- SMB Deal Hunter
- Posts
- New Deals - 26 Oct 2023
Today’s Sponsor
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.
Today’s issue is sponsored by Virtual Gurus, the platform that vets and matches you with the talent you need to scale your business.
But before we continue, I’m curious…
Have you signed an LOI with a deal featured in this newsletter? |
1/ Web Development E-Learning Company
📍 Location: N/A
💰 Asking Price: $3,250,000
💼 EBITDA: $805,906
📊 Revenue: $810,122
📅 Established: 2018
💭 My 2 Cents: This business creates courses for aspiring web developers, a large market projected to grow 23% from 2023 to 2031 (which makes sense; web dev is a lucrative career path). Accordingly, the business has taught 444k paying students and has 2.11M YouTube subscribers. The YouTube channel is an especially amazing asset as it enables them to generate sales without paid advertising (check out those margins!), which is rare. Considering that YouTube is the second largest search engine in the world, this is a potent lead generation machine. I also like that the channel has 47 guest contributors. This ensures that the channel’s success isn’t dependent on one superstar personality. It’s also great that the current owner is willing to stay on and create two courses annually, but because he is currently the sole course creator, I’d want to dig into the course creation process and future roadmap should the owner ever fully exit.
2/ Managed Service Provider
📍 Location: Omaha, Nebraska
💰 Asking Price: $8,975,000
💼 EBITDA: $1,767,484
📊 Revenue: $8,755,308
📅 Established: 2011
💭 My 2 Cents: This deal is for a managed service provider (MSP), which are firms providing services like network management, cloud computing, and cybersecurity. Companies like using MSPs because they are often cheaper than an in-house IT team and they usually come with more specialized expertise, 24/7 support, and scalability as the company grows. The result is that MSPs are great businesses, as they have high margins, are B2B, and have sticky customers, which leads to tons of recurring revenue. With an 85% repeat client base, this MSP is no different. I love that there’s a team in place on both the IT and sales sides and that the owner is willing to carry a larger-than-standard 25% of the sale with a 2-year transition as a sign of good faith. However, I’d want to see if there are any client concentration problems (I’ve turned down MSP deals for this reason before). If that all checks out, this could be a good opportunity for someone with a background in banking (the firm’s target industry) to get into the MSP game.
3/ Two Daycare Centers With Real Estate
📍 Location: Montgomery County, Ohio
💰 Asking Price: $1,700,000
💼 EBITDA: $762,364
📊 Revenue: $1,405,908
📅 Established: N/A
💭 My 2 Cents: With more and more families having both parents working, there is an increasing need for childcare. However, 50% of Americans report having trouble finding childcare, and this trend isn’t slowing down anytime soon. This business provides childcare in dense residential areas (where childcare is desperately needed) and is listed at a great price (especially since it also includes real estate). I also like that it comes with lots of recurring revenue since childcare isn’t something parents need just once. My primary concern is staffing, as working with young kids can be very demanding and it can be hard to hire quality staff. The business has 14 experienced employees, but I’d want to know how long they’ve worked in the business and what the owner’s role is. The last thing you want is a staffing shortage that results in you taking care of dozens of kids.
In Partnership With Virtual Gurus
Meet my favorite deal sourcing hack:
Hiring a virtual assistant (VA) to help with deal sourcing has been one of the biggest unlocks for me this year.
Whenever I come across an interesting deal, I send it to my VA and he takes over getting NDAs signed, requesting CIMs, coordinating calls with brokers and sellers, following up when brokers don’t respond (can you relate?), and keeping all of this organized in a CRM.
But finding a quality VA? Not so easy.
Enter Virtual Gurus.
Virtual Gurus manages the entire process from vetting to matching on your behalf, ensuring a perfect match for your business requirements.
Whether you’re hiring a VA to help with deal sourcing or for admin tasks like social media management, sales support, etc., their top-tier virtual assistants have you covered.
4/ Digital Marketing Agency
📍 Location: N/A
💰 Asking Price: $1,250,000
💼 EBITDA: $550,000
📊 Revenue: $720,000
📅 Established: 2014
💭 My 2 Cents: Many of you have expressed interest in acquiring digital marketing agencies. I can understand why; they can be operated 100% remotely, have high margins, and have good amounts of recurring revenue. So, I present to you a marketing agency deal. This agency offers the standard services of everything from SEO to email marketing and is selling at a really reasonable price. However, before you pull out the checkbook, there are multiple things you should dive into. How many clients do they have? Is there a client concentration issue? How long does the average client stay? What is the client LTV? What does the sales team and process for acquiring new clients look like (especially important for marketing agencies)? What does the current team look like, and what role does the current owner play? So, yeah, lots of questions that need answering, which makes me think this could be better suited for someone who comes from a B2B sales background or runs another marketing agency already and is looking to scale quickly.
5/ HVAC Contractor
📍 Location: Georgia, USA
💰 Asking Price: N/A
💼 EBITDA: $1,300,000
📊 Revenue: $14,500,000
📅 Established: N/A
💭 My 2 Cents: I feature HVAC businesses pretty frequently here for a good reason: they are recession-resistant and often come with good recurring revenue, as HVAC systems require periodic upgrades and component replacements. This HVAC contractor serves multiple industries and has a strong moat by being regulatory compliant with current and upcoming building regulations. I want to know how much of their business is from new work versus renovations and services, but with a 98% repeat business rate, I’d imagine that it’s heavily tilted toward renovations and services (which is good). I also want to know what’s the average contract length and size. The longer and bigger, the better. Ultimately, with $10.2M in revenue already under contract and 25 non-union employees, this looks like a potentially good platform deal for an HVAC roll-up.
🐦 The Best of SMB Twitter (X)
New SBA SOP you should know about effective Nov 15 (link)
Why franchises might be your path to success (link)
The 3 levers at your disposal for getting working capital into your financing package (link)
How to handle a good faith deposit so you don’t lose your $ (link)
What to do when you’re working on a deal and the other side goes silent (link)
10 principles for understanding financial accounting (link)
Dry powder in buyout funds have crossed $1T (great visual) (link)
7 things you need to know about the largest wealth transfer in history (link)
Tips for balancing business and life (link)
Where inflation might be headed next (link)
Investors: Want to invest passively into a cash-flowing business I’m acquiring right now? Reply “Invest with Helen” and I’ll share more.
See you next Tuesday!
-Helen Guo
Find Me On Twitter
Find Me On LinkedIn
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. Join the SMB Deal Hunters Mastermind, a community for serious acquisition entrepreneurs and investors where we 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.
🤝 Advertise in SMB Deal Hunter
Want to promote your business to my community of 10,000+ entrepreneurs and investors? Reply “advertise” and I’ll share my media kit.
📚 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):
SMB Scoop — Learn to find, buy, operate, and invest in profitable & cash flowing companies from someone who does it for a living.
Frameworks & Finance by Kurtis Hanni — Join 25k+ business owners and leaders learning financial statements and growing their businesses every Thursday.
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.
⏪ Catch Up On Recent SMB Deal Hunter Issues
How was today's newsletter? |
📨 Share SMB Deal Hunter
If you refer 1 friend or colleague to my newsletter, I’ll also send you The Comprehensive Seller Interview Question Bank I’ve put together for free ($99 value). In it, I’ve compiled 50+ questions business buyers should ask during seller interview calls when evaluating a business.
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.