New Deals: An IT staffing agency, precision metal fabrication company, and 3 other finds

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NEW DEALS

1/ IT Staffing Agency

📍 Location: Tampa, Florida
💰 Asking Price: $4,900,000
💼 EBITDA: $910,122
📊 Revenue: $10,550,141
📅 Established: 2002

💭 My 2 Cents: As tech companies continue to right-size their employee bases, I think there remains a lot of opportunity for short to medium-term staffing agencies to add a lot of value. I really like this IT agency’s national scope, as they operate in 40 states, long-standing client relationships, and stable revenue stream. They also have a proven business model, as their clients typically start with a $100K deal that frequently grows into a multi-million dollar engagement, with average contract lengths of 6 to 12 months. I also like that their team and operation are fully remote and that they have 40,000+ followers on social media, which represents a very strong pipeline for finding talent. This business screams scalable beast to me, but I’d first want to know the consistency of their earnings for the past five years, the revenue breakdown between temporary staffing, direct placements, and contract extensions, and their client retention rate. I’d also want to know how they acquire new clients, who their main competition is, how they recruit IT personnel for placement, what a transition plan away from the two active owners could look like, and if the cash flow numbers have been adjusted for their leaving the business.

2/ Precision Metal Fabrication Company

📍 Location: Illinois
💰 Asking Price: $2,100,000
💼 EBITDA: $611,456
📊 Revenue: $2,009,655
📅 Established: 2008

💭 My 2 Cents: This manufacturing company specializes in critically dimensioned sheet metal fabrication. I like their focus on precision fabrication, a critical need in many industries (aerospace and defense, automotive, medical devices, etc.). There can be a lot of competition in this space, but this company has proven over their 15 year history that they have carved out a very successful and sustainable niche in the larger Chicago manufacturing hub. They come with a 30,000 square foot leased facility, an experienced team of 12, and an always welcome $600K in equipment and $100K in inventory (I’d need to check on their condition) included in the asking price. I’d want to look into the distribution of revenue across different industries, the level of their repeat business, the terms of their standard contract, and if there are any client concentration issues. I’d also need to understand the current owner’s day to day role, if they are involved in the key client relationships, and how these relationships would transfer post sale. This looks like an attractive boring business and, added bonus, they’ve been SBA pre-qualified.

3/ Niche Structural Steel Fabricator

📍 Location: Wisconsin
💰 Asking Price: $7,600,000
💼 EBITDA: $1,442,000
📊 Revenue: $7,700,000
📅 Established: N/A

💭 My 2 Cents: This very profitable structural steel fabricator has been delivering quality projects nationwide for over three decades, creating the steel components used in the construction of buildings, bridges, and other structures. I like niche manufacturing companies like this, and I especially like them if they have cornered a unique section of the market, are known for their specialized expertise, and have built long-standing relationships with their clients. These factors provide a very powerful moat, as it’s difficult for competitors to recreate the experience and know-how that comes from being in business for so long. I'd need more detail on what exactly they produce, who their clients are, how their nationwide distribution works, how they win new business, and who their main competition is. I’d also need more info on the number of employees staying with the company, the nature and condition of any FF&E and inventory included in the sale, the condition of the fabrication shop, and the degree to which their current capabilities could support further growth through adding new products or clients. If that all checks out, then this is a cash cow with an owner willing to stay on for an extended period, which should help derisk the transition.

4/ Commercial and Residential Entryway Manufacturer

📍 Location: Indiana
💰 Asking Price: N/A
💼 EBITDA: $1,805,000
📊 Revenue: $8,125,000
📅 Established: 2002

💭 My 2 Cents: This company manufactures and sells entryway solutions through a dealer network. One nice feature of their business model is that their manufacturing process does not require extensive equipment, meaning there are not a lot of repair and replacement costs. I also like that they don’t do direct to consumer sales or installations, which allows them to simplify their operations, drive down costs, and focus on their core competency of producing their products. I’d want to better understand their sales and earnings over the past three years, how their ordering and production process works, how stable and predictable their workload is, their client retention rate, if there are any client concentration issues, and what sets them apart from their competition. I’d also want to find out if they hold any patents for their products, how they manage dealer relationships, and the role of the owner and what would be involved in replacing them. I posted about another attractive company in a similar industry a few weeks ago, and even though this one is much more established, it’s interesting to look at the two in conjunction with each other. You could potentially consider combining them together or as a bolt on play where you attach one to the other. Regardless, this just goes to show the roll-up opportunities in this space.

5/ Window Tinting Business

📍 Location: Irvine, California
💰 Asking Price: $3,500,000
💼 EBITDA: $918,482
📊 Revenue: $3,795,032
📅 Established: 2004

💭 My 2 Cents: This window tinting company has two distinct divisions, automotive and residential/commercial, each with its own location and general manager who oversees day-to-day operations. I really like the two separate divisions, as this helps to diversify risk and provides additional expansion opportunities. I also like their very strong online rating (which I’d have to confirm), as it means that they have an excellent reputation. There are lots of companies that can perform tinting services, so having a solid and long standing reputation is extremely important in differentiating from the competition and winning new customers. I’d need to get a handle on the revenue split between their two divisions, if there is any repeat business, who their clients typically are, how they bring in new work, and the extent of the competition in their local market. I’d also want to know about any equipment or inventory included in the sale, the lease terms for their facilities, and if the C52 and D61 licenses transfer with the business.