❇️ New Deals - 19 Dec 2023

A B2B massage company, motorcycle parts eCommerce brand, and 3 other interesting finds.

Author

Helen Guo
December 19, 2023

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Hello SMB Deal Hunters!

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

Looks like the managed IT service provider (with the 5-7 year contracts and 99% client retention rate) I featured was a big hit.

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

Today’s issue is sponsored by CalTier, the fund that's making commercial real estate easy for everyone.

1/ B2B Massage Service Company

📍 Location: N/A
💰 Asking Price: $4,750,000
💼 EBITDA: $1,001,077
📊 Revenue: $3,076,736
📅 Established: N/A

💭 My 2 Cents: This is a B2B massage therapy company providing services in well-known companies (at the clients locations). Let me tell you guys, this is an absolutely great perk for offices, and it will be especially useful in retaining employees coming back to in-person work. I like that they have contracts signed with all their clients and have director and manager-level staff in place. However, I do want to know what those contracts and client retention look like. Otherwise, this is a brilliant business with minimal overhead (since they operate out of client locations) and very strong 30% profit margins. Bonus: This business is SBA lender pre-approved.

2/ Motorcycle Parts eCommerce Brand

📍 Location: Texas (Remote)
💰 Asking Price: $2,400,000
💼 EBITDA: $567,603
📊 Revenue: $2,132,118
📅 Established: 2015

💭 My 2 Cents: This is an eCommerce brand specializing in motorcycle parts and gear. What jumped out to me is they have a very unique and valuable asset: a YouTube channel with over 1M subscribers. This is a fantastic organic top-of-funnel channel that almost no eCommerce brands have, which probably explains their exceptional profit margins for an eCommerce brand (over 25%). That and the fact that most of their products are dropshipped, which keeps their money out of the inventory black hole. I like that they have a team in place, and I also like that the owner would like to stay involved part-time, which I would encourage by asking them to roll equity. My questions mainly concern the YouTube channel, as keeping this organic sales machine humming is absolutely key. How does content creation work for the YouTube channel? Are there multiple faces representing the brand? If the owner leaves, can the show go on? Also, how does this audience translate into key retention metrics like LTV and repurchase rates? How is their paid ads performance? What is their CAC, and what channels do they spend on? You’re going to want to answer these questions before fully diving in.

3/ Residential HVAC Company

📍 Location: Alaska
💰 Asking Price: $5,000,000
💼 EBITDA: $1,232,247
📊 Revenue: $5,077,598
📅 Established: N/A

💭 My 2 Cents: This is a residential HVAC business based in Alaska, but don’t worry, you don’t have to move to Alaska. The business is run completely absentee. None of the revenue is from new construction, which I like to avoid because it means the business is dependent on the wider economy). Instead, all of the revenue is from repairs and replacements, which is nice and recurring. Heck, there are 1000(!) maintenance agreements in place. However, I’d want to know the renewal rate on these agreements, how long the average client stays on for, and what the average contract size is. I’d also want to understand the field employees a bit better, as they are the lifeblood of the company. Specifically, I’d want to know how long they’ve been with the company for. Having to constantly hire new employees would quickly kill that “absentee” label.

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4/ Car Enthusiast After-Market Auto Parts eCommerce Brand

📍 Location: Remote
💰 Asking Price: $1,000,000
💼 EBITDA: $319,910
📊 Revenue: $1,654,217
📅 Established: 2017

💭 My 2 Cents: This is a slightly smaller eCommerce business focused on after-market auto parts for car enthusiasts. More specifically, performance enhancement packages for Mustangs, Nissan race cars, and the like. As you could probably guess, the car enthusiast market is very devoted, which is never a bad thing. I like that 90% of their products are dropshipped without coming off as one of those sketchy dropship brands. You couldn’t do that and land their solid 30% repeat order rate. They also have a very strong AOV of $600 and strong profit margins for an eCommerce brand. I like that they are attacking marketing both organically with their YouTube channel (over 1M views, so this is something worth focusing on growing) and with paid advertising on Google. It all looks pretty good, but I do want to better understand the product pipeline so that I could scale up with other specific sub niches, like they did with the Nissan GT-R R35.

5/ Medical Billing Company

📍 Location: Mid-Atlantic, USA
💰 Asking Price: N/A
💼 EBITDA: $860,000
📊 Revenue: $1,655,000
📅 Established: N/A

💭 My 2 Cents: If you’ve been following this newsletter for a while, you’ll probably remember me sharing that medical billing is one of my favorite niches. What these businesses do is provide services that facilitate the billing process between healthcare providers and insurance companies. This process typically involves a lot of paperwork and meticulous data management, which is why many healthcare providers choose to outsource this task to specialized businesses like the one you are currently reading about. The result is an incredibly high-margin business, as they take a percentage of collected revenue and can offshore a lot of the billing and coding work. This particular company boasts insane 40% EBITDA margins, strong growth (25% YoY), and the always awesome auto-renewing contracts. I do want to know, however, if they focus on a specific niche of medical clientele (i.e. dentists, chiropractors) and what percentage of clients renew.

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See you Thursday!

P.S. Whenever you’re ready, here are a few ways for us to work together:

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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.

*AN OFFERING STATEMENT REGARDING THIS OFFERING HAS BEEN FILED WITH THE SEC. THE SEC HAS QUALIFIED THAT OFFERING STATEMENT, WHICH ONLY MEANS THAT THE COMPANY MAY MAKE SALES OF THE SECURITIES DESCRIBED BY THE OFFERING STATEMENT. IT DOES NOT MEAN THAT THE SEC HAS APPROVED, PASSED UPON THE MERITS OR PASSED UPON THE ACCURACY OR COMPLETENESS OF THE INFORMATION IN THE OFFERING STATEMENT. YOU MAY OBTAIN A COPY OF THE OFFERING CIRCULAR THAT IS PART OF THAT OFFERING STATEMENT FROM: Offering Circular​