❇️ New Deals - 9 Jan 2024

An e-Learning biz, B2B service provider, 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!

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

Today’s issue is sponsored by Steed Strategy, a tech-driven accounting firm that helps you stop overpaying in taxes!

1/ Non-Destructive Testing Service Provider

📍 Location: Southern US
💰 Asking Price: N/A
💼 EBITDA: $838,000
📊 Revenue: $3,877,000
📅 Established: N/A

💭 My 2 Cents: This is a non-destructive testing service provider for various businesses throughout the Southern United States, but particularly businesses in the energy, industrial, and amusement park sectors. Basically, they go in and make sure that materials, product, and equipment are up to standards…and they do it without causing damage. Industries from machinery manufacturing to oil and gas require this service, and in a lot of cases, it is legally mandated, which I love. That’s why they have contracts with over a dozen clients for regular asset maintenance; the clients literally don’t have a choice. I also like that there are opportunities to grow this business both in existing and new verticals. My main concern is that the business requires certified skilled labor. So I’d want to understand how long the current employees have been working with the company and what the process and difficulty is for hiring new ones. Besides that, I’d want to check for any client concentration issues and confirm client retention is high.

2/ Above-Ground Swimming Pool eCommerce Business

📍 Location: Oneida County, NY (Remote)
💰 Asking Price: $7,000,000
💼 EBITDA: $1,476,992
📊 Revenue: $6,520,424
📅 Established: 2011

💭 My 2 Cents: Our world is getting more and more urbanized, which means there’s less and less space to build in-ground swimming pools. The result is that the above-ground swimming pool market is expected to grow by $596M between 2022 and 2027. This company capitalizes on this trend by selling easy-to-install pool kits, as well as supplies like ladders and rails. What makes this company stand out from other eCommerce businesses is the high AOV (in the thousands of $) and strong margins, which leaves room to increase adspend. I also like that they have been around for a while since this means they likely have a strong reputation (which also means a potentially strong SEO presence) and that the owners are open to offering seller financing. I’m curious what their marketing efforts look like and what percentage of sales are B2B (aka the people who install them) vs B2C (DIYers). Ideally, most of the sales are B2B because it likely comes with a higher LTV.

3/ Youth Entrepreneurship E-Learning Business

📍 Location: Remote
💰 Asking Price: $12,500,000
💼 EBITDA: $2,235,000
📊 Revenue: $3,000,000
📅 Established: 2013

💭 My 2 Cents: This is an e-Learning business specializing in action-oriented youth entrepreneurship courses that promote youth engagement. I love that their clients are primarily governments and schools. My friends in this space tell me this is NOT easy to figure out, but they’ve clearly struck a chord and the rewards are massive: bulk annually recurring subscriptions with an average contract size of $100,000, an 80% client retention rate, and ridiculously high margins. If I were to buy this business, I’d focus on expanding into new cities via RFPs (aka doing more of what they’re already doing). The good news is, the seller is willing to stay on to help win bids. I’d want to check to see if there are any client concentration issues and confirm client retention is high (the government is usually a very sticky customer), but this business really looks like a winner.

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4/ Commercial Cleaning Company

📍 Location: Indianapolis, IN (Relocatable)
💰 Asking Price: $1,300,000
💼 EBITDA: $603,420
📊 Revenue: $1,617,786
📅 Established: N/A

💭 My 2 Cents: Commercial cleaning companies are great boring businesses with high margins and strong recurring revenues. This particular cleaner is priced very reasonably at 2.15x EBITDA, has been in business for almost 20 years, and has 15-16 contracts with commercial offices, government buildings, and educational facilities. These are very very sticky clients, which is great. It’s also great that they’ve achieved this success with no marketing strategy or sales rep. Adding one or both of those things would be an easy but impactful growth opportunity to take this business to the next level. Things look pretty good here, but I do have some questions. What’s the owner’s role? How long have the clients been around for? What does employee churn look like? And do any clients represent more than 10-20% of revenue?

5/ Chain of Dry Cleaners

📍 Location: South Bend, IN
💰 Asking Price: $3,200,000
💼 EBITDA: $900,000
📊 Revenue: $4,500,000
📅 Established: 1925

💭 My 2 Cents: This is a chain of 8 dry cleaners with 100 years of experience and has grown to be the largest dry cleaner in its area. It has management in place, an absentee owner who lives in another state, and it’s only operating at 50% capacity. In other words, this business has both proven its longevity and still has significant room to grow. It also has a very interesting business model, as it has a central plant and 7 drop stores in different towns where customers pick up/drop off their clothes. The drop store model is interesting because these locations require little to no equipment and staff. In fact, the drop stores can be fully automated/unmanned, which they have actually already done at 2 of their locations. I’d focus on improving margins by converting the remainder of existing drop stores to become fully automated and opening up new drop stores that can leverage the same central plant.

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🤝 Vendors and Lenders

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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.