The Business Inquirer #131
Two high-margin marketing SaaS, a leading Canadian wine & spirit marketplace, a Bubble Agency, a custom cabinet remodeler in FL, and more.
Hello Friends!
In this week’s issue:
☁️ SaaS - 2 listings
💼 Online Service & Marketplace - 2 listings
🏡 Main Street - 3 listings
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by Smash.vc
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☁️ SaaS
AI-Powered Personalized Cold Emails at Scale - $240k
Launched in 2021
Competitors: Lyne.ai, Smartwriter.ai
4-person team; Bootstrapped;
Revenue: $136k
Profit: $59k
Margin: 43%
Multiple: 4.07x
💬 Quick Take
Young but profitable B2B SaaS startup in the cold-email marketing space. It has demonstrated steady revenue with minimal effort. However, the current management's lack of focus and a lack of a marketing system might be concerning for potential buyers.
✅ What I Like
Steady Revenue Stream
The business has a consistent monthly revenue of $8k -$10k, achieved without any marketing efforts.
Flexible Pricing Model
With monthly subscriptions, lifetime deals, or one-time credit purchases, the backend infrastructure offers diverse and custom pricing options.
Untapped Customer Base
The substantial customer list that has been underutilized presents significant growth opportunities.
❓ Concerns
Limited Marketing Efforts
Current revenue has been achieved without any marketing, which may indicate a lack of brand building or market penetration. Current margins may be unsustainable once the new owner adds CAC.
Management's Lack of Focus
The founding team's preoccupation with other projects might have led to missed opportunities or lack of strategic direction. Tough to say if the tech stack has been ignored and needs to be completely updated.
Dependence on Special Offers
The reliance on limited-time deals might not be a sustainable revenue model in the long term.
💼 Due Diligence Questions
Customer Acquisition Strategy: What are the strategies for attracting new customers?
Revenue: What % of revenue is recurring?
Churn Rate: What is the churn rate, and what efforts have been made to retain customers?
Technology Infrastructure: What technology stack is used, and how scalable is the platform?
Intellectual Property Rights: Are there any patents or unique technology assets?
Competitive Landscape: What are the main competitors, and what differentiates this business from them?
Competition: How does this product differentiate itself from the many competitors?
Customer Reviews: How are client reviews collected and how do they look? Who handles support tickets?
🚀 Growth Levers
Expand Marketing Efforts: Investing in marketing can help build brand awareness and reach new customers.
Leverage Existing Customer Base: Targeted offers and upsells to the existing customer base can significantly boost revenue.
Explore New Markets: Expanding into different industries or regions could drive growth.
Develop New Features: Innovating and adding new functionalities can increase the platform's appeal.
Build Strategic Partnerships: Collaborating with other businesses could amplify reach and provide cross-selling opportunities.
🙋🏻♂️ The Buyer
Experienced in SaaS: Understanding of software as a service model and the B2B market.
Marketing Savvy: Ability to implement marketing strategies to leverage the existing customer base and expand reach.
Growth-Oriented: Looking for a business with significant growth potential, given the right investment and focus.
Financial Capability: Able to invest not just in the purchase but also in growing and expanding the business.
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B2B And B2C Lead Generation Software for No-Code - Open to Offers
Launched in 2022
17-person team
Revenue: $541k
Profit: $481k
Margin: 89%
Multiple: N/A
💬 Quick Take
Very young SaaS that offers a simple yet powerful solution for non-coders to generate B2B and B2C emails from social media platforms. The business has a large user base and a good reputation. However, the business is very young and there is a lot of platform risk.
✅ What I Like
Early Traction
With $541k in TTM revenue and a profit of $481k, the financials are very solid for such a young business. There’s clear traction and demand for this service.
No-Code
The no-code market continues to expand at a rapid pace. This software appears to be well-positioned to take advantage of this tailwind.
High Customer Satisfaction
The 4.6 Trustpilot rating indicates strong customer satisfaction and trust in the product.
Strong YouTube Presence
13k YouTube subscribers offer a substantial platform for marketing and community engagement.
❓ Concerns
Owners
The owners' diminished interest in the project may indicate potential unaddressed issues within the business.
