New Deals: A B2B SaaS Company, fertilizer supplier and fixed base operator, and 3 other finds

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NEW DEALS

1/ SMS Marketing B2B SaaS Company

📍 Location: Miami, Florida (Remote)
💰 Asking Price: $4,000,000
💼 EBITDA: $612,000
📊 Revenue: $1,086,000
📅 Established: 2008

💭 My 2 Cents: With my 8-figure e-Commerce brand, SMS was our #1 marketing channel. That’s why I was excited to find this SaaS business that enables marketing agencies, e-commerce brands, and other B2C businesses to easily communicate with their customers through SMS. I really like that they operate entirely remotely and that most of their onboarding and sales process is automated. This not only means that you could run the business from anywhere but also that it is highly scalable, as given that their product is already built out, every additional customer you bring in adds directly to the bottom line. I also like that they have a sticky subscription service and that it’s very easy to track the value of the service they provide. It’s a real advantage when you can document for clients how much more engagement and money they can expect by using your product. While they currently are expanding at a 66% YoY rate, I’d want to know how stable their revenues have been over time and I’d be curious as to why, given their scalability, they aren’t already larger than they are now. Technical staff is critical in a SaaS business, so I’d need to check on how many contractors plan to stay with the company, what the current owner does, and how technical a new owner would need to be to maintain the business. Otherwise, with their marketing up to now solely being word of mouth, there’s a real opportunity to scale quickly through partnerships and paid ads.

2/ Fertilizer Supplier And Fixed Base Operator

📍 Location: N/A
💰 Asking Price: $2,999,999
💼 EBITDA: $1,709,039
📊 Revenue: $11,325,247
📅 Established: 1978

💭 My 2 Cents: This business combines an agricultural chemical and fertilizer supplier with a Fixed Base Operator (FBO) service provider. As an FBO, they contract with airports to provide services from aviation maintenance and repair to storage. The two wings of their business often work together as many of their agricultural customers use aerial application services such as crop dusters which need FBO support. I really like it when a business has multiple segments that both enhance and complement each other. Beyond two revenue streams just being better than one, it can also help insulate you from downturns, boost your top line by allowing for cross-selling, and greatly increase customer stickiness. I also like that the asking price includes both real estate and an extensive amount of FF&E, as this not only helps build a moat against competition but also de-risks the transaction by providing a new owner with tangible assets, although I’d want to know exactly what equipment is included with the business, it’s value and condition, and if any is pending replacement. I’d also want to know what the current utilization rate is on the equipment, how much additional business could be handled without having to invest in upgrades, what the split is between agricultural service and airport operations, and if they have any major competition. Both of these business lines involve safety and insurance concerns, so I’d need to check on licensing requirements as well as how existing contracts transfer to a new owner. Finally, the business has a leasehold interest in a number of airport buildings and facilities, and while this could be a real positive, I’d need to understand what this entails.

3/ Home Inspection Services Company

📍 Location: Orange County, California
💰 Asking Price: $1,700,000
💼 EBITDA: $542,086
📊 Revenue: $1,360,894
📅 Established: 1994

💭 My 2 Cents: This company offers a full suite of specialty inspections for the construction industry, a nice boring business that is always in demand. I really like that the space they are in, while construction adjacent, is more downturn-resistant than a traditional contractor, as their ability to undertake inspections across a range of construction types protects them against slowdowns in any one business line. I also like that their model is entirely based on utilizing subcontracted inspectors to perform the work, so there should be very little overhead involved. This means that in slow periods, you won’t be at risk for fixed costs weighing you down, while during growth periods you will have the flexibility to scale up and take on as much business as you can generate. While these are real positives, I’d want to know how variable their cash flow has been from year to year, how large their market is, and whether the business could be expanded easily to other geographies. Both owners are involved in running the business and both work from home as neither are needed to complete the actual inspections themselves. Given their importance, I’d need to understand how key they are to both customer and subcontractor relationships and what would be involved in the business operating without them, although the transition should be made a bit easier by the owners offering training.

4/ Specialty Logistics Company For The Hospitality Industry

📍 Location: Collier County, Florida
💰 Asking Price: $2,900,000
💼 EBITDA: $1,123,306
📊 Revenue: $4,273,402
📅 Established: 2011

💭 My 2 Cents: Location is key in the hospitality business, so I like that this hospitality logistics company is located in Southwest Florida with its year-round flow of visitors. I also like that they have a consistent revenue stream in their storage and staffing offerings that is complimented by renovation and remediation services. Hospitality can be a difficult industry to break into, so the decade-plus history this company has of being a preferred vendor for some of the major hospitality companies in the region is a pretty substantial moat. Given this, I’d want to know who their possible competitors are, who their main customers are, and if there are any client concentration issues. I’d also want to better understand their different services and how much each contributes to the overall business, with a particular interest in how the staffing side of the business works, to include how they provide staff to their clients (do they outsource?) and what the economics of this looks like. If that all checks out, then there’s no reason this business can’t grow as Florida does.

5/ Paper And Janitorial Supply Distributor

📍 Location: Los Angeles County, California
💰 Asking Price: $2,200,000
💼 EBITDA: $574,086
📊 Revenue: $4,483,890
📅 Established: 1993

💭 My 2 Cents: This distribution company provides paper, janitorial, and bar supplies to restaurants, bars, and country clubs. In business for 30 years, they now serve 144 customers, with 70% of revenue from back-end products (paper and janitorial supplies) and 30% from front-end products (bar supplies). I love how consistent and stable their numbers have been, as looking past the Covid years, they have averaged about $4M of revenue and nearly $500K of SDE for the past half-decade. I also like that of the 1,800 SKUs offered by this business no single item makes up more than 2.25% of revenue and that their top 10 customers only account for a combined 35% of revenue, meaning there is little concentration risk if one customer or product falls off. While all this looks really good, I’d still want to know how they acquire and maintain customers, what their customer retention rate is, what their competition looks like, and if they offer any proprietary or other products that keep customers from switching to a competitor. I’d also want to understand how much of their business is recurring orders, what their relationships with their suppliers are like, and if there is any routine mismatch between how quickly they get paid and how quickly they need to pay suppliers. Lastly, I’d want to look into how large their potential market is and what the opportunity for growth is. Ultimately, this is a great stable boring business that still has some room to grow.