❇️ New Deals - 29 Feb 2024

A commercial parking lot sweeping contractor, AI lead gen SaaS, and 3 other interesting finds.

Author

Helen Guo
February 29, 2024

Today’s Sponsor

Hello SMB Deal Hunters!

Thanks for all the great feedback from Tuesday's issue!

Looks like you guys really enjoyed my interview with Steve Zeller, the acquisition entrepreneur who bought a $1.3 million home service business and sold it to PE for $5.8M a few months later.

Expect more interviews to come (and if you want to be interviewed or know someone who would be a good fit, please send them my way!).

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

Today’s issue is sponsored by Limited Supply, a podcast from Moiz Ali (founder of Native which was acquired by P&G for $100M) and Nik Sharma (founder of Sharma brands). Limited Supply gives all the behind-the-scenes of the DTC world from two insiders.

1/ Commercial Parking Lot Sweeping Contractor

📍 Location: Florida
💰 Asking Price: $2,700,000
💼 EBITDA: $635,524
📊 Revenue: $14,471,210
📅 Established: 2001

💭 My 2 Cents: I love boring essential B2B service businesses that generate a ton of recurring revenue, and this company definitely fits the bill. In business for over 20 years, this firm is the largest commercial parking lot sweeping contractor in the Southeast, with more than 200 active customers in Florida, Georgia, Alabama, and South Carolina. It boasts an 80% recurring business rate, with a very impressive clientele list that includes Costco, Wal-Mart, Home Depot, Regency, CBRE, and Cohen. I like that a transition would be straightforward as there is an established workforce of 160 employees and there’s a General Manager who is willing to stay on. The only things that I’d want to understand better are how long they have had relationships with their clientele and what kinds of contracts are in place. Otherwise, this looks like a great boring business that’s not going anywhere. Note: the asking price includes $1.5M in AR.

2/ AI Lead Gen SaaS

📍 Location: Remote
💰 Asking Price: $1,900,000
💼 EBITDA: $561,000
📊 Revenue: $738,000
📅 Established: 2020

💭 My 2 Cents: SaaS businesses are awesome for their high margins, recurring revenue, and ability to run remotely. Anytime you can find one listed at 3.4x EBITDA, like this company, you should definitely stop and take a look. What this SaaS does is help marketing agencies, startups, B2B companies, and consultants identify marketing opportunities and generate new leads. Basically, their AI software replaces cold calling, which means it is doing the work of 1-2 full-time employees. They have an impressive 800+ customers on autobill, although I do want to know what the churn rate is. I like that there is a full staff of 15 in place (including an outsourced development team), which should help ease the transition. I also like that the business is remote and relocatable. They have already figured out marketing channels that work (affiliate, Facebook and Google ads, product launches), so if customer retention is high, there’s a clear path to growth here.

3/ Pool Service And Repair

📍 Location: San Diego, CA
💰 Asking Price: $675,000
💼 EBITDA: $251,398
📊 Revenue: $959,593
📅 Established: N/A

💭 My 2 Cents: I really like pool service businesses because of their recurring revenue, with customers usually on weekly or biweekly service plans. This particular pool service and repair has 115 residential accounts and 60 commercial accounts, with the latter including apartments, condominiums, HOA recreation areas, parks, and fitness centers. These commercial clients are especially valuable because they are usually under contract and more regular. I also like that they offer repair in addition to maintenance services. Not only is the additional revenue nice, but the repair service is a great upsell for its maintenance customers as the business grows. I do want to know what % of sales currently are repairs, what the client retention rate is (in order to understand how good of a service they offer), and if there is any seasonality to the business. Otherwise, with a pool of technicians already in place and the business well priced at under 3x EBITDA, this company definitely has room to grow, especially with them currently doing only limited marketing.

In Partnership With Limited Supply

Let’s talk about a gem I’ve stumbled upon - a podcast that’s as straight-shooting as it gets.

Limited Supply is hosted by Nik Sharma, Founder and CEO of Sharma Brands, and Moiz Ali, the mastermind behind Native’s monumental $100M acquisition by P&G. They aren’t here to sugarcoat anything. They're here to tear down the facades of DTC brands and give you the raw, unfiltered truth of what’s happening behind the scenes.

Why You Should Tune In:

• Spicy Takes: Strictly hard truths and real, concrete advice.

• Deep Dives: From industry moves to autopsies of failed brands to why they invest in certain companies.

• Weekly Wisdom: The conversation you didn’t know you needed, but won’t be able to live without.

As business buyers, understanding the undercurrents of the industries we invest in is crucial.

Check out Limited Supply for a direct line to the DTC industry straight from two of the most experienced operators in the game.

4/ Insurance Restoration Business

📍 Location: Frisco, Texas
💰 Asking Price: $6,500,000
💼 EBITDA: $1,540,000
📊 Revenue: $7,200,000
📅 Established: N/A

💭 My 2 Cents: This is an insurance restoration firm that focuses on water and fire mitigation, storage, and reconstruction for residential and commercial buildings. That’s an essential business everywhere, and especially so in Texas, which ranks first in the U.S. in the variety and frequency of natural disasters. However, I would want to know about possible seasonality, as the business does more in sales when there are natural disasters such as fires, tornados, and hurricanes. I like that the business gets 95% of its income from insurance companies as these are a dependable payer. I also like that the owner is willing to roll over equity and stay involved in a consultative role, which is a great sign of faith in the business. If you can become a preferred partner to the insurance companies, there’s a real opportunity to grow here.

5/ Commercial Landscaping Company

📍 Location: Maricopa County, Arizona
💰 Asking Price: $1,700,000
💼 EBITDA: $512,529
📊 Revenue: $2,346,692
📅 Established: 2015

💭 My 2 Cents: This is a commercial landscaping company, which is typically a nice source of steady income as lawns need regular maintenance. As a bonus, this company is located in Arizona, meaning year-round demand for its services, and most of its income is from maintenance, meaning tons of repeat revenue. The firm's clients include property management companies, homeowner associations, and government agencies. I especially like the government clients as these can be extra sticky. However, I am curious as to what contracts they currently have and if there are any client concentration issues. Otherwise, the company comes with 17 employees, has strong margins, and is listed at a very reasonable multiple.

🐦 The Best of SMB Twitter (X)

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How to go from $0 to $1M in revenue from someone that recently did it in 24 months (link)

Once you’re financially independent, here’s what improves happiness (link)

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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 45,000+ 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.