Team
The listing mentions a 17-person team which seems excessive for a business of this size.
Dependence on Major Platforms
The tool relies on extracting information from major social media platforms, which could pose a risk if any changes in those platforms' policies occur.
💼 Due Diligence Questions
Owner's Interest Decline: Why has the owner's passion for the project diminished, and are there hidden problems?
Platform Reliance: How would changes in policies by major platforms like Facebook, Google, and LinkedIn affect the business?
Customer Churn Rate: What is the customer retention rate, and how has it fluctuated over time?
Competitor Landscape: Who are the major competitors, and what differentiates this software from them?
IP and Legal Compliance: Is the intellectual property well-protected, and is the business compliant with all relevant legal regulations?
🚀 Growth Levers
Expand Marketing Channels: Leveraging other social media platforms and marketing channels could broaden the reach.
Enhance Product Features: Continuous improvement and addition of new features will keep the product competitive.
Target New Industries: Exploring lead generation for different industry sectors could tap into new markets.
Partnerships with Major Platforms: Forming partnerships with platforms like LinkedIn or Google could enhance stability and growth.
🙋🏻♂️ The Buyer
Experienced in SaaS: Someone with prior experience in SaaS businesses, understanding the unique dynamics of this market.
Interest in Digital Marketing: A buyer focusing on digital marketing could find significant synergies with existing operations.
Vision for Growth: An individual or company with a clear plan for growth, leveraging the existing customer base and features of the product.
💼 Online Service, Media, Marketplace
10 Year Old Canadian Wine & Spirits Marketplace - $2M CAD
Launched in 2013
GMV: $1.1M CAD
Revenue (commission): $257k CAD
Profit: $16k CAD
Gross Margin: 23%
Net Margin: 6%
Multiple: 125.00x
💬 Quick Take
Really interesting online marketplace business. The largest and most popular online retailer for Canadian wine and spirits. Very small margin and potential regulatory risk. Not for everyone but could be a good opportunity for the right individual or group.
Read: It’s Nearly Impossible to Get Canadian Wine in the U.S. Here’s Why.
✅ What I Like
Strong Market Position
As the nation's largest and most popular online retailer for Canadian wine and spirits, this business has an established reputation and no direct competitors.
Diverse Revenue Streams
With three different lines of business, including an online retail platform, a subscription-based wine club, and a partnership with a large media company, there's room for growth.
Moat
This business is the only national online retailer compliant with Canadian wine and liquor laws, with a strong competitive advantage. Offering over 1,500 products, 95% of which are exclusive, enhances its unique value proposition.
Robust Partnerships
With long-standing contracts with over 100 top Canadian wineries and distilleries and a large media company, it's well-connected in the industry.
❓ Concerns
Regulatory Compliance Risk
Being the only compliant national online retailer might expose the business to regulatory scrutiny and changes in laws.
Margin
Marketplaces are not typically high-margin businesses but the 6% net margin needs some scrutiny.
Dependence on Partners
The business model heavily relies on signed contracts with wineries, distilleries, and a media company, and any disruption in these relationships could impact revenue.
Limited Geographic Reach
The focus on Canadian wine and spirits may limit expansion opportunities into other markets.
💼 Due Diligence Questions
Net Profit Margin: What accounts for the low net profit margin?
Contract Stability: How stable and renewable are the signed contracts with wineries, distilleries, and the media company?
Regulatory Compliance Strategy: What is the strategy for compliance with regulatory changes in Canadian wine and liquor laws?
Expansion Plans Exploration: Is there a strategy in place to expand into markets outside Canada, leveraging the existing export license?
Technology: How stable and scalable is the technology infrastructure?
Competition: Why is there no competition in this space?
Customer Satisfaction: How are customer satisfaction and brand reputation maintained, given the A+ rating with the Better Business Bureau?
🚀 Growth Levers
Expand Geographic Reach: Utilizing the existing export license to enter new markets.
Enhance Marketing Strategy: Creating targeted marketing campaigns to drive traffic and increase conversions.
Improve Operational Efficiency: Implementing measures to enhance profit margins.
Develop New Partnerships: Collaborating with additional media or retail companies to increase exposure and sales.
