New Deals: A cleaning business, commercial demolition business, and 3 other finds

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NEW DEALS

1/ Cleaning Business

📍 Location: Saint Lucie County, Florida
💰 Asking Price: $4,200,000
💼 EBITDA: $858,163
📊 Revenue: $4,292,306
📅 Established: 1983

💭 My 2 Cents: Readers know I love cleaning services because they remain relevant during economic downturns, have the potential to expand either through added services or geographically, and are readily scalable. This residential and commercial cleaning company has built a solid reputation over 40 years in business and has an impressive 95 employees, indicating a well-run operation. I like that they have transparent and clean books (not always the case with this type of business) as this should make due diligence and securing financing easier. I also like that the sale includes $285K of FF&E and $800K of real estate, with the property ownership adding some more stability and value to the business. While their numbers are good, I’d want to check their financials for the past 3 years to ensure their revenues and margins have been consistently stable and look into a breakdown of their revenues by type of service. I’d also want to know whether any types of service are responsible for an outsize portion of earnings, the revenue split between residential and commercial clients, if there is any seasonality to their business, and how much of their revenue is contractually recurring. Finally, because this industry is competitive, I’d want to get a real feel for how they attract new clients and distinguish themselves from their competitors. Overall, this company looks to be a steady cash producer, with the added bonus of the seller offering to finance up to 10% of the asking price.

2/ Commercial Demolition Business

📍 Location: Pima County, Arizona
💰 Asking Price: $2,800,000
💼 EBITDA: $680,000
📊 Revenue: $2,400,000
📅 Established: 2005

💭 My 2 Cents: I like that this commercial demolition company can do everything from concrete and brick wall cutting to complete structural tear-downs, as this helps ensure a steady demand for their services. I also like that because demolition services are essential to construction and renovation work, this industry should grow as urban redevelopment and infrastructure projects increase. The demolition business is capital intensive, so the inclusion of $650K of vehicles and equipment in the sale (I’d need to check on their condition) should aid the transition and represent a barrier to entry to potential competitors. I’d want to dig into what has led to their growth in 2022 and 2023 and if this is expected to continue, how their revenue is distributed across their different services, what the status of their current $650K in WIP is, and what their future backlog looks like. I’d also want to better understand how new business is won, if they are involved in competitive bidding, how their staff is organized, if there are challenges in recruiting and retaining the needed skilled labor, and what would be involved in obtaining the required CR-57 and CR-5 ROC licenses post-transition.

3/ Printing & Promotional Products Company

📍 Location: Essex County, New Jersey
💰 Asking Price: $4,600,000
💼 EBITDA: $1,309,200
📊 Revenue: $4,600,000
📅 Established: 2001

💭 My 2 Cents: This company has built a solid business offering custom digital and offset printing services. At the same time, I like how they have also expanded into providing promotional products, giving them multiple revenue streams. They also have an active client base, skilled staff, and a record of steady growth and profitability. However, what is potentially most attractive here is the $2M of FF&E included in the sale, as it’s always a huge benefit to obtain hard assets in an acquisition. The printing and promotional industry continues to evolve with technological advancements, so if their high FF&E value stems from recent upgrades and state-of-the-art equipment purchases, this company might be well positioned to differentiate itself in the market. I’d need a detailed breakdown of their FF&E, including when it was purchased, how it is used, what capabilities it provides, and how much is related to printing versus promotional products. More broadly, I’d want to know the split in revenues and earnings between their printing and promotional lines, if they manufacture their own promotional products, if there are any client concentration issues, if there is much repeat business or recurring revenue, and how much competition they face on either side of their business. While this is already an attractive deal, I also like that the seller is willing to offer financing and is open to considering any reasonable offers, so a potential buyer might be able to negotiate a better purchase price.

4/ Wholesale Bakery

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $2,100,000
📊 Revenue: $28,000,000
📅 Established: N/A

💭 My 2 Cents: This baked goods distributor has a network of bakeries spread over 5 states and serves over 2000 customers ranging from restaurants and supermarkets to schools and hospitals. I really like their very high (91%) customer retention rate, equally high (94%) repeat business rate, and very large customer base, as this means there is little risk of any one client having a noticeable impact on earnings. I also like that baked goods are recession-proof products, and reflecting this, the US bread market is projected to expand at a 16% CAGR, reaching $12 billion by 2029. Given this company’s consistently demonstrated growth through acquisitions, I would assume there’s competent management in place. Still, I’d want to learn more about the details of their previous acquisitions and how they were incorporated into the business. I’d also want to look into how they did from 2018-2021 and what caused their performance and margins to drop in 2021. Was this Covid related? Importantly, their 2024 revenue and cash flow numbers are projections, and I’d need to know what these are based on. I’d likewise want to get a handle on what FF&E is included in the transition, how large their staff is and how it is organized, what their relationships with suppliers are like, what further acquisitions might be pending, who their main competitors are, and how they are so successful at gaining and keeping their customers. Ultimately, this looks like an excellent opportunity if you are seeking to get into or expand in this industry in a big way.

5/ Commercial Weatherproofing Company

📍 Location: Utah
💰 Asking Price: $3,050,000
💼 EBITDA: $850,000
📊 Revenue: $3,500,000
📅 Established: 1999

💭 My 2 Cents: This company has carved out a niche specializing in weatherproofing commercial structures. I love the space they’re in, as weatherproofing is essential for maintaining the integrity of commercial buildings, meaning their services will always be in demand. They also are not dependent on new construction as existing structures can need renovation or repair, while their specialized skill gives them a competitive edge against general contractors. I like that they have generated substantial sales and earnings even though they’ve relied mostly on word-of-mouth and bid solicitation, and that the sale includes $650K of FF&E, including specialized equipment and vehicles. I’d want to check on their recent financials to confirm their steady year-to-year earnings and on the condition of the FF&E to make sure it's ready to go post-transition. Weatherproofing is subject to state and local regulation, so I’d need to get a full picture of their certification and licensing requirements and if there are any pending legal issues or liabilities associated with the business. I’d also want to understand the roles and responsibilities of their staff, who their key clients are, who generally holds the client relationships and how these would be maintained post-transition, who their main competitors are, and on what basis they compete for new business. Given their limited marketing to date, I think there’s still room to grow here if a new owner can adopt an updated marketing and sales campaign.