❇️ New Deals - 9 April 2024

A security guard company, sport court surfacing contractor, and 3 other interesting finds.

Author

Helen Guo
April 09, 2024

Today’s Sponsor

Hello SMB Deal Hunters!

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

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

Today’s issue is sponsored by Rejigg, a new platform that features exclusive off-market SMB deals.

🎙️ New Interview

Before diving in, I wanted to share this interview with acquisition entrepreneur Connor Pera, who left his career working in marketing for a large CPG company to buy a print shop in Nashville.

In the interview, we discuss:

  • The side hustle Connor ran that gave him the confidence to pursue entrepreneurship full-time

  • Why Connor decided to buy an existing business vs. grow his side hustle

  • The one piece of helpful advice a friend gave Connor for running due diligence

  • The big opportunity Connor saw to grow the business

And more!

1/ Security Guard Company

📍 Location: Morristown, New Jersey
💰 Asking Price: N/A
💼 EBITDA: $750,000
📊 Revenue: $4,000,000
📅 Established: 2003

💭 My 2 Cents: Regular readers know how much I like security guard companies. Security guards serve an essential role in deterring crime, and it’ll be quite some time before technology replaces the on-the-spot decision-making of a human security guard, especially in an unpredictable or nuanced situation. Unfortunately, I hadn’t seen one listed in a while…until now.  This particular security company offers both armed and unarmed security services. Contracts are typically 1-3 years long, and their 30 clients range from construction sites to housing authorities. The steady revenue from the contracts is really nice, but I’d want to check on when they are up for renewal as well as what their client retention rate is (I’d be their sticky though). I’d also want to get a handle on their staffing, specifically what their retention is and what their hiring process looks like. Otherwise, with a strong management team in place and a retiring owner who is available for any necessary transition period, this looks like the kind of deal that doesn’t come around often.

2/ Sport Court Surfacing Contractor

📍 Location: Florida
💰 Asking Price: $5,750,000
💼 EBITDA: $1,073,508
📊 Revenue: $3,816,449
📅 Established: 2015

💭 My 2 Cents: This family-owned business specializes in the design, construction, conversion, maintenance, and repair of surfaces used for various sports and recreational activities. They are in a great location, as outdoor sports surfaces are everywhere in Florida. With new sports like pickleball gaining in popularity and Florida growing in population, I would think that there’s still plenty of room to run. I like that they have 10 full-time employees with 3 managers. I also like that they are involved in both the construction and the ongoing maintenance of athletic surfaces as this means they have two different revenue streams and are not overly dependent on new construction. However, I’d want to understand what the revenue and cost mix looks like by the type of client and the type of work being done. I’m especially curious about which service is higher margin and how often new construction clients convert to ongoing maintenance/service contracts. There is also the question of what licenses are necessary for this type of business. Along with the licenses required to own or operate the business, I’d need to know who in the company is currently licensed and what is involved in licensing others. Finally, I'd want to know if they have a business development team. If not, then there’s a ton of potential to grow through sales and marketing.

3/ Metal Recycling Company

📍 Location: Pennsylvania
💰 Asking Price: $1,600,000
💼 EBITDA: $550,000
📊 Revenue: $4,000,000
📅 Established: 1953

💭 My 2 Cents: This metal recycling company is your classic boring business. Located in Northeast Pennsylvania since its 1953 founding, the company has historically had strong and steady margins. Considering how long they’ve been in business, you can pretty confidently say that these margins are likely to continue. I’d want to confirm that financial results have remained consistent, especially during past crises like COVID and past recessions. I’d also want to understand who their customers are and where business comes from as well as if there are any client concentration issues. Otherwise, I like that there is a strong team in place that is planning on staying with the business and that the owner is open to an extended transition period or even a longer-term consulting agreement. This could prove critical depending on the extent of the owner’s involvement and whether any specialized knowledge or background is needed to manage the day-to-day operations. I also like that the business is SBA pre-approved for a $1M loan and the seller is offering an additional $300K in financing. Both this financing and the potential transition assistance are great signs that the seller is committed to the ongoing success of the business post-acquisition. Throw in a significant amount of net working capital and over $800K of fixed assets, with the opportunity to separately purchase the real estate if desired, and this looks like a great boring deal.

