❇️ New Deals - 25 Jan 2024

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Hello SMB Deal Hunters!

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

🔥 Community Top Picks from the Last Issue:

#1: Commercial janitorial service company with sticky clients
#2: Label supply business that closes 50% of their leads
#3: Educational toy e-Commerce brand in a booming market

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

Today’s issue is sponsored by Flippa, one of my go-to marketplaces to find online businesses for sale.

1/ Security Guard Company

📍 Location: Utah
💰 Asking Price: $6,500,000
💼 EBITDA: $1,540,646
📊 Revenue: $8,698,098
📅 Established: N/A

💭 My 2 Cents: Fun fact: the security guard industry is secretly one of my favorite industries. I actually tried to buy a security guard business last year, but the owner decided to keep it because it was growing so fast! So, why do I love the industry so much? One word: essentiality. Even with technology like surveillance cameras and alarm systems, security guards remain absolutely essential for a wide variety of businesses. You just can’t replicate the adaptability and versatility of a human security guard, and especially not in an unpredictable or nuanced situation. This particular company is growing so fast that it was recently included in the Inc. 5000 fastest-growing companies in America, and it’s continued to grow revenue at a double-digit pace since then. The only reason the owner is selling is because he’s ready to retire. I also like that they hold many exclusive and profitable contracts with city justice courts, which is huge because this will always be an essential service. It’s actually so huge that I want to know the terms of those government contracts and how many contracts are government buildings versus guarding commercial buildings, industrial buildings, and residential buildings. I also want to know their guard retention rate and their process for hiring new guards, as staffing is crucial in this industry. If the answers to those questions look good, then this is a great opportunity to get into a market that’s expected to grow at a 13.44% CAGR over the next 3 years.

2/ Automotive And Hospitality Digital Marketing Agency

📍 Location: Remote
💰 Asking Price: $3,500,000
💼 EBITDA: $804,798
📊 Revenue: $1,650,586
📅 Established: 2016

💭 My 2 Cents: This is a digital marketing agency focused on the automotive and hospitality industries, which I like because these industries aren’t saturated with agencies like e-Commerce and SaaS. I like that the majority of their revenue is recurring since most of their clients are on contracts, but I love that over 90% of their clients come from organic search traffic and referrals. This means they have strong SEO and that there’s a huge opportunity to grow through outbound lead gen. I’m dying to know what their client retention is like, how many clients they have, and what their average contract size is. If they have a good service with strong retention, then you could really scale this thing with some more aggressive outbound marketing efforts.

3/ Commercial And Janitorial Cleaning Service

📍 Location: Denver, Colorado
💰 Asking Price: $1,699,500
💼 EBITDA: $556,532
📊 Revenue: $1,464,179
📅 Established: 2006

💭 My 2 Cents: It’s a good thing the commercial janitorial service was the top hit on Tuesday, because I got another one for you today. This company has been in business for 19 years (so they probably have strong brand recognition), has field supervisors and a loyal team, and primarily gets work from word of mouth and referrals (so there is definitely room to grow via outbound sales and marketing). I do want to make sure that they have contracts in place, don’t have any client concentration issues, and are offering a good service (how long clients have been with them is a good way to check this), but, ultimately, commercial cleaning businesses are great boring B2B businesses with strong margins and recurring revenue. Businesses need cleaners, and they need them regularly. It’s as simple as that.

4/ HVAC And Electrical Company

📍 Location: New York
💰 Asking Price: N/A
💼 EBITDA: $513,000
📊 Revenue: $1,843,000
📅 Established: N/A

💭 My 2 Cents: This is an HVAC and electrical company, which regular readers know that I love. How can you not love a recession-resistant essential business that comes with a lot of recurring revenue and high-value commercial contracts? This specific company has a nice diversified revenue stream between commercial (63%) and residential (37%) and between HVAC (64%) and electrical (36%), so business should be relatively stable. It’s also good that they don’t do any new construction jobs, as these are very affected by the macro-economy, and that there are no client concentration issues (the top customer only represents 6% of revenue). Overall things look pretty good, especially if you live in New York and want to buy a business that’s not in the middle of nowhere, but I’d want to know what the commercial contracts look like (contract size, length), the renewal rate on the contracts, how long their clients have been around for, and how long their employees have been with them for (since it can be hard to find skilled technicians).

5/ Bed And Bath Amazon FBA Brand

📍 Location: Remote
💰 Asking Price: $3,500,000
💼 EBITDA: $1,580,437
📊 Revenue: $5,338,134
📅 Established: 2012

💭 My 2 Cents: I’m glad that the heyday of Thrasio is over, because now you can buy Amazon FBA brands like this that are cash-flowing over $1.5M a year for just 2.2x EBITDA. The margins for this brand are stronger than you usually see because they’ve been around for 12 years, which means they’ve had time to accumulate a strong organic ranking on Amazon from several best-selling products and thousands of positive reviews. This is a moat that’s going to be hard for competitors to defeat. This longevity also shows me that this business isn’t just a sketchy overnight success like so many of the other FBA brands you see for sale. However, I would want to make sure that they have been growing consistently over the last 12 years. I’m also curious about what’s on the product pipeline since there are some good opportunities for cross-sells on Amazon. With an agency that’s managing PPC (and, judging from their margins, doing it well), this looks like a strong business with a straightforward transition.

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🤝 Vendors and Lenders

I frequently get asked by you guys for recommendations on SBA lenders, quality of earnings providers, and legal counsel.

I’ve decided to streamline this to help the SMB Deal Hunter community close more deals, faster.

Fill out this form and I will personally make introductions to folks I trust.

See you next Tuesday!

-Helen Guo
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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. Upgrade to SMB Deal Hunter+ to unlock full access to all deals I feature in this newsletter and get invited to weekly group calls hosted by me with fellow acquisition entrepreneurs and investors.

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 33,000+ entrepreneurs and investors? Advertise in SMB Deal Hunter

⏪ Catch Up On Recent SMB Deal Hunter Issues

• January 23th, 2024

• January 18th, 2024

• January 16th, 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.