❇️ New Deals - 8 Feb 2024

A pool service company, dog treat FBA brand, and 3 other interesting finds.

Author

Helen Guo
February 08, 2024

Today’s Sponsor

Hello SMB Deal Hunters!

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

I’m excited to share 6 new deals worth checking out.

🥁 But before we continue, I have a small announcement:

I’m taking on 5 clients to help them find a business to buy in the next 90 days and handhold them through closing their first deal. If you’re interested, reply “me” and I’ll share more.

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.

1/ Pool Service Company

📍 Location: Brevard County, Florida
💰 Asking Price: $2,100,000
💼 EBITDA: $548,000
📊 Revenue: $2,019,000
📅 Established: N/A

💭 My 2 Cents: Florida and pools go together like milk and cereal. Because pools are open year-round in Florida (I’m literally sitting next to a pool right now in Miami), pool service routes in the Sunshine State come with a lot of recurring revenue (especially because the people who want their pools serviced normally have this set on auto-pilot). This company has 940 residential accounts, which is pretty sizeable, and because they’re all residential pools, there aren’t going to be customer concentration issues you have to worry about. I think you could really grow this business either through digital marketing and door-to-door sales to acquire more clients or by acquiring other pool routes in the same or neighboring areas. One key question is how sticky its customers are, but the company’s consistent sales and solid profit margins (27%) tell me that this should be a non-issue. There is also a full team in place and it can be run remotely, so this is a good turnkey option regardless of where you live.

2/ Dog Treat FBA Brand

📍 Location: Remote
💰 Asking Price: $4,700,000
💼 EBITDA: $1,004,233
📊 Revenue: $4,666,252
📅 Established: 2017

💭 My 2 Cents: I love pet brands, and that’s because people (like me) love spending money on their pets. Consumer pet expenditure increased by 77.9% from 2013 to 2021 alone, and this isn’t slowing down anytime soon. This particular FBA brand sells dog bones and treats. This is great because consumables naturally lend themselves to repeat purchases. I like that it has strong margins and a very strong subscribe & save program that’s growing 30% YoY. I also like that it already has an outsourced Amazon marketing agency that’s clearly performing well, which derisks the transition to a new buyer. However, I do want to know the lead times on inventory as well as how much cash is tied up in inventory at any given time. Current margins are solid, so I would dig into ad performance (marketing metrics like TACoS and ACoS) to determine how much room there is to juice up adspend.

3/ Dye and Pigment Manufacturer

📍 Location: New England
💰 Asking Price: $1,340,000
💼 EBITDA: $510,000
📊 Revenue: $2,600,000
📅 Established: 1985

💭 My 2 Cents: I saw from last week’s poll that a lot of you want to acquire manufacturing businesses. I get that; you can leverage their real estate and equipment to get asset-based financing from banks. So, I got one for you all today (that’s selling at a great multiple). This company manufactures dyes and pigments, which are used in everything from food to plastics. I like that they’ve been around for almost 40 years and have a base of loyal, repeat customers responsible for approximately 45% of recurring annual revenue. Not surprising though—if you need colors in your products (i.e. snacks or beverages) you’re going to need to order them regularly. I can also see tons of potential opportunities to grow via B2B sales into new territories and new industries. However, I do want to check for client concentration issues and know what industries its clients currently are in and if these industries are growing. If everything checks out, then this could be an interesting deal, especially if you’re operating in an industry that uses colorants heavily and it makes sense to integrate vertically to improve margins.

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/ Digital Marketing Agency Serving SMBs

📍 Location: Remote
💰 Asking Price: $1,950,000
💼 EBITDA: $428,500
📊 Revenue: $1,500,000
📅 Established: 25+ years

💭 My 2 Cents: In case you haven’t noticed, I love SMBs. So, I couldn’t help but show you guys a digital marketing agency that serves local, regional, and franchise businesses, handling everything from web design to paid search to local SEO. I really like that the firm’s customers work in industries that are largely recession-resistant, such as plumbing. These sectors also tend to outsource their digital marketing because they are run by folks who are not the most digitally savvy. And you see that here, as they’ve consistently grown by 15% YoY with no marketing. With an amazing 90% recurring revenue rate, almost no customer turnover among its hundreds of clients, a remote team, and very strong margins, somebody with a B2B sales background can really run with this thing.

5/ Home Care Agency

📍 Location: New Haven, CT
💰 Asking Price: $1,900,000
💼 EBITDA: $622,000
📊 Revenue: $1,939,759
📅 Established: 2021

💭 My 2 Cents: One trend that’s not going away: the rapidly aging population in the U.S. plans to stay at home for as long as possible. Why? People value independence as they age more than ever, AND it’s more cost-effective for the government. In other words, Americans are going to need a lot of home care, and thus home care agencies. These agencies are great businesses because of how in demand they are and their ability to get free referrals from hospitals and physicians. For this particular agency, I really like that it has a license to serve all of Connecticut. Trust me, this isn’t easy to obtain. I also like that they are focused on a niche disabled population for which the DOH and DOD pay a higher hourly rate, as this results in higher margins. It’s also a niche that’s clearly in demand, as they are growing an insane 8% each month (!). However, despite all the good here, I do still want to know how many clients they have and how long they work with the average client. I assume it’s very sticky, but still, this is something to check. I also would want to know exactly what is driving their phenomenal growth and to what degree it’s sustainable.

6/ Managed Cybersecurity Services Provider*

📍 Location: N/A
💰 Asking Price: $2-3M
💼 EBITDA: $400,000
📊 Revenue: $2,400,000
📅 Established: N/A

💭 My 2 Cents: MSPs are one of my favorite B2B service businesses because they come with sticky long-term clients, recurring revenue, and contracts. I was excited to come across this one that generates revenue through 3-year contracts, with 70% coming from monthly recurring revenue (MRR). I also like the profile of its clientele: manufacturing companies and billionaire family offices. I want to understand what % of these contracts renew, how many clients they have, and whether there are any client concentration issues, but otherwise, this is a deal worth exploring and negotiating, especially since there’s no broker involved.

*Sponsored listing

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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. 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.