New Deals: A traffic management company, retail and wholesale liquor store, and 3 other finds

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NEW DEALS

1/ Traffic Management Company

📍 Location: Remote
💰 Asking Price: $11,000,000
💼 EBITDA: $2,200,000
📊 Revenue: $20,000,000
📅 Established: N/A

💭 My 2 Cents: I love coming across niche and essential B2B service businesses that aren’t usually up for sale. Enter this company which provides traffic management solutions for clients ranging from shopping centers to airports. Traffic management companies generally a provide a full suite of services ranging from engineering, to getting the right permits, to supplying and installing signage, to putting the personnel in place for traffic control. I like that there’s both strong demand for traffic management services across various sectors and not a ton of competition. As a result, this remotely-run business with 39 employees is growing quickly even with minimal marketing efforts and a largely absentee owner. Not to mention, there is a young management team in place who intends to stay with the business post-transaction and many of the employees have experience in law and traffic enforcement. With this business, I’d want to understand how they gain new clients and what their typical contract looks like, but ultimately, this is a really interesting business that I haven’t come across before.

2/ Digital Marketing Agency

📍 Location: Remote
💰 Asking Price: $3,000,000
💼 EBITDA: $1,086,739
📊 Revenue: $2,298,660
📅 Established: 2016

💭 My 2 Cents: This full-suite digital marketing agency is known for its work with elite brands, with clients including Hilton, BMW, and iKonik. I really like their 95% recurring revenue rate combined with their low level of client concentration, as this translates into an ongoing robust cash flow. They also continue to bring in new business and are on track for 14% growth this year. With marketing agencies, the number one focus of diligence should be on client retention. That said, I’d dig into what their contracts look like in terms of length and size and key retention metrics like churn and renewal rates. I’d also want to understand whether the owner holds any key customer relationships or if there are account managers in place. One very appealing aspect of this deal is that the seller is offering up to $1M in financing at a very attractive 3% interest rate. Add to this their earnings, margins, and current and potential growth, and the asking price looks very reasonable.

3/ Retail and Wholesale Liquor Store

📍 Location: Houston, Texas
💰 Asking Price: $3,217,000
💼 EBITDA: $816,000
📊 Revenue: $10,202,000
📅 Established: 2019

💭 My 2 Cents: This high-volume liquor retail and wholesale distribution business in Houston has experienced tremendous growth since its establishment in 2019, with 2024 sales on track to increase by 30% over 2023. The business operates from a large and easily accessible facility, with 5,000 sq ft dedicated to retail and 10,000 sq ft for wholesale inventory. Normally I wouldn’t be too interested in a liquor store because of the lack of growth opportunities, but I really like the wholesale side of this business and how set up it is for continued expansion. I also like that it diversifies their revenue stream and that the infrastructure is in place to grow the business much larger than a retail-only operation could support. A new owner could definitely scale by continuing to solidify relationships with current customers, upselling into other categories, and expanding into neighboring counties. That being said, I’d want to review the revenue and earnings breakdown between their retail and wholesale sales over the past three years to confirm the strength of their wholesale operations. I’d also need to understand their wholesale client base, standard wholesale order, wholesale sales process, their main competitors, and on what basis they compete with them.

4/ Landscaping Company

📍 Location: Kentucky
💰 Asking Price: $1,490,000
💼 EBITDA: $503,604
📊 Revenue: $1,633,305
📅 Established: 2004

💭 My 2 Cents: This landscape company has carved out a strong niche specializing in pond and fountain design and installation, which I just learned is a $1 billion market. Over the past 20 years, they have built a reputation as the leading expert in their specialization in Kentucky, and as such, now deal with the nice-to-have problem of turning away business. With the company sitting on over 20 acres of leased land at an incredibly low rent of $1,650 per month, there’s no reason a motivated new owner can’t jump in and expand the business to take advantage of this unmet demand. I’d want to look into how they bring in new work (is this mostly word of mouth and referrals or do they run ads so this can be easily scaled up?) and dig into their current backlog. I’d also need to understand what additional resources would be needed for this company to take on all the business they are now turning away. Assuming extra staff and equipment should do the trick, this business is just waiting for the right energetic new owner to come along.

5/ HVAC Company

📍 Location: Richmond, Virginia
💰 Asking Price: $1,400,000
💼 EBITDA: $547,111
📊 Revenue: $4,644,388
📅 Established: 2011

💭 My 2 Cents: This HVAC company focuses primarily on residential new construction in the booming greater Richmond area, ranked #15 in the US for highest population growth. I like that their decade-plus in operation means they should have built strong relationships with key homebuilders in the area and a core team of experienced technicians who handle most aspects of their projects, with subcontractors filling in the gaps. I also like that they are not completely dependent on new construction, as 20% of their revenue comes from service and maintenance, so there could be the opportunity to expand that side of the business and limit potential headwinds if there is a slowdown in the housing market. Accordingly, I’d want to see how they have handled varying economic conditions in the past and get a feel for how strong the local housing market is projected to be going forward. I’d also need to understand their sales process, who holds their key client relationships, the level of involvement of the current owners and what would be involved in replacing them, and the condition of the vehicles and equipment included in the sale. I’d finally want to check on the current utilization of their staff and equipment and the extent to which they could support expanding their services or reach.