what it takes to replace them, especially if you’re not already a marketing agency veteran.
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See you next Tuesday!
-Helen Guo
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P.S. Whenever you’re ready, here are a few ways for us to work together:
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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. 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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