The Business Inquirer #113
In this week's issue, I highlight 3 listings including a lead gen business, an IT MSP, and a landscaping business.
Hello Friends!
In this week’s issue:
💼 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.
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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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Submit your project.
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💼 Online Service, Media, Marketplace
Lead Gen for Movers & Packers (SellerForce) - $256k
Launched in 2017
Lead gen service connects clients with moving cos
Revenue: $316k
Profit: $128k
Margin: 41%
Multiple: 2.00x
✅ What I Like
A lot of operating history. Systems are in place to handle a lot of the day-to-day. Evergreen niche. Valuation isn’t crazy.
❓ Questions & Concerns
I’d want to understand the historical performance of the business. Why are the owners selling now? How sustainable is their client acquisition process? How do Google updates impact the business? Relying solely on Craigslist for client acquisition is risky. How big is their e-mail list? What’s the conversion rate?
Google ads are competitive and expensive…
💼 Due Diligence
The focus of due diligence should be on customer acquisition and systems.
Website
How optimized are the website and landing pages?
Review Google Analytics to understand the customer journey and conversion rates
Sales Systems
How are customers acquired? Is this system sustainable?
What are the breaking points in this system?
DueDilio can help you hire the right due diligence professional who has expertise in these types of businesses.
🚀 Growth
Local Google ads
Advertising on Thumbtack and similar
Facebook ads
SEO
Referral partners
🙋🏻♂️ The Buyer
Someone familiar with SEO and lead gen. Possibly a first-time business buyer.
🏡 Main Street, Offline, Other
Full-Service Texas IT MSP (PrivSource) - Open to Offers
Launched in 2010; Located in Houston, TX;
Cloud, IT MSP, custom solutions
90% recurring revenue; 95% customer retention;
Owner is retiring
Revenue: $3.8M
EBITDA: $2.0M
Margin: 53%
Multiple: N/A
✅ What I Like
Demand for IT managed services is at an all-time high and is projected to grow double digits. Located in Houston, this MSP serves a large and growing market. Private and government contracts. Recurring revenue and high retention. A lot of expansion opportunities.
Read: The MSP Managed Services Market Size Is Growing with Businesses’ Needs
❓ Questions & Concerns
8 out of 10 people I meet are looking to acquire an IT MSP. PE firms are also all over this industry. This has driven valuations higher. Is there any customer concentration? Are the contracts annual or monthly?
💼 Due Diligence
This business is all about technology and people. At DueDilio, we’ve had many due diligence projects on IT MSPs. One of the most valuable services (IMO) is that we can connect you with experts in this space from an M&A perspective. Our network includes several consultants with deep expertise in this space.
🚀 Growth
Copied from the listing because I think this is a great list:
Expand the number of Brokerage House and Re-Seller agreements with local IT consultants who can leverage existing cloud and data center to service their customers.
Expand sales force to focus more on MSP and cloud services. This includes dedicating more marketing and advertising resources for lead generation and acceleration of sales.
More aggressive pursuit of rural cities, counties, municipalities, and schools for MSP services thru existing cooperative contracts, which has been one of companies highest areas of growth.
Expand the managed security services in the end-use sectors, which is anticipated to grow as the number of cyber-attacks continues to rise. In addition, managed security services are commonly used in business operations to protect confidential data.
Expansion of services with current customers. Continually market managed services to current customers and assess customer needs for additional MSP services.
Revise and Expand Website to include eCommerce and online purchasing of services, particularly in the Public Cloud market.
More aggressive Telemarketing for Sales Leads through 3rd party email and telemarketing providers.
Expanding MSP services with Texas State and government contracts through the Texas DIR and Federal Government GSA contract for Cloud and IT Managed Services.
🙋🏻♂️ The Buyer
Strategic acquirer or PE firm. Someone intimately familiar with this space.
__ __ __ __ __ __ __ __ __
Landscape Construction (BizNexus) - $1M
Located in Charleston Country, SC
Landscape design, installation, and renovation
Full team in place; Absentee owner;
Revenue: $1.5
Profit: $453
Margin: 30%
Multiple: 2.21x
✅ What I Like
Offers a full suite of landscaping services. Labor and foreman in place. Nice margins. Charleston is a great, growing city.
Read: 25 Landscaping Industry Statistics and Trends to Watch in 2023
❓ Questions & Concerns
The financials shown are for a FT owner/operator. The listing appears to say that there’s minimal maintenance revenue. Most work is from new construction (not great).
💼 Due Diligence
Finance
You’ll want to get a lite scope QofE for a business of this size and industry. This will cost anywhere from $8k to $15k.
Operations
Evaluate the equipment
Does the business use any software?
Legal
Legal due diligence on the business including employees and contracts.
The total legal costs for an acquisition of this size should be in the $12k to $17k range.
🚀 Growth
Direct mail
Local Google ads
Billboards
Partnerships
🙋🏻♂️ The Buyer
Makes sense for a Searcher looking at this industry.
⚒️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.
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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