New Deals - 26 Sept 2023

by SMB Deal Hunter

Author

Helen Guo
September 26, 2023

Today’s Sponsor

Hello SMB Deal Hunters!

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

Last week, I took a few 1-on-1 consulting calls chatting through starting vs. buying a business, how to plan for an exit, growing a DTC business, and building newsletters. If you need help with any of these topics, let’s talk.

Today’s issue is sponsored by AE Studio, the AI team you didn’t know your company needed — until now.

Want to promote your business to my community of 10,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.

1/ Commercial Printing Company

📍 Location: Mountain Region, USA
💰 Asking Price: N/A
💼 EBITDA: $4,800,000
📊 Revenue: $24,000,000
📅 Established: 1973

💭 My 2 Cents: Did you know that commercial printing is a $489 billion market? It makes sense when you think about it: all of those signs, banners, and business cards have to come from somewhere. This business has been pumping out print products for over 50 years now. Beyond the impressive longevity, I like that its revenue and EBITDA are continuously growing (26.3% revenue GACR between 2020 and 2022), there’s a management team in place and committed for at least the next five years, no client accounts for more than 8% of revenue, and 90% of revenue comes from repeat customers. Before acquiring this business, I’d want to dig into what’s driving growth. Specifically, how they were able to grow during Covid, as that was a pretty harsh time for most commercial printers. One opportunity for growth here would be to beef up the sales team to bring on new clients and capture more local paid search traffic.

2/ Electric Bicycle eCommerce Business

📍 Location: USA and Canada
💰 Asking Price: $3,940,000
💼 EBITDA: $820,000
📊 Revenue: $2,500,000
📅 Established: 2018

💭 My 2 Cents: People these days increasingly want a way of getting around that is environmentally friendly, physically healthy, and efficient. Enter electric bicycles (eBikes). If you live in a city, you probably know how much better these things are compared to sitting in traffic or waiting for the train. This business sells eBikes online and has averaged a strong 20% annual growth rate. I also like that the bikes aren’t cheap ($1599 each), they offer a subscription model (although I’m not sure what it is), and there’s low overhead (as it’s an eCommerce business). The owners are looking to sell because they want capital to expand into retail locations, so I’d want to know if they are looking to stay involved in the business and/or roll equity.

3/ RV Rental Business

📍 Location: Anchorage, Alaska
💰 Asking Price: $8,000,000
💼 EBITDA: $1,382,471
📊 Revenue: $1,625,820
📅 Established: 2008

💭 My 2 Cents: No state spends more per capita on RVs than Alaska, which makes sense when you consider the rugged landscape and robust tourism market (1.6 million people are expected to make the pilgrimage to The Last Frontier this year, up from 1.15 million in 2022). This business takes advantage of this market with incredible profit margins and strong recurring revenue (1/3rd of all revenue is from repeat bookings). I also like that the RV fleet is freshly updated and that there is potential for new revenue streams like camping gear rentals and itinerary planning. Overall, it’s a good opportunity for adventurous entrepreneurs, but before acquiring I’d make sure you are comfortable with the seasonality of the business (which may make it harder to raise debt) and confirm that the business has a team in place.

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4/ Two Home Health Care Agencies

📍 Location: Florida
💰 Asking Price: $2,900,000
💼 EBITDA: $816,361
📊 Revenue: $4,044,968
📅 Established: 2000

💭 My 2 Cents: This business offers in-home skilled care for residents of assisted-living facilities (ALFs), which is always in demand and is primed for strong growth considering how quickly the country is aging. I like that they have agreements with the ALFs to service residents (recurring revenue!), that the reason for selling is retirement, and that they have an admin staff in place. Everything seems ready for a smooth transition, but I’d first want to better understand what their process is for hiring caregivers and their relationships with the surrounding hospitals and physicians, as they are usually the ones to refer in-home-care agencies to patients. Regardless, expanding these relationships will be a key growth opportunity!

5/ Popular Fitness Center

📍 Location: Queens, NY
💰 Asking Price: $4,500,000
💼 EBITDA: $850,000
📊 Revenue: $3,200,000
📅 Established: N/A

💭 My 2 Cents: The key to a gym business is location. Basically, is it in a lively area, and are there places to park? This gym checks both boxes, as it’s on a small shopping strip off a busy thoroughfare that has tons of businesses driving traffic to the gym and offers customer parking. With 6200 active memberships, it’s the #1 location for all franchisee locations. And they’ve had this success without offering personal training, which is a huge growth opportunity. I’d want to know how they acquire customers and how long the average member stays on for, as gyms can have very high churn. I’d also want to dig into the relationship with the franchisor. A good franchisor can provide brand legitimacy and marketing help, but a bad franchisor could really make your life difficult.

🐦 The Best of SMB Twitter (X)

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See you Thursday!

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.

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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):

  • 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.

  • SMB Scoop — Learn to find, buy, operate, and invest in profitable & cash flowing companies

  • The PyQuant Newsletter — Real Python code for algo trading & market data analysis by traders and quants from Goldman Sachs & JPMorgan.

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