New Deals - 19 Oct 2023

By SMB Deal Hunter

Author

Helen Guo
October 19, 2023

Today’s Sponsor

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.

Today’s issue is sponsored by Portless, the go-to platform for e-commerce shipping.

❇️ Special Opportunity: Want to invest passively into a cash-flowing business I’m buying? Reply “Invest with Helen” and I’ll share more.

1/ B2B Commercial Water Treatment Company

📍 Location: Virginia
💰 Asking Price: $2,600,000
💼 EBITDA: $691,647
📊 Revenue: $2,333,754
📅 Established: N/A

💭 My 2 Cents: This business is a water treatment company. When you talk about “boring” fields, it doesn’t get much more boring than that. But nobody ever said boring is unprofitable, as this company has been pulling in steady profits at strong margins for more than 30 years. Fortunately, the train doesn’t appear to be slowing anytime soon, as water treatment solutions are only gaining in importance with increasing concerns about water quality and governments implementing stricter water quality. I like that water treatment systems often need regular maintenance, updates, and servicing, which naturally leads to recurring revenues with low customer turnover. It’s also good that every industry from manufacturing to healthcare could benefit from water treatment, which leads to a diversified client base. I would want to dig into the process for landing new contracts, but with a team of 14 already in place, this looks to be a good opportunity to scoop up a recession-resistant business.

2/ Commercial Property Maintenance Business

📍 Location: Southwest Michigan and North Central Indiana
💰 Asking Price: $5,450,000
💼 EBITDA: $811,816
📊 Revenue: $6,874,587
📅 Established: 1998

💭 My 2 Cents: The holy grail of small businesses are those with a senior management team. With an existing President, Director of Operations, and Operations Manager in place, this commercial property maintenance company fits the bill. The company also has 11 full-time employees and 45-60 seasonal employees. Commercial property management usually has lots of recurring revenue, but with so many seasonal employees I’d want to dig further into the seasonality of the business. The company claims to have long-term contracts with various businesses, towns, and school districts in the area, but I’d want to understand how sticky those contracts are. Ultimately, despite these concerns, with such a strong team and a retiring owner, this business looks pretty turnkey.

3/ Regional Provider Of Print Finishing And Packaging Services

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $2,600,000
📊 Revenue: $14,000,000
📅 Established: N/A

💭 My 2 Cents: This is a print finishing and packaging business that provides services like folding, cutting, and laminating for commercial printing companies, packaging companies, and graphic designers. I like that they have a strong existing customer base (202 customers) and that 96% of revenue comes from repeat customers. This makes sense when you consider that they do a fair amount of specialized work with international and domestic government agencies, which tend to be sticky clients. I also like that they’ve been growing quickly (52% revenue growth between 2020 and 2022) even without a dedicated sales function (a huge growth opportunity!). Finally, they have something that many small businesses lack: a moat. This moat comes in the form of cutting-edge equipment inventory worth over $12M and the most complete offering of finishing services in the region, which has turned them into the largest print finisher in 7 states.

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4/ 3 Burger King Locations

📍 Location: California
💰 Asking Price: $3,150,000
💼 EBITDA: $552,040
📊 Revenue: $3,912,877
📅 Established: N/A

💭 My 2 Cents: This listing offers three Burger King locations, the world’s second-largest hamburger chain. There’s a lot to like about franchises, especially if you’re a first-time entrepreneur, and especially a brand like Burger King. The tried-and-true Burger King operational system is going to take some of the pressure off your shoulders, while the established brand name will attract customers from day one. They also come with in-house advertising. Restaurant Brands (Burger King’s parent company) spent $10M on advertising for Burger King in the last quarter alone, which, when combined with the established brand, provides a steady stream of leads. And, if you ever decide you want out, all the listed positives make franchises easier to sell.

5/ Aftermarket Auto Parts Brand

📍 Location: N/A
💰 Asking Price: $1,500,000
💼 EBITDA: $535,286
📊 Revenue: $1,828,757
📅 Established: 2003

💭 My 2 Cents: This business sells specialized auto parts including coilovers, air suspension, and big brake kits mainly to wholesale accounts (65% of revenue), although their D2C audience is growing. I’m a sucker for B2B e-commerce businesses, and I especially love those that have proven their longevity (this company has been around for 20 years). The reason I love B2B e-commerce businesses so much is that the customers are sticky, which is seen in this brand’s amazing 90% repeat order rate. However, I also like diversification, which this business has by selling on Amazon, eBay, Walmart, and DTC. With a team in place and an established customer base, this looks like a good opportunity to get into a large and growing market (the auto accessories aftermarket is expected to grow at a GACR of 5.5% from 2023 to 2033, which would put it at $984B!).

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See you next Tuesday!

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.

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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):

  • GirdleyWorld — Business buyer and Holdco owner Michael Girdley shares lessons from building a $100M empire.

  • Frameworks & Finance by Kurtis Hanni — Join 25k+ business owners and leaders learning financial statements and growing their businesses every Thursday.

  • Sieva Kozinsky's Newsletter — The founder of Enduring Ventures shares weekly insights from his experience buying 17+ cash-flowing businesses.

  • 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.

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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.