Launch New Product Lines: Introducing new and exclusive wine and spirit offerings to keep the product catalog fresh and appealing.
🙋🏻♂️ The Buyer
Experience in the Alcohol Industry: Knowledge of wine and spirits will be advantageous.
Understanding of Canadian Regulations: Familiarity with Canadian wine and liquor laws will aid in maintaining compliance.
Interest in E-commerce: A background in online retailing will help in driving the business forward.
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Top Tier No-Code/Bubble Agency with an Extensive Portfolio - $1M
Launched in 2018
10-person team
Revenue: $700k
Profit: $140k
Margin: 20%
Multiple: 7.14x
💬 Quick Take
This business is a profitable agency that specializes in no-code development. The business has a large portfolio of work and a good reputation in the industry. However, agencies are notoriously difficult to scale and the valuation needs some scrutiny.
✅ What I Like
Moat
As a Bubble.io Gold Partner, the agency is an acknowledged leader in the no-code ecosystem, adding credibility and attracting high-profile clients.
Internal Tools
The development of proprietary internal tools showcases innovation and a commitment to efficiency in the project management process. Perhaps some of the tools can be white-labeled for other agency owners.
No-Code
The no-code ecosystem is growing and there is increasing demand for services.
❓ Concerns
Valuation
The valuation seems very elevated for this type of business.
Competition
I recently submitted a project on Bubble and received over 75 proposals within a day. The space may be becoming commoditized.
Hiring & Scale
Agencies are known to be high cash flow businesses but they are notoriously difficult to hire for and scale.
💼 Due Diligence Questions
Team: Who are on the development and sales teams? Are they staying with the business?
Profit Margins: Can the profit margin be improved, or are there underlying reasons for the existing margin?
Client Retention: What are the client retention rates, and how do they compare with industry standards?
Reviews: Are there client reviews on Trustpilot, Clutch, or other platforms?
Sales & Marketing: What systems and processes are in place for the sales and marketing functions? How effective are they? How are clients acquired and at what cost?
Long-term Strategy: What are the long-term growth strategies, and how does the agency plan to adapt to the ever-changing no-code landscape?
🚀 Growth Levers
Expand Technology Partnerships: Collaborating with other no-code platforms could diversify offerings and mitigate platform-related risks.
Introduce Subscription Models: Creating subscription-based support or tool access could generate recurring revenue.
Explore Vertical Specialization: Targeting specific industries or verticals could create specialization, attracting new clients.
Invest in Marketing and Branding: Increased marketing efforts could further establish the agency as a thought leader in the no-code space.
🙋🏻♂️ The Buyer
Experienced in No-Code Space: An individual or company with a background in no-code development would leverage existing relationships and expertise.
Understanding of Agency Dynamics: A buyer familiar with the unique dynamics of running an agency, including client management, remote work culture, and profit margin optimization.
🏡 Main Street, Offline, Other
Sale/Lease/Installation of WiFi Technology, Security Cameras, and Access Control - $5.9M
Launched in 2000
Can be operated remotely
10-employees; Owner retiring;
Revenue: $2.6M
Profit: $1.2M
Margin: 46%
Multiple: 4.92x
💬 Quick Take
This business is a leading technology integrator in a niche market. It has a strong track record of growth and profitability. Enough scale for new owner to bring in an operator. However, some reliance on a specific market and limited geographical reach may warrant careful examination.
✅ What I Like
Strong Niche Positioning
The business has specialized expertise in its niche market, leading since the early 2000s, with over 750 outdoor locations.
Impressive ARR
Generating over $1MM+ in recurring revenue (44%) from leasing and servicing equipment, showcasing a sustainable revenue model.
Wide Geographic Reach
Presence across 17 states/provinces/territories in the US and the Caribbean, allowing for diversified revenue streams.
Scalability
Employing both 1099 & W2 personnel and on-demand contractors, the business enjoys low overhead costs and scalability.
Robust Growth
Demonstrated growth with a 72.2% increase in revenue between 2019 and 2022, even maintaining stability during the pandemic. Projected 2023 revenue of $3.5M to $4M.
