❇️ New Deals - 19 March 2024

An IT managed service, security guard company, and 3 other interesting finds.

Author

Helen Guo
March 19, 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.

📣 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.

But before we continue, I wanted to share an interview with acquisition entrepreneur Mitchell Sorkin, who started buying ATM routes in Oct ‘21 and now owns 800+ ATMs.

In the interview, we discuss:

  • Why Mitchell left the VC-backed startup world to buy cash-flowing businesses

  • How to outsource the majority of an ATM operation 

  • Why cash isn’t going to die anytime soon

  • What questions to ask when evaluating ATM deals

  • Where he finds the best ATM businesses for sale (hint, it’s not on Bizbuysell)

  • A little-known non-ATM business that he’s excited about

And more!

1/ IT Managed Service

📍 Location: Pennsylvania
💰 Asking Price: $3,220,000
💼 EBITDA: $1,200,000
📊 Revenue: $2,500,000
📅 Established: 2006

💭 My 2 Cents: This is an IT managed service business, an industry I like for its recurring revenue, high margins, and steady demand as many companies do not have the in-house expertise to handle their own IT. I particularly like that this business has a diversified client base from healthcare businesses to professional services, making it much less susceptible to fluctuations affecting specific industries. I also like that there’s probably no significant client concentration given that their customers are all SMBs (but I would want to confirm this). I would also want to know how long on average a client sticks around for, what their contracts are like, and what percent of the business is from recurring contracts vs one-time projects. While there is a team of 7 in place, the owner is retiring so I would need to understand their role and how this might impact a transition. Otherwise, this is a great opportunity given the established and diversified clientele.

2/ Security Guard Company

📍 Location: Palm Beach County, Florida
💰 Asking Price: $1,500,000
💼 EBITDA: $651,395
📊 Revenue: $1,915,872
📅 Established: 2015

💭 My 2 Cents: Security companies are great B2B service businesses because of their essential role in deterrence. Even with technology like surveillance cameras and alarm systems, you just can’t replicate the adaptability and versatility of a human security guard, and especially not in an unpredictable or nuanced situation. This particular security company provides guards and patrol services to a diverse clientele in Florida and neighboring states, including residential HOA communities, apartment complexes, retail sites, and medical plazas. I like its strong margins and that most of its work is from annual contracts, which is great for recurring revenue. I also like that there’s an established team in place with 10 admin personnel, including a manager who oversees operations, and some 50 state-licensed professional security officers. This deal is going to go really fast at this multiple, so I would jump on this while you still can. And if you do get it, there is still a lot of room for growth as property managers often use the same security guard company for all of their properties.

3/ Moving And Storage Business

📍 Location: Waynesboro, Virginia
💰 Asking Price: $3,000,000
💼 EBITDA: $687,279
📊 Revenue: $3,033,933
📅 Established: 1979

💭 My 2 Cents: Moving and storage is a great industry. Demand for these businesses tends to be stable and somewhat resistant to economic downturns because if people and businesses need to move or require storage, the broader economic conditions aren’t going to stop them. People also often need storage solutions for extended periods, which means a nice amount of recurring revenue. I like that this company has both residential and commercial clients, as these tend to bring in a lot more repeat revenue. And they aren’t serving run-of-the-mill commercial clients, but big names like the University of Virginia, Hilton Hotels, Marriott Hotels, and the US military, which is a huge vote of confidence. I’m curious as to how much their commercial clients spend with them each year as well as how often they work with them. I also want to know the breakdown of their sales between moving and storage. Other than that, with a 40-year track record, service in multiple states, and a retiring owner able to assist in the transition, this looks like a pretty good deal.

4/ Roofing Business

📍 Location: Salt Lake County, Utah
💰 Asking Price: $1,649,000
💼 EBITDA: $607,267
📊 Revenue: $3,631,358
📅 Established: 40+ years ago

💭 My 2 Cents: You guys know I like roofing businesses (I’m even investing in one right now!). This particular roofer is in Utah, which experiences a range of weather conditions, including heavy snow in the winter and hot summers, which can lead to a consistent demand for roofing services. Utah has also seen significant population growth and construction development, and a lot of new houses mean a lot of demand for roofing to come. I like that it’s been around for over 40 years as this is a good sign for its reputation, though I would want to check social media reviews. I also like that roofing jobs are mostly paid for by insurance, as this means the payment comes quickly and reliably. There are multiple opportunities for growth here. You can set up preferred vendor relationships with insurance companies if they haven’t already done so. You can really start pushing digital marketing as this business has mostly relied on referrals from past customers and TV ads. In any case, roofing is a great essential boring business, and it looks even better at this price.

5/ Plumbing Service

📍 Location: Florida
💰 Asking Price: $2,325,000
💼 EBITDA: $684,899
📊 Revenue: $1,572,544
📅 Established: 1980

💭 My 2 Cents: It’s hard to go wrong with a plumbing company, almost the definition of a boring essential business. This plumber has been around for over 40 years, provides a full mix of repair, replacement, and installation services, and has really strong 80% gross and 44% net margins. I like that some 80% of its work is residential, as this usually means a lot of repeat revenue without the risk of client concentration. However, I would want to know if they have service contracts with their residential clients and I would want to check their reviews to make sure they are doing good work (reputation is everything in the plumbing business). I would also want to know how long the current staff has been in place, as it can be hard to hire skilled technicians. Overall, I really like this business, especially if you’re able to start digital marketing to attract some fresh customers, as they currently rely on repeat revenue.

🐦 The Best of SMB Twitter (X)

Business purchase SBA loans FAQ and answers (link)

What a typical funding stack looks like for buying a small business (link)

How scaling franchises can be a much quicker path to cash than investing in real estate(link)

The economics of a small town pickleball club (link)

Top 5 insights from the International Business Brokers Association quarterly report (link)

How to move from SMB to larger enterprise markets (link)

How to raise money for your first real estate deal (link)

The delicate balance of transition services (link)

A guide to early-stage hiring (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.