The Business Inquirer #112
In this week's issue, I highlight 4 listings including a community building SaaS, a Miami landscaping company, and more.
Hello Friends!
In this week’s issue:
☁️ SaaS - 2 listings
🏡 Main Street, Offline, Other - 2 listings
⚒️ Tools & Resources
This issue of The Business Inquirer is brought to you by DueDilio.
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Our large and growing network of independent professionals, boutique, and mid-size firms specialize in finance, legal, technology, commercial, and other key areas of business diligence.
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☁️ SaaS
Online Community Platform (Acquire) - $24k
Launched 2021
Competitors: SageSpot, Patreon, MightyNetworks, Heartbeat.chat, Outverse
Creator community platform allowing creators to build and monetize their audience in one place
Web app, mobile apps, desktop app
Revenue: $3k
Profit: $0
Margin: 0%
Multiple: 8.0x revenue
✅ What I Like
If you’re bullish on the creator economy, this project may be a good fit. For sale is a very robust web platform and mobile app. At one point they had over 2k users and revenue of $2,700/day. I haven’t met a single person who likes existing solutions such as Circle, Mighty Networks, etc. Maybe an opportunity here.
❓ Questions & Concerns
There’s no current revenue or profits. Why did the sellers pivot away from this business? What happened to the 2k users? How is this product differentiated from others? What were some of the customer acquisition strategies that worked and those that didn’t? Can you build this for < $24k?
💼 Due Diligence
You’re just buying the tech so that’s where you should focus.
Technology
How stable and secure is the tech stack?
Is it built on scalable architecture or will it need to be rebuilt?
How easy is it to hire devs for updates and upkeep?
Is there robust documentation?
On DueDilio, you can hire a professional or a firm to do a full tech audit of the web and mobile app. I can cost anywhere from $4k to $8k.
🚀 Growth
Focus on SEO & content marketing
Case studies
Partnerships & affiliates
Direct outreach
Online ads
🙋🏻♂️ The Buyer
First-time entrepreneur: “I need to have an amazing product”
Experience entrepreneur: “I need to have amazing distribution”
The right buyer for this SaaS would be someone with growth/sales skills.
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Project Management for Pool Industry (Acquire) - $977k
Launched 2015
Project and business management all-in-one platform for the swimming pool industry
Competitors: Pool Pro Office, Pentair Pool Builder, ProEdge Build
90 users; $17k CLTV; 5.2% churn;
Divestiture from a larger portfolio of businesses
Revenue: $279k
Profit: $0
Margin: 0%
Multiple: 3.5x revenue
✅ What I Like
Some operating history. I like businesses that target a very specific audience or market. There’s some traction and good revenue numbers. High CLTV. A few existing competitors to learn from.
❓ Questions & Concerns
Not a lot of traction for an 8-year-old company. Why? How’s the revenue being spent? How does this compare to other solutions out there? Tough to put a valuation on an unprofitable business.
💼 Due Diligence
Finance
Financial DD for tech businesses is typically easier because they use Stripe or some other automated billing software plus QuickBooks.
A Proof of Cash or even a lite scope QofE report would cost anywhere from $2k to $8k.
Technology
Tech stack is Python and Javascript. Not complicated.
A basic tech audit could cost $2k to $5k
Commercial
Conducting some client surveys or interviews may be helpful. Interviews can cost $90 to $150 per subject.
Some basic market research to understand the overall TAM of this industry, competitors, etc. Can cost $3k to $5k for a broad market research report.
🚀 Growth
Industry publications
Direct mailers
Industry events
Partnerships
Referral program
🙋🏻♂️ The Buyer
Ideally, someone who ran a SaaS previously and is familiar with growth and tech.
🏡 Main Street, Offline, Other
Cemetery Plot Broker (BizBuySell) - $2.9M
Launched in 1998
Connects burial plots and families
Competitors: PlotBrokers.com, GraveSolutions.com
20 employees; Home-based and relocatable;
Revenue: $2.4M
Profit: $2.1M
Margin: 88%
Multiple: 1.38x
✅ What I Like
A bit morbid but a really interesting business. A lot of operating history. Very large TAM in an evergreen niche. Great margins and low valuation. There may be an opportunity to introduce some tech into the business and improve efficiency.
❓ Questions & Concerns
There’s really no detail in this listing. It sounds like a two-sided marketplace that connects supply with demand. I’d want to understand how those two are acquired and connected. Do they buy the plots and then resell them or is it closer to a consignment type of model? How does the cash flow cycle look? What do the 20 employees do? The listing shows a very large delta between EBITDA and cash flow. There is a growing preference for cremations (57.5%) over burials (36.6%). How would this impact the longevity of this business?
For further reading:
💼 Due Diligence
This is a somewhat unique business but the same DD areas would apply.
Finance
For a business of this size, I’d recommend going with at least a lite scope QofE. Through DueDilio, you’ll get proposals in the range of $8k to $15k depending on details.
Legal
Are there any licensing requirements or unique legal considerations for this type of business?
Through DueDilio you can hire a good M&A attorney for $250 to $450/hr. The legal fees can range from $8k to $18k for a deal of this size.
Operations
Not needed if you have experience in this space.
You can hire an operations DD consultant for $125 - $250/hr.
🚀 Growth
Partnerships
Advertising in targeted publications (AARP, etc)
Relevant online advertising networks
Direct mailers
Industry events
🙋🏻♂️ The Buyer
The listing mentions that it’s a turnkey business but someone with experience in the death care space would be a good fit.
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Landscaping Company in Miami (BizBuySell) - $3.3M
Launched 2004
Design, construction, maintenance, irrigation, and tree service
44 employees; GM and OM have been with business for 11+ years;
107 commercial clients, 195 residential, 35 municipalities
License for Miami-Dade, Broward, and Palm Beach counties
Owners willing to finance 20% of asking price
Revenue: $4M
Profit: $871k
Margin: 22%
Multiple: 3.79x
✅ What I Like
A lot of operating history. Not seasonal in Miami. Large and diversified list of clients. Variety of services offered. Day-to-day managers in place and have been with the business for 11+ years. All equipment and inventory are already included in the asking price.
❓ Questions & Concerns
There are a lot of moving parts here. How involved are the owners in the day-to-day? Is there any key-person risk? Do client contracts renew annually or are they long-term? Will the GM and employees stay on with new ownership? I live in Miami and I watch the news. Nothing gets done here without a little baksheesh.
💼 Due Diligence
Finance
I would not skimp on the financial due diligence for this business. Are all revenues and expenses accounted for? Are there any off-the-books items?
Get a QofE from a pro or a firm that knows landscaping businesses inside and out. Depending on details, it’ll cost you anywhere from $13k to $20k for this type of business.
Legal
Review all the employee contracts
Review the client contracts
Understand licensing and how to transfer those
I would imagine the legal costs to be in the $15k to $20k
Operations
Equipment & machinery is included in the asking price. You’ll want to hire a certified appraiser to put a value on those assets as well as inspect them
An on-site inspection can cost $2k to $8k. If there’s a detailed asset list, a simple desktop report can cost $1,500 to $2,500.
DueDilio can easily help you source the right DD service providers for this type of transaction.
🚀 Growth
Signage on trucks
Direct mail
Door-to-door sales
Local Google ads
🙋🏻♂️ The Buyer
Someone who has prior business experience and management of employees. Helpful to know Spanish in this part of the country.
⚒️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.
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.
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