New Deals - 24 Aug 2023

by SMB Deal Hunter

Author

Helen Guo
August 24, 2023

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Today’s Sponsor

Hello SMB Deal Hunters!

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

Today’s issue is sponsored by Appletree, the premier partner for bookkeeping, payroll, and tax services catering to small businesses nationwide.

Want to promote your business to my community of 9,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.

1/ Marine & Boating Parts eCommerce Brand

📍 Location: Remote
💰 Asking Price: $3,850,000
💼 Cash Flow: $1,589,113
📊 Revenue: $6,580,526
📅 Established: 2011

💭 My 2 Cents: This niche business sells aftermarket parts to boat owners who may not have access to a local marine shop or are seeking better pricing. The business sells 2/3 on Amazon and 1/3 on eBay. The asking price is only 2.4x EBITDA, which I think is very attractive for a business of this size. A growth opportunity is to expand into other Amazon regions (particularly because marine parts outside the US can be challenging to locate). I’d also look at expanding into other marketplaces like Walmart. With an $81 AOV on Amazon and $158 AOV on eBay, I reckon there’s an opportunity to leverage paid search (Google) to sell the same products on their own DTC website. Bonus: This business is SBA pre-approved.

2/ Towing & Transportation Company 

📍 Location: California
💰 Asking Price: $3,870,000
💼 Cash Flow: $1,000,000
📊 Revenue: $2,500,000
📅 Established: 1995

💭 My 2 Cents: This 30-year-old business runs on very impressive 40% profit margins. Roadside assistance is a recession-proof business with regular demand that isn’t going anywhere. This business operates out of two locations and provides full-service towing. I like that they have several contracts in place that provide recurring revenue. What’s interesting is they also provide Law Enforcement towing on a rotation basis (towing companies usually have to meet stringent requirements to be included in the rotation). A couple opportunities include getting into big rig towing (specialized towing of large, heavy-duty vehicles) to get into the California Highway Patrol rotation for big rig wrecks, as well as expanding geographically beyond their present two locations.

3/ Well Established & Profitable Hospice

📍 Location: Los Angeles, CA
💰 Asking Price: $1,350,000
💼 EBITDA: $707,000
📊 Revenue: $3,385,000
📅 Established: 2016

💭 My 2 Cents: This is an exceptionally priced business (under 2x EBITDA) from a motivated seller that’s in another recession-proof industry. The hospice industry is actually growing rapidly at 8% annually, attributed to the rising prevalence of chronic diseases among the rapidly growing geriatric population. This licensed and accredited hospice currently has 40 active patients and is supported by a full team. I like that hospices benefit from low-cost marketing from referring organizations such as hospitals, long term care, and skilled nursing facilities.

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4/ Medical Software Company

📍 Location: Texas
💰 Asking Price: $9,950,000
💼 Cash Flow: $984,000
📊 Revenue: $1,620,000
📅 Established: 1993

💭 My 2 Cents: While the asking price is a little rich on this 30-year-old family-owned medical software business, I wanted to share the opportunity because the fundamentals are very solid. The business offers a unified, end-to-end solution that automates the management of healthcare professionals, patients, insurance related workflows, and more. Customers are on annual subscriptions, and the customer retention is incredible with zero customer attrition in 2 years. What’s great to see given their clients are medical facilities is that they have no client concentration issues. The business has also grown YoY, which is something I always look for. TLDR; This deal might be worth negotiating for!

5/ Plumbing and Heating Service Business

📍 Location: Passaic County, NJ
💰 Asking Price: $2,000,000
💼 Cash Flow: $641,460
📊 Revenue: $3,787,407
📅 Established: 2015

💭 My 2 Cents: A good ol’ “boring business” at an attractive multiple is all of a sudden a sexy business. This business is a highly rated service company covering plumbing, heating, and cooling that’s grown by double digits every single year since inception. I like that they have a mix of residential, commercial, and industrial clients. I also like that the business comes with a team of great technicians (17 employees) since hiring skilled labor is usually a challenge in service businesses. I’d want to understand what service contracts the business comes with and really dig into what % of revenue is repeat (maintenance) vs one-time (installation).

🐦 The Best of SMB Twitter (X)

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🧠 Mastermind Announcement - Last Chance To Apply!

I’m excited about all the applications I’ve already received for the SMB Deal Hunter Mastermind!

I will be reviewing the first round of applications this weekend, so be sure to apply ASAP if you’re interested.

As a reminder, this will be an active community for serious acquisition entrepreneurs and investors.

We'll share insights, ask questions, and collaborate in bi-weekly Zoom calls and a Slack channel.

Spots are limited and will be released on a first-come, first-served basis to qualified applicants.

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. I'm launching an exclusive SMB Deal Hunters Mastermind for serious acquisition entrepreneurs and investors in a few weeks. We'll share insights, ask questions, and collaborate in bi-weekly calls and a Slack channel. Want in? Apply here.

3. Interested in selling your business? Get an offer from me.

4. Know someone ready to sell their business? Scout a deal for me and I'll make it worth your while! I pay finders fees of $25,000 to $200,000+, all you have to do is make the introduction.

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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 (all free):

  • 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.

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

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

  • Houck's Newsletter — Tactical advice every week from an a16z-backed founder on how to build, grow, and raise capital for your startup.

  • The PyQuant Newsletter — Join traders & quants from Goldman Sachs & JPMorgan. Real Python code for algo trading & market data analysis twice weekly. Read in 5 minutes or less.

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