❇️ New Deals - 2 April 2024

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Hello SMB Deal Hunters!

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

🔥 Community Top Picks from the Last Issue:

#1: Invoicing SaaS that has processed over $250M in payments
#2: 11 liquor stores that currently do zero marketing
#3: Commercial property management with 18 properties under management

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

Today’s issue is sponsored by Steed, a team of tax specialists that ensures you pay the absolute least in taxes.

But before we continue, I wanted to share an interview with acquisition entrepreneur Shawn Allard, who left his career in consulting to buy a $1.2M ice cream shop with two locations.

In the interview, we discuss:

• What attracted Shawn to the opportunity

• How Shawn managed the search while working a full-time job

• Shawn’s experience with leveraging an SBA loan

• What are the key metrics to look at when buying a food and beverage retail business

• What was unexpected during the transition period

• How Shawn grew the business by 25% last month alone

And more!

Watch the full 37-min interview with Shawn Allard 👉

1/ Janitorial Service

📍 Location: DuPage County, Illinois
💰 Asking Price: $4,500,000
💼 EBITDA: $1,100,000
📊 Revenue: $10,000,000
📅 Established: N/A

💭 My 2 Cents: This is a janitorial company that has been in business for over 40 years. Besides being a generally great boring business, what caught my eye is that all of its clients are commercial, with 70% from the government and 30% from private businesses. This is great because commercial clients typically mean more long-term contracts and steady revenue flow, and this is especially true with very sticky government clients. However, I am curious as to how long their contracts are written for, whether they automatically renew, and, especially with the government, whether they have to be rebid. I’d also want to check for customer concentration issues and make sure that there isn’t any churn to worry about. I like that the seller wants to maintain 20% equity in the company, a sign that he has confidence in the business continuing to succeed.

2/ Medical Equipment Supplier

📍 Location: Suffolk County, New York
💰 Asking Price: $3,000,000
💼 EBITDA: $553,975
📊 Revenue: $2,338,802
📅 Established: 2001

💭 My 2 Cents: This is an interesting healthcare-adjacent company that’s carved out a great niche. What they do is rent and supply medical equipment to individual end users by making contact with them right at the moment they need it most: as they are being discharged from medical procedures. In business since 2001, they now have over 1,000 monthly recurring rental agreements with patients and relationships with over 30 different insurance providers, with up to 50% of their revenue coming from private pay clients, resulting in a lot of steady revenue. However, I’d want to understand what their relationships with healthcare providers look like in terms of how and when they are able to contact patients, if that access is exclusive, and if there are any terms or concessions they need to give to the healthcare providers. Depending on how this process is set up, there could be huge growth potential in expanding these relationships and adding dedicated sales people in more healthcare offices, as you’d have very sticky sales leads if you’re able to become the medical equipment provider for these offices. You could also boost recurring revenue by offering more rental program options to various clients. Overall, the fact that a company already pulling in $2.4M in revenue and $553K in SDE has such room to grow makes this a very attractive deal.

3/ Meat And Poultry Broker

📍 Location: Miami County, Florida
💰 Asking Price: $1,999,918
💼 EBITDA: $645,185
📊 Revenue: $18,782,737
📅 Established: 2014

💭 My 2 Cents: This business is a broker of meat and poultry products to the Caribbean and Central American countries, acting as a middleman between meat and poultry producers in the U.S. and buyers in the Americas. Established in 2014, the 3 person company has grown from $12M in revenue in 2020 to over $18M in 2023. I like that it has very minimal fixed costs and assets as it uses outsourced shipping and storage facilities, so it never has to touch the product while retaining the ability to scale easily upon increased demand. I also like that they are recession-resilient (people have to eat!) and that they have strong relationships with their producers and customers, so it’d be easy to expand into other products like beef and seafood. It’s also nice that the owner is open to maintaining equity post-transaction. Besides making the deal more affordable, this could help mitigate the risk of losing clients post-transition. However, I do have a lot of questions I’d need answered before diving in. Do they have long-term commitments with either side on both quantity and price, and is there any risk in not being able to pass through potential price increases from producers to the end customer? Is demand from customers fairly consistent and stable? Are there any concentration issues with either suppliers or customers? And finally, If there were an issue with a supplier, how easy is it to switch? If all those answers come back clean, then this looks like a real winner.

