❇️ New Deals - 18 Jan 2024

A dog clothing e-Commerce brand, agricultural service business, and 3 other interesting finds.

Author

Helen Guo
January 18, 2024

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Hello SMB Deal Hunters!

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

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

1/ Dog Clothing e-Commerce Brand

📍 Location: Remote
💰 Asking Price: $2,900,000
💼 EBITDA: $513,757
📊 Revenue: $1,229,876
📅 Established: 2016

💭 My 2 Cents: Bloomberg believes the pet industry could be worth $200B in 2030, and 56% of millennials already own a dog. And to us millennials, dogs are the new babies. Which is why dog fashion brands like this one are able to do so well. After all, a baby has to wear clothes! I like that this brand has an owned audience of 58,000 email subs and 10,000 SMS subs. This is important because even as advertising costs go up, you can launch new products to folks on your list at virtually no cost. I’m also impressed that they have a strong influencer marketing program that is actually driving sales because, despite what you may think, most brands actually fail at successfully making this a performance-driven channel. The business is also especially strong during Black Friday and the holidays, which tells me it's a very giftable item. I’d want to dig into the key metrics like AOV, CAC, LTV, and repurchase rate, as well as what the owner’s current role looks like, but overall, if you’re one of the many people who have told me they want to buy a pet-related brand, this is a deal to really consider.

2/ Agricultural Service Business

📍 Location: Colorado
💰 Asking Price: $2,500,000
💼 EBITDA: $509,715
📊 Revenue: $1,086,270
📅 Established: N/A

💭 My 2 Cents: This business provides an essential service for the agricultural industry—aerial application of crop protection products. Basically, they use a plane to spray mass amounts of fertilizer onto farms. You simply can’t grow crops at scale without fertilizer, and while the business does have some seasonality, I think the essential need for its services outweighs the seasonality, backed by the fact they have a long-standing customer base and lots of repeat revenue. I’d need to know if the clients are under contract, what the average contract size is, what the average yearly revenue per customer is, what retention looks like, and if there are any customer concentration issues. If all of that comes back clean, then this is a great opportunity with room to grow from either expanding the geographic area served or hiring a salesperson (which they don't have!).

3/ Tactical Gear Subscription Box Company

📍 Location: Remote
💰 Asking Price: $7,200,000
💼 EBITDA: $1,200,000
📊 Revenue: $7,000,000
📅 Established: 2018

💭 My 2 Cents: This company offers a subscription service that delivers a monthly box of tactical gear (i.e. survival tools) to its subscribers of outdoor enthusiasts, survivalists, medical professionals, and preppers. I know a couple of these types of businesses, and they usually have very loyal die-hard customers. This is great for a subscription company because you want people to stick around for as long as possible. One thing that immediately jumped out at me is this business’s fantastic cash conversion cycle. They collect payments before incurring expenses for supplies or shipping, so you’re never going to have to deal with all your money being tied up in inventory. The other thing that jumped out at me was the average subscriber duration of 5.5 months. This seems a bit low to me, but I think if you prioritize prepaid plans of 6 or 12 months like other subscription box players, this can really quickly be improved. Overall it seems like a cool opportunity, but first I’d want to understand their acquisition costs, payback period, AOV, LTV, and gross margins on the product.

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4/ Marketing Agency For Self-Storage Companies

📍 Location: Remote
💰 Asking Price: $14,600,000
💼 EBITDA: $863,040
📊 Revenue: $3,634,146
📅 Established: 2010

💭 My 2 Cents: I love coming across marketing agencies that serve industries outside of the over-saturated regulars like eCommerce and SaaS, and this one that serves self-storage companies fits the bill. Self-storage companies are interesting because they often own multiple locations and are constantly expanding, which means contracts can grow over time. They also always need new leads because the self-storage industry often experiences a high rate of customer turnover because people tend to use storage units for transitional periods, like moving or downsizing. As with all marketing agencies, I'm curious to see their average monthly retainer and average contract length (I’m going to guess these customers are pretty sticky). The asking price is a ridiculous 16.9x EBITDA, which will probably scare off rival bids. So if you’re interested, it’s probably worth reaching out and negotiating (you never know!).

5/ Marketing Agency with Government and Healthcare Clients

📍 Location: South Florida
💰 Asking Price: N/A
💼 EBITDA: $688,000
📊 Revenue: $1,900,000
📅 Established: 1993

💭 My 2 Cents: This is another marketing agency, and I picked this one because of their client profile. They have 40 accounts, half of which are sticky government accounts (the best!), and 40% of which are in the rapidly growing healthcare sector. I also like that 90% of their business is recurring and they focus on non-performance-based marketing, which is great because churn is often lower when clients aren’t measuring you on results that can be affected by rising ad costs. Growth has been strong over the years with a revenue CAGR of 23% from 2020 to 2023, and EBITDA margins are a very solid 36%. Things look pretty good here, but I’d want to confirm retention is strong, understand the government contract terms, and check and make sure there aren’t any client concentration issues.

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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.