❇️ New Deals - 12 Dec 2023

An Amazon FBA pet brand, disc golf eCommerce biz, and 4 other interesting finds

Author

Helen Guo
December 12, 2023

Today’s Sponsor

Forwarded this newsletter? Join 21,000+ readers and sign up for free.

Hello SMB Deal Hunters!

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

Looks like the legally mandated kitchen hood cleaning service (with the 97% repeat business rate) I featured was a big hit.

I’m excited to share 5 6 new deals worth checking out, including a special bonus deal that I’ve gotten you guys access to that you won’t find on any marketplaces 😏

Today’s issue is sponsored by Frec, an investment platform that offers direct indexing, which can help you earn more by unlocking tax savings.

1/ Amazon FBA Pet Brand

📍 Location: Remote
💰 Asking Price: $1,182,000
💼 EBITDA: $407,595
📊 Revenue: $1,335,231
📅 Established: 2015

💭 My 2 Cents: This is an Amazon FBA pet brand focusing on products like shampoo and litter deodorant. All of their sales are through two sources: Amazon (90%) and Chewy (10%). This has led to impressive 30% net profit margins and 70% YoY revenue growth. What’s interesting is it’s currently run by owners who acquired the business in 2021, so it’s already proven transferability. I like that they don’t have many SKUs and focus on consumable products (recurring revenue!). And, the low SKU count and absence of new product launches since 2021 leave a strong runway for growth by launching the same products in optimal sizes, listing additional products, scaling PPC, adding affiliates and influencers, and scaling other channels of revenue. To me, this is the main growth opportunity, although you could also probably spin up a DTC site and capture some search traffic. Otherwise, some key things to dig into include the Amazon advertising metrics ACOS and TACOS, repurchase rates, and access to subscription reporting to track retention (especially important given that it’s a consumable).

2/ Disc Golf eCommerce Business

📍 Location: Remote
💰 Asking Price: $1,700,000
💼 EBITDA: $377,121
📊 Revenue: $2,966,316
📅 Established: 2020

💭 My 2 Cents: This is a disc golf business, and although it’s a bit smaller than my typical shares, I just couldn’t resist. Disc golf is one of the fastest-growing outdoor sports, and it’s not going to stop anytime soon. 254 million people can play the sport within 6 miles of where they live in the US alone. The result is expected growth from $219M in 2022 to $525.6M by 2028 (15.67% growth YoY). Don’t believe it? Neither did I until I did some research on SEMRush, and let me tell you guys, the search volume for disc golf-related keywords is absolutely phenomenal. This particular business has over 1,500 SKUs from more than 25 brands, exclusive Amazon selling rights for several manufacturers, and very strong SEO on Google. The result is that it’s among the top 5 disc golf retailers on Amazon and DTC (Shopify) platforms, enjoys an amazing 62% YoY growth, and has a solid 29% repeat rate on Amazon. With Amazon, there’s always the risk of a single product getting delisted for whatever reason, so I was happy to learn that they’re not reliant on any single product to drive the majority of sales. I also like that the owner is willing to stay on for up to 12 months post-acquisition to assist in a transition. Overall, this could be a really nice deal. It’s super well-positioned to ride the disc golf wave.

3/ Landscaping Business

📍 Location: Horry County, SC
💰 Asking Price: $5,900,000
💼 EBITDA: $1,400,000
📊 Revenue: $3,800,000
📅 Established: 2007

💭 My 2 Cents: This landscaping business has been around for more than 15 years. It has really strong net margins of over 35%, a team of 27 long-term employees, and recurring revenue backed by contracts, which makes sense because the resort properties, HOAs, and commercial properties that make up the clientele all need regular maintenance to keep up appearances. It all adds up to a great boring business. However, I do want to know how many of these clients renew their contracts every year, what the average contract size is, if any of the clients make up more than 10% of revenue, and if they have a sales team in place.

In Partnership With Frec

Have gains but don’t want to sell because, well… taxes?

I recently discovered Frec, an investment platform that offers direct indexing. 

Haven’t heard of direct indexing? 

That’s because it’s a tax-optimized investment strategy that’s traditionally had high minimums and mostly available through wealth advisors.

The good news: Frec has built tech that removes the middleman and offers it directly to investors at a low 0.10% fee. 

It’s just as easy as investing in an ETF, but you own the underlying stock of an index which unlocks powerful tax loss harvesting on the individual stock level–so you get the performance of the index while generating tax losses. 

As a result, you typically capture 38% of your portfolio back in tax deductions over five years that carry forward indefinitely. 

