❇️ New Deals - 6 Feb 2024

A remote staffing service, email marketing agency, and 3 other interesting finds.

Author

Helen Guo
February 06, 2024

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Hello SMB Deal Hunters!

Thanks for all the great feedback from the deals I shared on Tuesday!

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

Today’s issue is sponsored by Dealwise (YC W23), a platform where founders of SaaS companies with >$1mm in ARR anonymously list their companies for sale. They have dozens of opportunities listed that can’t be found anywhere else, including quite a few YC startups that have great metrics but never hit venture scale.

But before we continue…I’m curious:

What industries are you most interested in? 👇

This will help me better curate the deals I share

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1/ Remote Staffing Service

📍 Location: Remote
💰 Asking Price: N/A
💼 EBITDA: $958,000
📊 Revenue: $2,900,000
📅 Established: 2017

💭 My 2 Cents: This is a remote staffing service specializing in the medical (eye care and dental) and technology sectors, which is great because these are industries that are super in demand. I’m also super bullish on remote staffing as a whole. The cost savings it provides (often half the cost) is just too good not to be. This particular company has high 33% EBITDA margins, over 50 customers, an INCREDIBLE 100% repeat rate, no major customer concentration issues, and an astounding growth rate (446% CAGR from 2020 to 2023). I’d want to know what the team looks like and, even more importantly, why they are selling. This is always something you should ask about faster growth companies on the market, just to make sure there isn’t any baggage waiting to sink you.

2/ Email Marketing Agency

📍 Location: Remote
💰 Asking Price: N/A
💼 EBITDA: $1,700,037
📊 Revenue: $3,011,637
📅 Established: 2002

💭 My 2 Cents: Regular readers know that I like marketing agencies because they are operated remotely, can have very strong (over 50%) EBITDA margins, and can leverage offshore talent (which saves money). This email marketing agency has been in business for 22 years and has extremely loyal customers. Most marketing agencies struggle with retention, but this company has had its longest clients for 10 to 20 years and boasts an average tenure of more than 6 years. This indicates to me that they provide very good service and that they work in an industry with very sticky customers (which you should double-check), both of which are rare positives. I also really like that most of the clients are coming from word of mouth and referrals. With it being pre-approved for an SBA loan with 15% cash down (I recommend speaking to my preferred lender to see about getting your equity contribution down to 10% or less) and one of the owners willing to stay on and roll equity (a huge show of faith!), this business is primed for someone with B2B sales experience to come in and really scale things up.

3/ Medical Spa [No Broker]

📍 Location: Norfolk, VA
💰 Asking Price: $1,300,000
💼 EBITDA: $684,100
📊 Revenue: $1,799,015
📅 Established: 2006

💭 My 2 Cents: Regular readers will also know that I love medical spas, and this one is for sale at a very attractive multiple. People these days really care about their appearance, so med spas like this one that provide services from facials to botox are absolute cash cows, especially because these treatments require regular maintenance. It’s why the med spa market is expected to grow at a CAGR of 13.75% from 2022 to 2028 and why this particular spa has more than 4,000 customers. I like that there are only 6 medical spas in a 25-mile radius that provide similar services. That’s not much competition to deal with. The owner is retiring and handling the sale herself (which means no broker to take a cut!), so I want to know what her current role is and what the team looks like. I also want to know what the repeat rate is, how much the average client spends, and how they market themselves. Given that it’s an older owner, there may be an opportunity to implement a digital marketing strategy to better attract and retain clients.

In Partnership with Dealwise

Access Exclusive SaaS Opportunities Today

As you already know, SaaS companies have very attractive margins and can be operated from virtually anywhere. No wonder they’re some of the most popular companies for any type of buyer.

Enter Dealwise, a new Y Combinator backed company that matches SaaS founders who are strongly motivated to sell with buyers who are looking to build a SaaS portfolio.

They have dozens of opportunities listed that can’t be found anywhere else, including:

1) A bootstrapped Salesforce solution implementor and integrator with $6mm in revenue and $600k in EBITDA, growing 30% YoY.

2) A multichannel e-commerce platform with $2.5mm in ARR from enterprise customers, growing 20% YoY and with 98% NRR.

3) A micro-SaaS web app with $4000 in MRR and 90% operating margins. Grew 437% in the past year, and organically growing 5-6% each month.

Check out all opportunities available on Dealwise 👉

4/ Cleaning Service

📍 Location: Saint Lucie County, Florida
💰 Asking Price: $4,200,000
💼 EBITDA: $933,479
📊 Revenue: $4,270,079
📅 Established: 1983

💭 My 2 Cents: This is a 41-year-old cleaning service offering everything from general maid service to pressure washing. Cleaning businesses are great boring businesses because nobody orders a cleaning just once. The result is strong margins and tons of recurring revenue. This company has both commercial and residential clients, so I’d want to know the revenue split between the two sides. Obviously, commercial clients and their larger recurring contracts are preferred. It also has 95 employees, so it’s probably a good idea to check how loyal they are. Besides that, my questions are pretty standard. Are there contracts in place? If so, what’s the average contract size? How long have the clients been around for? Is there existing management? And how are they acquiring new customers? If it’s mostly word-of-mouth, then there’s an opportunity to put in a sales and marketing function and do outbound. And if the answers to all the other questions are good, then this is a good boring business where the seller is willing to offer 10% financing.

5/ Existing Vacation Rental Franchise Location

📍 Location: South Lake Tahoe, California
💰 Asking Price: $3,000,000
💼 EBITDA: $857,677
📊 Revenue: $5,503,758
📅 Established: 2008

💭 My 2 Cents: My philosophy for franchises is the same as my philosophy for startups: there’s no point in starting fresh when you can buy a proven winner. This property rental franchise location fits that bill. It has over 215 locations in Tahoe (which is a premium vacation spot) and 5 other locations I wouldn’t mind spending a week at that are not included but are also up for sale. I’d want to know how long their clients have been around, but overall, the franchise benefits of monthly accounting, leading industry technology, operating systems and processes, and revenue management look pretty sweet. It’s like a blueprint for running the business successfully, which is great for anybody, but especially first-time entrepreneurs.

🐦 The Best of SMB Twitter (X)

Buying a business with $0 (link)

How to define yourself as a buyer (link)

The rules for SBA partial ownership changes (link)

How to process yourself out of a day-to-day role after acquiring an SMB (link)

Buying a business can be very dangerous if you make these 3 common mistakes (link)

Why the top-line purchase number is only one part of an offer (link)

How adding a complimentary service or product to your SMB can 2x revenue (link)

Why you should never start a business with a two-person board (link)

10 books that shaped Girdley’s worldview (link)

The four styles of management (link)

🤝 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 Thursday!

P.S. Whenever you’re ready, here are a few ways for us to work together:

1. 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 operating. Reply “LP” and I’ll share more.

2. Upgrade to SMB Deal Hunter+ to unlock full access to all deals I feature in this newsletter and get invited to weekly mastermind calls with fellow acquisition entrepreneurs and investors.

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 40,000+ 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.