The Business Inquirer #108
The Business Inquirer #108
In this week's issue, I highlight 5 listings including a Twitter growth tool, a PDF converter, a hardscape contractor, and more.
Hello Friends!
This week I’m continuing to play around with the format and content. Let me know if you like the added sections.
Here are a few additional listings that I found interesting but didn’t have time to highlight below:
Now let’s jump into this week’s issue:
☁ SaaS - 2 listings
💼 Online Service, Media, Marketplace - 1 listing
🏡 Main Street, Offline, Other - 2 listings
🛠 Tools & Resources
This issue of The Business Inquirer is brought to you by DueDilio.
DueDilio is a leading marketplace to hire highly vetted due diligence service providers.
Our large and growing network of verified independent professionals, boutique, and mid-size firms specialize in finance, technology, operations, and other key areas of business diligence.
Submit your project. Review proposals. Hire a service provider.
☁ SaaS
Twitter Audience Growth (Acquire) - $55k
Competitors: Tweettribe, TweetHunter, FeedHive, Threadstart
Launched July 2022
SaaS priced at $10.99 to $99.99 per month
TTM Revenue: $12k
Profit: $11.5k
Margin: 96%
Multiple: 4.78x
✅ What I Like
Broadly, I like the Twitter space. There’s no better way to build an audience then by utilizing Twitter. Seller focused on building community and crowdsourcing the features. This solution is feature packed and has everything a client may need to grow their audience. A lot of competitors to learn from.
❓ Questions & Concerns
Very young project without history. How many paid users are there? What’s the free to paid conversion? What’s the churn? Besides word of mouth, what type of marketing has worked? Longer term, it’ll take marketing $$$ to grow this thing. Is there true differentiation from the competition? How’s the tech stack?
🚀 Growth
Possible growth channels:
Affiliate marketing
ProductHunt, Reddit
CPC on Facebook & Twitter
Optimize website and focus on SEO
Optimize pricing
🤝 Who’s the Buyer
Solopreneur or small team. Maybe micro-PE firm.
Already selling products in this space and has an audience
Knows marketing/growth and needs the right product to apply it to
Has tech skills and wants to try to grow a startup
💼 Due Diligence
With this deal size, you don’t have a lot of budget for due diligence. DIY as much as you can. You can hire someone on DueDilio to validate the financials and do a high-level tech stack audit for around $3k to $5k (combined).
Read: Buying an Online Business: Centurica's Guide to Due Diligence (duedilio.com)
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HTML to PDF Conversion API (Acquire) - $450k
Launched May 2018
Business is PDFShift
B2B; 300 paying customers;
TTM Revenue: $102k
Profit: $89k
Margin: 87%
Multiple: 5.06x
✅ What I Like
Some operating history. Niche product doing one thing and one thing only. A lot of detail in the listing and the seller comes across as honest and transparent, good intentioned. Nice looking website. Technical founder with a few exits under his belt.
❓ Questions & Concerns
What’s the TAM for a product like this? Is the tech stack scalable? What are the typical SaaS metrics such as CAC, churn, and conversion? How does this compare to other similar solutions?
🚀 Growth
SEO & content marketing
Direct e-mail outreach
Partners
🤝 Who’s the Buyer
Micro-PE firm that has shared resources
Solopreneur with tech and/or marketing background
💼 Due Diligence
In terms of financial due diligence, SaaS products are relatively straightforward. A simple Proof of Cash should suffice and would cost $2.5 to $5k. The area I would focus on would be the tech stack. You want to have a code review to make sure everything is working properly, documented, and can scale. Depending on complexity, this could cost anywhere from $2.5k to $5k for a basic audit.
Read: Investors Guide to Tech Due Diligence (duedilio.com)
💼 Online Service, Media, Marketplace
Managed Security Services Provider (BizNexus) - Open to Offers
Founded 5+ years ago
Serves the SMB sector
TTM Revenue: $2.3M
Profit: $400k
Margin: 17%
✅ What I Like
Business is in a growing sector with large TAM. The business has been recognized in industry publications. This is helpful for marketing purposes. Self-funded and profitable from the start. Recurring revenue.
❓ Questions & Concerns
Not a lot of detail in this listing.