I started using it and am kicking myself for not doing so earlier. 

Check Out Frec Today 👉

4/ Recycling and Waste Pickup Company

📍 Location: Pennsylvania
💰 Asking Price: $7,999,999
💼 EBITDA: $1,500,000
📊 Revenue: $5,600,000
📅 Established: N/A

💭 My 2 Cents: A lot of you are looking for recession-proof businesses, so I present to you this Pennsylvania-based recycling and waste pickup company. Recycling companies are very recession-proof and come with a lot of recurring revenue because they offer an essential service. You see that in this company’s main customers being townships and municipalities (which are both typically very sticky). What’s great is there’s management in place, so even though the asking price is on the higher end, there are likely fewer add-backs associated with owner compensation and the hiring of replacements. Things look pretty good here, but you should still dig into the average size and duration of contracts, the client count and concentration, and the churn rate.

5/ Toxicology Lab

📍 Location: Bristol County, MA
💰 Asking Price: $15,500,000
💼 EBITDA: $2,616,000
📊 Revenue: $13,789,000
📅 Established: N/A

💭 My 2 Cents: This is a 50-year-old toxicology lab testing business processing urine, blood, and oral samples for drug treatment centers across the US. In most cases, they have multi-year customer agreements, which is a major plus. I like that the (unfortunate) high demand from the opioid epidemic isn’t going away and with all the licensing, the barrier to entry to start a competitor is high. It is also good that the property is owned by the sellers and they’re willing to extend a lease to the buyer (so you could probably get something long-term in place at favorable terms). I do have some questions, though. How much more volume can they accommodate? Is there room to expand in the same building? What’s the team like? What’s the owner’s role? And finally, how long have the clients been with them for?

6/ SPECIAL BONUS: Everyday Carry (EDC) e-Commerce Brand

📍 Location: Remote
💰 Asking Price: $2,000,000 - $3,000,000
💼 EBITDA: $611,779
📊 Revenue: $3,167,944
📅 Established: 2015

💭 My 2 Cents: I’m excited to have gotten you guys access to an opportunity that you won’t find on any marketplaces. This is an 8-year-old e-Commerce brand that targets the everyday carry (EDC) community. If you’ve read Gear Patrol, you know this audience is tight-knit. No wonder players in the space like Ridge Wallets, Mini.Katana, and KeySmart have absolutely blown up. This brand sells high-quality carry gear handcrafted by talented artisans such as knives, multitools, pens, flashlights, and more. They boast an LTV of $451 and net profit margins close to 20%, which is incredible (and rare) for e-Commerce and speaks to how dedicated this niche audience is. What I like is they already have an established system to drive sales through weekly new gear drops that any future buyer can continue, and they have a full team in place (including a General Manager). Plus, the seller is flexible on deal structure.

🐦 The Best of SMB Twitter (X)

Exactly how to launch a 7-8 figure home service brand, with detailed tactics (link)

How to approach structuring seller transition services (link)

Some invaluable advice from someone who grew a $10M business to $180M (link)

What you need to know about the SBA’s procedural notice effective Dec 6 (link)

A breakdown of what TikTok influencers cost (link)

$264k profit in year 1 with a CPA firm acquisition (link)

3 strategies to fight back against the silent productivity killer you’ve never heard of: attention residue (link)

How a service business can add $1M in ARR in 12 months (link)

Limitation on seller’s liability: survival, caps, & baskets (link)

Real estate terms you absolutely need to know (link)

🤝 Vendors and Lenders

I frequently get asked by you guys for recommendations on SBA lenders, quality of earnings providers, and legal counsel.

I’ve decided to streamline this to help the SMB Deal Hunter community close more deals, faster.

Fill out this form and I will personally make introductions to folks I trust.

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” to join the waitlist.

2. Join the SMB Deal Hunters Mastermind, a paid 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.

4. Want me to review a deal you’re working on? Sign up for Roast My Deal.

5. Want to promote your business to my community of 20,000+ entrepreneurs and investors? Advertise in SMB Deal Hunter

⏪ Catch Up On Recent SMB Deal Hunter Issues

How was today's newsletter?

Login or Subscribe to participate in polls.

📨 Share SMB Deal Hunter

If you refer 1 friend or colleague to my newsletter, I’ll also send you The Comprehensive Seller Interview Question Bank I’ve put together for free ($99 value). In it, I’ve compiled 50+ questions business buyers should ask during seller interview calls when evaluating a business.

Disclaimer

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.