In Partnership With Rejigg

Hunting for Off-Market SMB Deals?

I recently discovered a new platform called Rejigg that features off market SMB companies that are doing $500k-$10M in revenue.

They have an in-house team doing outreach everyday, finding owners who are excited to meet with buyers.

Their team adds 7-10 new proprietary deals every week (and because these deals are off-market, they aren’t listed on competitive marketplaces like Bizbuysell).

Here are two interesting deals I found today that speak to the quality of the platform:

1) A healthcare claims management and payroll software with enterprise clients doing $400k in EBITDA

2) A full service pet-care company with $1M in EBITDA

No wonder searchers who join Rejigg often have a dozen meetings with owners in their first month!

Sign Up To View 162+ Off-Market Deals Instantly 👉

4/ Transportation Support Services for Government Clients

📍 Location: Florida
💰 Asking Price: $3,410,000
💼 EBITDA: $967,000
📊 Revenue: $4,295,000
📅 Established: N/A

💭 My 2 Cents: This consulting company provides transportation support services to municipal, county, and state government agencies. These services include everything from in-house IT support to staffing of traffic management centers. Everyone knows that I love companies that work with government agencies, as government contracts are as sticky as they come. Considering that this business has long-term, recurring government contracts in place and a large backlog of work, cash flow shouldn’t be an issue for the foreseeable future. I also like that the seller is open to a variety of deal structures, including rolling over equity, a long transition period, or even a consulting agreement. This shows me that the seller really believes in the future success of the business. However, I do have some questions. First, I’d need to dive into how their contracts work, especially whether they renew automatically or are ever rebid. Next, I’d want to check if there are any customer concentration issues as well as if they have any direct competitors. I’d then want to look at a detailed breakdown of what services generate the most revenue and have the best margins. Finally, I’d need to understand the owner’s role in day-to-day operations and what would be involved in replacing them.

5/ Parking Lot Striping Company

📍 Location: Saint Paul, Minnesota
💰 Asking Price: $300,000
💼 EBITDA: $513,320
📊 Revenue: $1,031,500
📅 Established: 2000

💭 My 2 Cents: It’s hard to think of a more essential business than a striping company, as you can’t have a parking without stripes. Established in 2000, this company stripes new parking lots and provides maintenance to established lots that want to keep their lines looking fresh. They operate with a lean staff of 5 full-time employees who are very focused on customer service and fast turnaround times, with most jobs completed within one week of first contact with a customer. I do want to look into how much of their business is from new clients versus established maintenance contracts and what separates them from the competition in the area, but at the end of the day, it’s hard to pass up a business with 50% net margins and an asking price of less than one year’s cash flow. This makes for an awesome opportunity for a first-time entrepreneur, and if you’re able to find ways to expand (maybe by focusing on ongoing service contracts?), then this could end up being a real winner.

🐦 The Best of SMB Twitter (X)

10 ways to improve working capital (link)

13 steps to do financial analysis (link)

9 ways to forecast (link)

Tips and considerations for your SaaS P&L (link)

Myths about SBA debt (link)

The truth about the Silver Tsunami (link)

Everything you need to know about SBA partial ownership buyouts (link)

5 financial ratios everyone should know (link)

See you Thursday!

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.

3. Raising money for your deal? I’ll connect you with investors from the SMB Deal Hunter Community.

4. Interested in selling your business? I’ll help you connect with buyers from the SMB Deal Hunter Community.

5. Want to promote your business to my community of 55,000+ entrepreneurs and investors? Advertise in SMB Deal Hunter

🤝 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.

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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.