The Business Inquirer #097
The Business Inquirer #097
In this week's issue, I highlight three listings including a stock trading SaaS, a tech sales and service firm, and an equity crowdfunding marketplace.
The Business Inquirer covers the most interesting business acquisition opportunities. Written for entrepreneurs, search funds, investors, and business owners. It’s completely free and you’re guaranteed to learn something new.
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Hello Friends!
Just a quick reminder that I’m moving this week and next so the publishing schedule may be a bit sporadic for the next few issues of this newsletter.
In this week’s issue:
☁ SaaS - 1 listing
🕸 Content/Service/Other - 2 listings
🛠 Tools & Resources
This issue of The Business Inquirer is brought to you by DueDilio.
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☁ SaaS
Stock Data & Trading - $1.2M
For sale is a 2-year-old SaaS that offers a set of stock screeners, trade logging tools, and stock alerts used by new and experienced retail traders.
Competitors: Option Samurai, Ortex, Benzinga
Priced at $34.95/m or $349.50/yr; Database of 19,000 traders;
Bootstrapped with no debt
TTM Revenue: $736k; Profit: $625k; Margin: 85%
Asking: $1.2M; Multiple: 1.92x
✅ What I Like
The business is taking advantage of recent shifts in the market. Retail traders used to make up around 10% of the volume but that number has increased to 17-25% over the last two years. Listing mentions that the tech is solid and owner just has to focus on marketing. Margins look very strong at first glance.
❓ Questions & Concerns
The big red flag with this business is that it’s taking advantage of a 2-year-old trend that’s reversing (see chart). You have to perform a stress test on this business and see how the financials look if 50% of the users don’t renew their subscriptions. What’s the right valuation if you model that? How are new users acquired? Analyze the typical SaaS metrics such as conversions, CAC, CLTV, and churn. I’d also want to understand the tech side of things and what type of support requests they see. A lot of diligence is required for this type of business.
🚀 Growth
First, I would take advantage of the 19,000 traders in their database and start a free newsletter, if there isn’t one already. Add some interesting stock signals into the newsletter to draw interest and make it forwardable.
The typical marketing channels for a SaaS are paid search, content, affiliate, referral, and social media. This product has a very dialed-in customer base. It shouldn’t be too difficult to see where their clients spend time and advertise on those channels.
CPC doesn’t look too bad…
You can view the listing on MicroAcquire.
🕸 Content/Service/Other
B2B Tech Sales & Service - $675k
For sale is a 30-year-old tech sales and service business serving Southeast Ohio and Northwest Virginia. The owner is retiring. This is a good example of a business that may not be sellable.
Serves gov’t, schools, and financial institutions
Annual contracts with clients; Owner operated;
Seller will finance 50% of the purchase price; Willing to stay on for 6 mos;
TTM Revenue: $1.5M; Profit: $282k; Margin: 19%
Asking: $675k; Multiple: 2.39x
✅ What I Like
There’s a lot of operating history. Low CAPEX business. Have to assume that the business has a good reputation and repeat clients. Reputation and longevity are great marketing tools, especially within B2B space. Government contracts tend to be sticky. Seller is open to creative deal structures. The listing mentions some low-hanging fruit to expand the business such as adding a website and launching marketing campaigns.
❓ Questions & Concerns
This very well could be a business that’s just not sellable. Owned and operated by the seller and does not have enough margin to hire employees. You’re really just purchasing the client relationships and service contracts. How secure are those? Is there key person risk? How easy is it to hire someone for this business? Valuation should be lower. As the business is currently structured, you’re buying a job. I wouldn’t purchase this business unless I had a clear growth plan.
🚀 Growth
You’re stuck with a job unless you are able to grow this business.
Gain more market share in the current territory
Expand to new territories & sectors
Add additional products & services to increase AOV
It wouldn’t be difficult to do some analysis and figure out which of the strategies would have the best ROI. To implement 1 and 2 you’d need to hire some additional help. That’ll impact margins until you start seeing the added revenue.
At DueDilio, we received this type of project a few weeks back. A client was looking at a local lawncare business and wanted to hire a market research firm to analyze the TAM and competitive landscape. They spent about $5k for this type of analysis.
You can view the listing on BizBuySell.
__ __ __ __ __ __
Equity Crowdfunding Platform - Open to Offers
For sale is a 3-year-old equity crowdfunding platform registered with the SEC and a member of FINRA. It’s a top 10 platform based on funds raised.
Competitors: WeFunder
Tech: WordPress with Prime Trust
1,500 customers; 100% success rate; 50% Y/Y growth;
Bootstrapped by the two owners;
TTM Revenue: $100k; Profit: $72k; Margin: 72%
Asking: Open to Offers
✅ What I Like
Interesting business for the right person. The business is in an expanding industry and seeing good growth. The time and expense of registering with SEC & FINRA are taken care of. Fragmented market that may present a lot of exit opportunities down the road.
❓ Questions & Concerns
Not a lot of operating history. It’s the same business model as a marketplace where you have to attract both sides - buyers (investors) and sellers (startups). There are a lot of moving pieces in a business like this - tech, finance, marketing, and legal/regulatory. The market is fragmented but I believe there are a few well-known, VC-funded platforms that are taking a lot of market share. Why are the current owners selling? A lot of due diligence is required.
🚀 Growth
First, you would need to consult with an attorney to understand the regulations around advertising in this space. My basic understanding is that there are limits on advertising individual crowdfunding campaigns per the SEC. Having said that, I don’t believe there are any restrictions on advertising the overall platform to attract investors and startups.
I have seen these types of platforms being advertised on social media and in relevant newsletters.
You can view the listing on BitsForDigits.
— — — — — -
Here’s something a bit different…
🛠 Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these may contain affiliate links. This means that I may receive compensation if you sign-up and use them.
Kumo - Find every deal in one complete platform. Spend less time sourcing deals and more time closing them. Kumo aggregates 180K+ business listings into one easy-to-use platform.
Cerebro Capital - Cerebro has a network of 1,500+ lenders who can provide debt financing for your acquisition, refi, etc. $500k minimum.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Curators - Proprietary deal sourcing. You need targets that fit your investment criteria, and Curators delivers week after week - we even update your personalized database on a daily basis with new information on best-fit targets.
BizNexus - Proprietary deal flow, deal aggregator, and exit prep. Local Boston company and I consider the founder (Adam Ray) a friend.
PrivSource - Deal aggregator for lower and middle-market listings.
The Website Flip - a newsletter that sends content sites for sale to your email inbox. They send deals each Wednesday and Friday.
Logology - Best automated logo & brand identity tool I’ve come across.
OpenPhone - The best VoIP phone solution that I have found. I use this for DueDilio. You get a $20 credit if you sign-up.
Eloquens - Knowledge marketplace. I’ve purchased a few templates from them.
Deal Flow Scout - Peer-to-peer deal flow exchange. Free, open, transparent.
Deal Sourcing Guide - A directory I put together of online marketplaces, brokers, DFY deal flow, and more.
That’s all for this issue of The Business Inquirer!
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Important Disclaimer: This newsletter is provided for informational & educational purposes only, and should not be relied upon as legal, business, investment, or tax advice. This newsletter may link to other websites and certain information contained herein has been obtained from third-party sources. While taken from sources believed to be reliable, it has not been independently verified. The Business Inquirer makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. References to any companies, securities, or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any business, tax, or investment decisions. Content in this newsletter speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.