4/ 3 Device Repair Locations

📍 Location: Manhattan, New York
💰 Asking Price: $3,000,000
💼 EBITDA: $610,709
📊 Revenue: $2,143,672
📅 Established: 2003

💭 My 2 Cents: This is a tech device repair company with three Manhattan locations and 17 employees. I like that this business, which provides a vital service in our digital age, has two revenue streams involving both on-site and in-home repairs and a high average ticket size of $180. They also clearly do good work, as they have over 67,000 past clients and an average of 4.8 stars over 800 reviews between Yelp and Google. You don’t often find a company with such high reviews over such a long period of time (they’ve been in business for over 21 years). However, the most exciting thing about this business is a warranty protection plan they launched in 2022 which has established a recurring revenue stream that now has 1,600 customers and accounts for 17% of their revenue. There’s no reason you can’t continue to grow recurring revenue through this program, however, I’d want to know what the current advertising plan looks like and how they have been promoting the warranty program so far. I’d also want to understand how often they have repeat customers versus walk-ins and what the lease terms are on their different locations. You need to know if any of them drive outsize revenue and profitability so you know where to focus your efforts. Otherwise, with a staff of 17 in place that allows the owners to only work about 10 hours a week, this is the rare deal that is attractive to everybody. If you want to be hands-off, you can do that. Or, if you want to scale, you can do that with the warranty program.

5/ Plumbing Company

📍 Location: Nebraska
💰 Asking Price: N/A
💼 EBITDA: $938,386
📊 Revenue: $5,021,891
📅 Established: N/A

💭 My 2 Cents: This is an essential plumbing company in Nebraska that’s been around for over 20 years, offers everything from emergency repairs to pipe installation, has a remarkable 45-50% market share and generates 80% of sales from commercial contracts. It goes without saying that companies like this are always needed and I like that this one is so heavily focused on commercial projects as these often represent steady income. While I’m interested in the nature of all their contracts, I’d want to know in particular what the 80% of commercial contracts look like and whether they are mostly repair and service or new construction. I’d also want to understand where new business comes from and how important the seller’s relationships are to winning and maintaining contracts. The last thing you want is for business to dry up as soon as the owner leaves. Otherwise, I like that there are 20 full-time employees operating out of a large (31,000 SQFT) facility that can either be leased or purchased as part of the sales price. Overall, my experience is that it can be difficult to stand out in the fragmented plumbing industry, so finding a plumbing business with this size market share is a rare opportunity.

🐦 The Best of SMB Twitter (X)

How to avoid having to personally guarantee an SBA loan when there are two buyers in the ownership group (link)

The story of one recent $12MM Pari Passu transaction (link)

17 weird ways people get rich (link)

How anyone can buy a business that is cash flowing $10,000/month (link)

Mastering the fundamentals of capital allocation (link)

The importance of ceiling height when buying industrial real estate (link)

10 lame but lucrative businesses (link)

Changes to improve your financial infrastructure (link)

See you Thursday!

-Helen Guo
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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.

3. Raising money for your deal? I’ll connect you with investors from the SMB Deal Hunter Community.

4. Interested in selling your business? I’ll help you connect with buyers from the SMB Deal Hunter Community.

5. Want to promote your business to my community of 55,000+ entrepreneurs and investors? Advertise in SMB Deal Hunter

🤝 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.

⏪ Catch Up On Recent SMB Deal Hunter Issues

• March 28th, 2024

• March 26th, 2024

• March 21st, 2024

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.