❇️ New Deals - 21 March 2024

A group fitness studio, commercial lawncare company, and 3 other interesting finds.

Author

Helen Guo
March 21, 2024

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.

📣 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.

1/ Group Fitness Studio

📍 Location: Harris County, Texas
💰 Asking Price: $1,800,000
💼 EBITDA: $537,007
📊 Revenue: $1,381,594
📅 Established: 2016

💭 My 2 Cents: When done well, a gym can be a cash cow with a lot of recurring revenue. What can be a challenge, though, is that clients tend to drop out over the long term. So, this gym’s claim of 500 loyal members really jumped out at me. The key is their holistic approach combining fitness, nutrition, and accountability. In addition, because 80% of their revenue comes from group fitness programs, this builds a sense of community which I’m sure also contributes to customer retention. They also have very high almost 40% net profit margins, which is not easy to do for a gym. That being said, considering how competitive the gym industry is, I would want to understand how they market and acquire customers. I would also need to know the owner’s role. A red flag for me would be if they coach clients themselves, as many gym-goers follow individual coaches. Overall, with the sale including a built-out 8500 square foot facility and gym equipment, this is an opportunity worth exploring.

2/ Commercial Lawncare Company

📍 Location: Orange County, Florida
💰 Asking Price: $1,300,000
💼 EBITDA: $366,549
📊 Revenue: $1,595,570
📅 Established: 2015

💭 My 2 Cents: Lawn care is one of my favorite boring businesses because of its steady demand, recurring revenue, and ease of finding workers, and I love it even more when it’s B2B (stickier clients, larger accounts). I like that this company is located in Florida, where lawn care is needed year-round, and that it has 14 commercial clients (townhome communities and HOAs), as these businesses usually come with a lot of maintenance contracts. I also like that there is already a manager in place, making for an easy transition for someone looking to get into or expand in the lawncare business. I do want to know how long their clients have been under contract and if there are any client concentration issues, but otherwise, this is a great boring business listed at a reasonable price.

3/ Commercial Concrete Repair And Restoration Company

📍 Location: Florida
💰 Asking Price: N/A
💼 EBITDA: $1,400,000
📊 Revenue: $9,200,000
📅 Established: N/A

💭 My 2 Cents: Infrastructure doesn’t last forever, meaning that commercial buildings, bridges, and roads constantly need maintenance. On top of that, the government often has legal mandates in place to maintain infrastructure. This all leads to steady demand and maintenance contracts for businesses like this one. I like that they already have a lot of clients and a management team in place. However, I would want to know what percent of their clients are commercial versus government, what maintenance contracts they have in place, and what client retention looks like. I’d also want to dig into how long their skilled employees have been around for, as they can be hard to replace. Assuming an established, loyal client base and staff, this looks like a really solid opportunity.

4/ Healthcare Software Business

📍 Location: Denver, Colorado (Remote)
💰 Asking Price: N/A
💼 EBITDA: $605,547
📊 Revenue: $1,376,195
📅 Established: 2012

💭 My 2 Cents: This is a healthcare software business that lets users compare medication pricing at nearby pharmacies, connecting customers to less expensive prescription drug options. Considering how opaque pharmaceutical pricing is and the financial strain that high medication costs place on families, this software really solves a need. I’m assuming (but would want to verify) that its business model is similar to GoodRx. In the case of GoodRX, when a patient redeems a discount coupon, the pharmacy pays a fee to the pharmacy benefit manager, which splits the fee with the company. There can also be a subscription component from membership fees consumers pay, as well as marketing revenue from pharmaceutical companies leveraging the platform. In any case, whatever this company’s doing, it’s working, as it has shown steady YoY growth with high margins. It’s also nice that it’s highly automated and can be remotely operated by just one person. There’s a real opportunity here to fire up the digital marketing and really grow this thing.

5/ Assisted Living Center

📍 Location: Saints Johns, Florida
💰 Asking Price: $1,600,000
💼 EBITDA: $324,357
📊 Revenue: $840,000
📅 Established: N/A

💭 My 2 Cents: Regular readers know I think assisted living facilities are great businesses, as they usually bring in lots of recurring revenue and require very little marketing as they get referrals from hospitals and healthcare providers. And they are only going to become more important given our aging population, which is especially true where this company is in Florida, as it’s a popular retiree spot. The facility is currently authorized 14 beds, but there is a growth opportunity here as it’s zoned to add 6 more beds. It also has been recently renovated, generates strong margins, and is eligible for an SBA loan. But what really makes this deal enticing is that the facility’s real estate, worth $1.5M, is included in the $1.6M asking price. If the team is good and they are actually filling beds, then this looks like an absolute steal.

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🤝 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 next Tuesday!

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.