New Deals - 28 Nov 2023

A custom database designer & developer, digital travel & tourism magazine, and 3 other interesting finds.

Author

Helen Guo
November 28, 2023

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Hello SMB Deal Hunters!

Thanks for all the great feedback from the deals I shared on Thursday! There was a lot of interest in the medical and school transportation van converter I featured (makes sense with that $10.1M backlog 🤑).

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

📣 Today’s issue is sponsored by DealPipe, a new service that helps you find off-market deals.

1/ Database Design & Development Agency

📍 Location: N/A
💰 Asking Price: N/A
💼 EBITDA: $800,000
📊 Revenue: $3,100,000
📅 Established: N/A

💭 My 2 Cents: Agencies are oh-so-popular for their high margins, B2B clientele, and recurring revenue. But they’re often in highly saturated niches (i.e., Facebook ads) and industries (i.e., SaaS and eCommerce). This agency, on the other hand, offers specialized services in database design, development, and optimization for industries often deemed "boring" like agriculture, energy, and manufacturing. Because of this, you may overlook the fact that it’s positioned in a rapidly growing market, as the global database software sector is expected to expand at a 13.8% CAGR from $142 billion to $274.5 billion by 2027. I like that it has proprietary software and is a Microsoft Gold Certified Partner agency. I also like that 93% of its revenue comes in the recurring fashion from its 38 clients. This makes me think that these clients are pretty sticky, but I would still dig into how long they’ve been with the business, what the contracts are like, and the average contract size. Overall, this looks like a promising opportunity, especially for someone with a B2B sales and lead generation background.

2/ Online Spanish-Language Travel Magazine

📍 Location: Tampa, FL
💰 Asking Price: $2,400,000
💼 EBITDA: $617,000
📊 Revenue: $681,790
📅 Established: 2018

💭 My 2 Cents: This is the world's most-read Spanish-language online travel and leisure magazine. It has incredible margins and 3.5 million readers (!). In my opinion, it’s going to be key to understand the breakdown of readers between the US, Latin America, and Spain. US readers are the most valuable as there are a lot of advertisers in the US willing to pay to reach them. I also want to see if they have an email newsletter, and if so, how many subscribers they have and what the open/click rates are. I’m also curious as to what the team looks like and how they monetize. I’m assuming it’s mostly through Google display advertising and/or direct partnerships, but what percentage of those advertisers renew? How long have they had the relationships for? And are there any contacts in place with them? Ultimately, if the readership is valuable, there is a lot of room to grow here. In the US, over 42 million people aged five or older speak Spanish at home, and that number is only increasing. If you can land additional partnerships with airlines, hotels, tourism boards, and travel agencies and expand the audience through additional channels like podcasts, IG, and YouTube, then you’ll have a real winner on your hands.

3/ Coding Bootcamp

📍 Location: Florida
💰 Asking Price: $22,000,000
💼 EBITDA: $2,200,000
📊 Revenue: $5,600,000
📅 Established: 2013

💭 My 2 Cents: This is a 10-year-old coding bootcamp licensed by the Department of Education that operates globally and offers both online and in-person courses. The global bootcamp market is absolutely massive and growing at a CAGR of 17.2% to reach $4.7B by 2028. And this makes perfect sense because of how hot software engineering is right now due to the high salaries, high demand, strong job security, and great work-life balance. For many people, coding bootcamps are the lottery ticket into this dream world. This means that people really care about employment prospects in this business. So it’s a great sign that 81% of its graduates are employed within six months. The result has been impressive growth, with a projected revenue of $5.6M in 2023 and an 81% CAGR from '20-'23E. I also like that it has 100 employees and managers in the countries the business operates it, that the courses are solidly priced from $4,500 to $11,000, and that 85% of courses take place online. However, I do want to understand what the graduate average salary is, the student acceptance rate, what the role of the founders is, and what the sales/marketing channels are.

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4/ Online Motor Vehicle Dealer

📍 Location: Nassau County, NY
💰 Asking Price: $2,000,000
💼 EBITDA: $783,012
📊 Revenue: $2,638,580
📅 Established: 1985

💭 My 2 Cents: This is a 38-year-old online motor vehicle dealership, which is a market growing pretty quickly due to urbanization and a shift towards fuel-efficient vehicles and low-emission vehicles. The margins are very strong and each sale comes with an average gross profit of over $12,000, which I love seeing. There is also significant repeat business, but I do want to know exactly how much. I’d also want to dig into what percent of buyers are end users vs other dealerships. The latter B2B component could be great for repeat business. With more than 75% of sales completed online or by telephone and 90% from digital marketing, it’s important to know whether these sales are mostly coming from organic efforts vs paid ads. There is a small team in New York and the owner is open to continuing in various roles, which is nice, but I do still want to know what the owner’s role is and who would need to be hired to replace them. I can easily see how you would grow this thing by offering extended warranty sales and vehicle financing, and because they have inventory in vehicles, you can get vehicle-based financing (which is always a plus).

5/ Residential & Commercial Trash Company

📍 Location: Augusta, ME
💰 Asking Price: $1,300,000
💼 EBITDA: $523,343
📊 Revenue: $5,601,840
📅 Established: 1975

💭 My 2 Cents: This 49-year-old (!) trash service business offers recycling and demolition services to residential and commercial clients. Besides being a good old-fashioned boring business, it stands out for its competitive sale price (which I assume is because of the owner's retirement). It’s also nice that it serves 50 towns, includes valuable assets like dumpsters and trucks (which would probably qualify you for asset-based financing), and comes with a team of 23 FT and 8 PT employees. Some of the key things I’d look into are the proportion of residential vs commercial clients, the total client count, the specifics of commercial contracts (most importantly, how long they’ve been around for), and the client acquisition process. If you can expand into additional towns, then this would be a very solid purchase.

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See you Thursday!

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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.