🚀 Growth
SEO & content marketing
Relevant trade shows & publications
Paid ads
Partnerships and affiliates
🤝 Who’s the Buyer
Experienced in the security space
Strategic acquirer offering adjacent servies
💼 Due Diligence
The financial due diligence should be relatively straightforward for a service business with recurring revenue. To save costs, you may want to simply get a Proof of Cash for $2.5k to $5k. The legal costs should come out to $15k to $25k for this transaction.
At DueDilio, we’ve seen these types of acquisitions. Business buyers often would request a few employee and client interviews as part of the DD process. You can expect to pay anywhere from $500k to $2k for this type of service. We also have subject-matter-experts who you can consult with about this type of business.
🏡 Main Street, Offline, Other
Residential Hardscape Contractor (BizBuySell) - $930k
Launched 2010
CA based; Focus on high-end residential;
$1.2M order backlog; Owner retiring
25 employees
TTM Revenue: $3.5M
Profit: $550k
Margin: 16%
Multiple: 1.69x
✅ What I Like
A lot of operating history. Services are in an evergreen niche. Backlog of order is typically a good sign. Listing mentioned great client reviews, quality machinery and equipment. Easy to finance with an SBA loan.
❓ Questions & Concerns
You need a C27 license to operate this business. Is this business recession proof? On first glance, the margin appears very small. The business can’t be relocated. How involved is the owner on a day-to-day? How easy is it to hire for this business? Why is there a backlog? What’s been the bottleneck?
🚀 Growth
Word of mouth
Local publications
Local Google ads
Partnerships
🤝 Who’s the Buyer
You have to be in or relocate to CA
Must have a C27 license
Strategic acquisition for someone who’s already in this area offering landscaping
Searcher interested and with experience in this space
💼 Due Diligence
The basic pieces would be legal, financial, and equipment. The legal costs for a deal of this size should fall in the $8k to $15k range. You’ll want to get a Quality of Earnings report as the key piece of your financial due diligence. If the financials are in good shape then you can expect to pay $6k to $15k for a lite scope QoE or $12k to $25k for a full scope. A basic assessment of the equipment may also be a good idea and can cost $3k to $6k depending on the asset list.
With 25 employees, you may want to do some basic benefits & insurance due diligence. This can be performed free of charge if you agree to make the service provider your “broker of record”.
If you want to have some fun, hire a market research firm to analyze the local market where this business is operating. They can help you figure out the competitive landscape, the TAM, and maybe even some growth drivers. Cost for this can range from $2.5k to $5k for some basic research.
DueDilio can help you hire for all of the above.
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Commercial and Residential Tree Service (BizBuySell) - $3M
Launched in 1987; Located in Port Saint Lucie, FL;
Commercial (50%), Residential (30%) and Municipal (20%) customers
33 employees
TTM Revenue: $1.8M
Profit: $516k
Margin: 29%
Multiple: 5.81x
✅ What I Like
You don’t often see a business with 35-year history come for sale. A lot of operating history. Recently won large contract with AT&T. Diverse mix of clients. Has been operated to optimize cash flow for the owners. Nice margin. Easy to finance with SBA.
❓ Questions & Concerns
Why would a family member not want to take over this “family owned” business? Is it valued at record revenue? Valuation seems aggressive. How has the business performed during recessions?
🚀 Growth
Local events
Direct mail
Local publications
Local Google ads
Partners and affiliates
🤝 Who’s the Buyer
Strategic acquirer
Experienced in this space
💼 Due Diligence
Similar DD profile to the business above. Legal expenses would come in around $15k to $25k for a deal of this size. The cost for a QoE wouldn’t change unless the financials are more complicated. The buyer may opt for a full scope QoE for a deal of this size which can cost $12k to $25k.
🛠 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.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
BizNexus - Marketplace + off-market origination in one platform. The marketplace averages about 10k active listings & pre-CIM opportunities, and the off-market origination focuses on data & multi-channel. Local Boston company and I consider the founder (Adam Ray) a friend.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Import Dojo - a newsletter that sends eCommerce and Amazon FBA businesses for sale to your email inbox. They send deals each Wednesday at 9:00 AM CST.
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.
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.
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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