New Deals: A residential custom metal fabricator, IT consulting business, and 3 other finds

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NEW DEALS

1/ Residential Custom Metal Fabricator

📍 Location: Florida
💰 Asking Price: $2,250,000
💼 EBITDA: $793,023
📊 Revenue: $2,517,364
📅 Established: 1994

💭 My 2 Cents: This metal fabrication business creates custom residential items such as gates, doors, and railings. I like their client base of high-end residential contractors, south Florida location where there is no shortage of demand given the ongoing home construction boom, and reputation for the highest quality craftsmanship and customer service. They operate out of a large 15,000 sq ft facility (available for purchase separately), and over $400K of FF&E and inventory is included in the sale. I’d want to see their financial statements for the past five years to check on the consistency of their earnings post-Covid, their average job size and value, if there is any seasonality to the business, and how they handle fluctuations in material costs. I’d also want to look into their current work-in-progress and contracted backlog, how they source new business, who their key competitors are, and how reliant they are on the owner. Ultimately, their 30-year track record, in-demand products, and high-end clientele point to this being a very steady income producer.

2/ IT Consulting Business

📍 Location: Minnesota
💰 Asking Price: $1,740,000
💼 EBITDA: $532,148
📊 Revenue: $3,575,526
📅 Established: 1992

💭 My 2 Cents: The market for outsourced IT firms should only grow in the coming years as businesses of all sizes are more and more reliant on technology (no wonder MSPs are getting snatched up by PE). This consulting company specializes in providing IT services for small businesses of around 20 employees with no dedicated IT staff of their own. I like that they are in a line of work known for long-term, recurring contracts, and predictable monthly revenue. I also like that they operate in a smaller market where their long history has likely gained them a strong reputation in the local community. This all leads me to believe that this is a very stable business with a track record of long-standing clients and steady cash flow. However, I’d want more detail on their client retention rate, how they acquire new clients and the typical customer acquisition cost (CAC) involved, the qualifications and experience of their staff, and how they keep up with the latest developments in the relevant technology. The owner notes that as things currently stand, a buyer should be prepared to take on accounting and management functions, but they’re also open to supporting other transition plans.

3/ Septic Pump & Tank Company

📍 Location: Texas
💰 Asking Price: $1,600,000
💼 EBITDA: $560,154
📊 Revenue: $1,319,217
📅 Established: N/A

💭 My 2 Cents: Regular readers know I’m high on septic companies as great boring businesses. What else can you call a business that provides a sweet mix of earnings that can first bring in revenue from an installation and then have a locked-in, very sticky customer for recurring servicing and maintenance? Plus, septic companies offer a service that is essential for both environmental and health reasons, making the industry recession-resistant. Adding to this, I like that this full-service septic business is home-based with very low overhead and resulting strong margins, has many steady contracts that generate much of their revenue, and comes with some $400K in FF&E. To start, I’d want to know how long they’ve been in business and what their earnings have looked like over the past five years. I’d also need to better understand the revenue split between their installation and servicing work, the percentage of new clients who convert to service contracts, if there is any possible client concentration, what their insurance premiums look like (since liabilities can be high), and what equipment maintenance costs look like (especially since the equipment is specialized).

4/ Electronics Manufacturer

📍 Location: California
💰 Asking Price: $2,500,000
💼 EBITDA: $589,859
📊 Revenue: $3,478,093
📅 Established: 1991

💭 My 2 Cents: This Silicon Valley-based contract manufacturing company specializes in advanced electronics solutions for OEMs and Tier 1 suppliers, offering a full suite of services from design assistance and PCB assembly to system integration and testing. I really like contract manufacturing as it allows a business to deeply diversify its risk. This company works with many different businesses across a lot of end markets, so their fortune is not tied to any one economic trend, cycle, or consumer preference shift. There is also broad upside potential as any one of their clients could hit on a new product and then have sharply increased demand. They are also in the perfect high-tech location for what they do and come with a substantial $940K in FF&E. However, it will be really important to understand the costs and challenges associated with staying at the forefront of state-of-the-art equipment. For this company to stay relevant and competitive, their production capabilities will always need to be kept up to date, so I’d need to know how frequently they are making capital investments and how much they spend annually on maintenance and R&D. I’d also need to find out how they handle their supplier relationships, how their capabilities compare to those of competitors, what their client retention rate looks like, and the role the owner plays in sourcing new business and maintaining client relationships. If that all checks out, then with the demand for electronics manufacturing services expected to grow at a strong CAGR of 7.4% through 2030, this business could be a real winner.

5/ Masonry Business

📍 Location: Alabama
💰 Asking Price: $2,999,999
💼 EBITDA: $1,165,945
📊 Revenue: $3,868,320
📅 Established: Over 40 years ago

💭 My 2 Cents: I love a business with a long history of success in its given area of expertise, and this one fits the bill. This Alabama-based masonry company has been delivering high-quality, multi-million dollar projects for over four decades. I like their geographic reach throughout the southeast, which shows they have the capability and operational expertise to handle complex projects far outside their home base. This also tells me that they are widely well-regarded as they are sought after by more distant contractors who expressly want to work with them. Their large geographic reach also means they are unlikely to be impacted by a downturn in any one regional market. Critically, the founder is now over 70 and looking to retire. I’d want to focus my diligence here on fully understanding how well this business could exist without the founder, and I’d need to ensure that client relationships built over the decades will continue post-transaction. I’d also want to get a fuller picture of their operational structure, including the size of their staff, if they use subcontractors, and how they manage projects spread across multiple states. Finally, I’d need to check on how new jobs are sourced and won, any required licensing, and the condition and projected lifespan of the specialized equipment included in the sale.