❓ Concerns
Market Dependence
The company’s heavy reliance on a specific niche market might pose risks if that market faces challenges.
Lack of Formal Marketing Plan
The absence of a formal marketing plan may limit growth potential in unexplored markets and similar niches.
💼 Due Diligence Questions
Customer Concentration: What percentage of revenue comes from the top clients? How do client contracts look? Are any big contracts about to expire?
Vendor Relationships: What are the terms and exclusivity with vendors and contractors?
Technology Licensing: Are there any patents or proprietary technologies?
Employee Contracts: What are the terms and conditions with 1099 & W2 personnel?
Owner: Is there any key-person risk? What are the day-to-day responsibilities of the owner?
🚀 Growth Levers
Market Expansion: Expanding into similar niche markets around the country.
Product Diversification: Introducing additional related products or services.
Strategic Partnerships: Collaborating with tech giants or local businesses to expand reach.
Investment in Marketing: Implementing a robust marketing strategy to reach new customers.
Technology Innovation: Continued investment in technology development for future growth.
🙋🏻♂️ The Buyer
Technology Savvy: Someone with a strong background in technology and network integration.
Growth-Minded: An individual or firm interested in scaling a well-established business.
Strategic Thinker: A buyer with a vision for expanding into new markets and diversifying services.
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Family-Owned Custom Kitchen & Bath Remodeler - $749k
Established 2017
Based in Boynton Beach, FL
Revenue: $1M
Profit: $418k
Margin: 42%
Multiple: 1.79x
💬 Quick Take
Boynton is a beautiful beach town. This very profitable family-owned custom remodeler stands out due to its great location and strong profitability. Valuation is very reasonable. However, the lack of marketing, dependence on walk-in traffic, and limited workforce could present challenges.
✅ What I Like
Strong Brand Partnerships
Representing high-quality brands like Decoci and Hunter Douglas ensures quality offerings and attracts a premium clientele.
Profitable and Low Overhead
With $1M in gross revenue and $418k in profit and only one full-time employee, the business has a streamlined operation.
Exceptional Location
Located on a high-traffic avenue, the showroom attracts walk-in traffic, driving most of the sales.
Seller Support
The seller's willingness to train the buyer extensively and offer some financing to a qualified buyer adds value to the transaction.
❓ Concerns
Dependence on Walk-In Traffic
Heavy reliance on walk-in traffic might make the business vulnerable to changes in location dynamics.
Limited Marketing Efforts
The lack of a marketing strategy may impact future growth.
Seller’s Reason for Selling
The seller operates a kitchen cabinet manufacturer. This needs to be examined closely.
💼 Due Diligence Questions
Overhead: What comprises the overhead, and how might it change with scaling the business?
Marketing Strategy: Why have marketing efforts been limited, and what potential exists for growth through marketing?
Employee Structure: What are the roles of subcontractors, and how stable are these relationships?
Transition Plan: How will the seller's training and ongoing product supply be structured and ensured?
Seller: How are the seller’s two businesses intertwined? Will there be any change in the cost structure once a new owner takes over?
Seasonality: Is there any seasonality in this business? How have the financials trended over time?
🚀 Growth Levers
Expand Marketing Initiatives: Implementing a strategic marketing campaign could enhance brand visibility and attract a broader clientele.
Diversify Product Offerings: Exploring additional quality products or services might appeal to different customer segments.
Form Strategic Partnerships: Collaborating with real estate agencies or builders could create steady referral opportunities.
🙋🏻♂️ The Buyer
Experienced in Remodeling Industry: A buyer with experience in custom remodeling would understand the market and operational dynamics.
Understanding of Local Market: Familiarity with the Boynton Beach, FL market would be advantageous in maintaining and growing the business.
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Trucking Company
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⚒️Tools & Resources
I want to share some tools & resources that I have found helpful. Please note that some of these are paid sponsors of the newsletter.
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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.
Search Fund Coalition - community for the Entrepreneurship Through Acquisition ecosystem. Monthly events and meetups for acquisition entrepreneurs.
Deal Sourcing Guide - a comprehensive list of business marketplaces, brokers, deal origination firms, and more.
💡 How I Can Help
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