❇️ New Deals - 12 March 2024

A medical products distributor, blue-collar workwear brand, and 3 other interesting finds.

Author

Helen Guo
March 12, 2024

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.

But before we continue, I wanted to share an interview with successful acquisition entrepreneur Nate Packer, who bought a kitchen hood cleaning business for $928K and sold the business for $2.07M in under 2 years. In the interview, we discuss:

  • The exact strategies Nate used to grow the business from $300K to $515K in EBITDA in under 2 years

  • Nate’s background (hint: it was not in kitchen hood cleaning)

  • How Nate incentivized one of the owners to stay involved in the business

  • How Nate found his eventual acquirer

And more!

1/ Medical Products Distributor

📍 Location: Pasco County, Florida
💰 Asking Price: $1,295,000
💼 EBITDA: $515,908
📊 Revenue: $1,225,235
📅 Established: 2009

💭 My 2 Cents: This business sells high-turnover medical supplies, such as patient monitoring devices and hospital bed accessories to major hospitals and health care facilities. I like that these products constantly need to be reordered, which means a lot of repeat revenue. I also like that the company has grown YoY for the past 15 years from nothing but organic sources like referrals and repeat revenue. Considering the growth has been fully organic, there is definitely an opportunity to scale with a sales team, possibly even expanding geographically into other Florida metro areas. However, before diving in, I would want to know how long they have had their client relationships, what retention has been like, and if there are any client concentration issues. If that all comes back clean, then with a retiring owner who is available to aid the transition, pre-qualification for an SBA loan with 10% down, and an attractive price, this looks like quite the deal.

2/ Blue-Collar Workwear E-Commerce Brand

📍 Location: New Jersey
💰 Asking Price: $4,600,000
💼 EBITDA: $1,524,777
📊 Revenue: $4,060,591
📅 Established: 2016

💭 My 2 Cents: This e-commerce business sells blue-collar workwear directly to consumers, which is a quite lucrative niche considering the exceptional 38% net profit margins. It’s not every day that you find a very profitable e-commerce brand like this because of how expensive ad costs are, and I know brands like Indestructible Shoes have done very well targeting this exact audience. This company has managed to crack Tiktok marketing through building relationships with hundreds of Tiktok affiliates as well as running Facebook ads profitably. I also like that the owners are retiring, which is super rare for an e-Commerce brand (usually run by younger founders). I do want to dig into their customer lifetime value (LTV) to understand if there’s much repeat to this business, but given that it has carved out its own workwear niche, there are some really nice opportunities to grow by offering new products to its established audience.

3/ Liquor Store

📍 Location: Anne Arundel County, Maryland
💰 Asking Price: $1,750,000
💼 EBITDA: $570,000
📊 Revenue: $3,000,000
📅 Established: 2003

💭 My 2 Cents: Liquor stores are some of the most recession-resistant and easy-to-operate businesses you can find. There is little risk of a significant decline in profits, as alcohol is considered an inelastic product. In other words, regardless of the price of alcohol or the state of the economy, people are going to buy booze. I like that there are significant barriers to entry for new competitors, as the liquor business is heavily regulated and the number of licenses restricted. Likewise, I like that there’s very little threat from e-commerce competitors compared to other inventory-based industries because of the regulations and the fiendishly expensive costs of shipping heavy bottles of alcohol. This particular liquor store is in an excellent location and has been a community staple for 20 years, so it most likely has a lot of repeat customers. Liquor stores of this size really don’t come on the market very often, with this one only available because the owners are dissolving their partnership, so this is a great opportunity to pick up a classic boring business.

4/ Tree Service

📍 Location: Texas
💰 Asking Price: $13,500,000
💼 EBITDA: $2,790,336
📊 Revenue: $4,752,766
📅 Established: 1991

💭 My 2 Cents: I really like tree service businesses. What’s there not to like about an essential service with tons of repeat revenue (as trees constantly need to be trimmed)? On top of that, demand is growing with urbanization and the increase in residential and commercial properties. This particular tree service has been around for over 30 years, so it almost certainly has a solid base of existing customers. I would want to understand what contracts come with the business and its revenue breakdown between residential, commercial, and municipal clients, but overall, it really wouldn’t be too hard to hire the less technical labor needed to scale this. The result is a good platform deal for those who want to roll up tree services in the area before the PE shops do.

5/ Environmental And Hazard Remediation Company

📍 Location: Northeast, United States
💰 Asking Price: N/A
💼 EBITDA: $1,822,700
📊 Revenue: $3,613,445
📅 Established: N/A

💭 My 2 Cents: This company is in a very specialized niche of cleaning, providing radiological decontamination and hazardous material cleanup. Its services are essential to sectors from nuclear energy to medical radiology. But what I really like is that environmental and hazard remediation services are often required by law, resulting in steady demand. And with regulations becoming stricter and public awareness of environmental issues increasing, demand isn’t tailing off anytime soon. I like that the company has contracts with both government and private clients across the globe. I also like that this business has high barriers to entry, as it requires technical expertise and specialized equipment. This means that they can command premium pricing and build long-term client relationships. No wonder they operate on ~50% EBITDA margins and have witnessed strong YoY growth, with adjusted EBITDA increasing at a 103.3% CAGR from 2020 to 2023. Overall, with a retiring owner and a Vice President willing and able to fill the vacancy, this looks like an awesome turnkey opportunity.

🐦 The Best of SMB Twitter (X)

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5 boring franchises that print cash (link)

10 boring service businesses (link)

Crash course on scaling businesses (link)

3 subtle mental traps that could cost you in your next deal (link)

How to get a seller comfortable with a promissory note (link)

40 facts about franchising (link)

Taking advantage of the Work Opportunity Tax Credit (link)

10 do’s and don’ts of working with Gen Z (link)

🤝 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.

4. Want to promote your business to my community of 50,000+ entrepreneurs and investors? Advertise in SMB Deal Hunter

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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.