New Deals - 17 Oct 2023

By SMB Deal Hunter

Author

Helen Guo
October 17, 2023

Hello SMB Deal Hunters!

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

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

❇️ Special Opportunity: Want to invest passively into a cash-flowing SMB deal I’m working on right now? Reply “Invest with Helen” and I’ll share more.

1/ Window Cleaning Service

📍 Location: King County, WA
💰 Asking Price: $1,150,000
💼 EBITDA: $363,681
📊 Revenue: $1,370,363
📅 Established: 1986

💭 My 2 Cents: This business is a window cleaning service in operation since 1986. Originally focused on residential clients, it has since shifted strategies and now pulls in 80% of its revenue from commercial clients. I think this is an extremely smart move, as commercial clients have to schedule more regular cleanings in order to keep a certain appearance. Put differently, commercial revenue equals recurring revenue, which is always a plus. I would want to know how many clients they have and how long they’ve been around for, as well as what kind of contracts they are on. The longer the contracts are, the better. Ultimately, with strong margins, a very attractive multiple, and a large opportunity for B2B lead generation (they haven’t actively marketed in the last 5 years), it might not be a bad day to get into the window cleaning business.

2/ Women’s Apparel And Cosmetics Brand

📍 Location: Tampa, FL (Relocatable)
💰 Asking Price: $14,000,000
💼 EBITDA: $3,906,960
📊 Revenue: $23,038,097
📅 Established: 2018

💭 My 2 Cents: Did you know that 67% of women now wear clothes size 14 or larger? This business takes advantage of this reality by selling a subscription box with women’s apparel and cosmetics to the plus-sized population. The result has been almost $4M in cash flow a year and impressive 17% net profit margins. Beyond the niche, I am particularly fascinated by their supply chain. They drop ship directly from the manufacturer, meaning they maintain no inventory. This is amazing because the money eCommerce businesses usually have sunk in inventory creates a cash-conversion problem, which then limits cash flow. Being a subscription business, I’d want to know how many subscribers they have and what the churn and LTV of those subscribers are. But, if retention is strong, then this business is selling at a very reasonable multiple with some room to grow by upselling additional products to the existing customer base.

3/ Salon And Spa Business

📍 Location: Washington, DC
💰 Asking Price: $2,450,000
💼 EBITDA: $1,200,000
📊 Revenue: $3,000,000
📅 Established: 2012

💭 My 2 Cents: Have you ever wondered why PE firms rolled up European Wax Centers? Well, a big reason why is because the service naturally leads to repeat customers. Most people aren’t going to get a wax just once. Luckily for us, salon and spa businesses, like this one, benefit from the same effect. The fact that it’s been around for 10 years, and thus likely has loyal customers, doesn’t hurt the repeat rate either. I also like the margins, the multiple (only 2x EBITDA), and that there are 40 employees to run things day-to-day. Unfortunately, the owner recently passed away, so the family is looking to sell and is willing to offer sellers financing and rolling equity (another plus). Did someone say spa day?

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4/ Commercial Landscape And Lawn Service Business

📍 Location: Tennessee
💰 Asking Price: $1,415,000
💼 EBITDA: $543,481
📊 Revenue: $2,437,410
📅 Established: 1999

💭 My 2 Cents: I’ve been bullish on the lawn service space for a while now. It’s hard not to with the great recurring revenue, opportunity for both B2B and B2C clients, solid margins, and listings at reasonable multiples (like this business). I like that they have a diversified clientele with 260+ accounts in industries from medical facilities to shopping centers, hammering home the point that anybody and everybody could use some lawn care. Many of these clients are on year-round contracts, which is great. However, I am curious how long these clients have been around for. I am also curious as to what the owner’s role is and how long the crew has been employed. If you’re somebody with strong skills in digital marketing, I think this is an especially good opportunity for you, as the business has relied primarily on word-of-mouth for new leads. With some savvy advertising, this business can very readily grow and scale.

5/ Profitable Pallet Business

📍 Location: Broward County, Florida
💰 Asking Price: $1,399,000
💼 EBITDA: $730,686
📊 Revenue: $1,489,765
📅 Established: 2008

💭 My 2 Cents: I wrote about a pallet deal back in August that ended up being one of the most popular deals I’ve ever shared. Like that business, this business manufactures, fixes, and sells pallets. The location couldn’t be better (Florida is the second-largest foreign trade zone network in the US) and the margins are exceptional (almost 50% net). It is also selling at a very low sub 2x multiple because the seller is moving out of the country and comes with repeat customers. I’d want to check out if there are contracts in place, and if so, what those contracts are, as well as if there are any customer concentration issues. Finally, unless you’re a pallet expert and able to bring in your own team, I’d want to know what the team looks like. This thing is going to go fast at this multiple, so get moving ASAP.

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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” and I’ll share more.

2. Join the SMB Deal Hunters Mastermind, a 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.

3. Interested in selling your business? Get an offer from me.

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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.

  • 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.

  • 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.

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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.