The Business Inquirer #135
Sharing an invoicing SaaS with 86% margins, a translation & copywriting agency priced at 1.4x, a sign franchise in Miami, user testing SaaS, and a landscaping business in CA.
Hello Friends!
In this week’s issue:
☁️ SaaS - 1 listing
💼 Online Service - 2 listing
🏡 Main Street - 2 listings
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by Smash.vc
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☁️ SaaS
Invoicing for SMBs and Freelancers - $400k
Launched in 2006
Competitors: Harvest, Invoicera, Zoho
Revenue: $113k
Profit: $97k
Margin: 86%
Multiple: 4.12x
💬 Quick Take
This invoicing SaaS business presents a lucrative opportunity with an 86% gross margin and minimal operational headaches. The customer base is diverse, spanning multiple industries from HVAC to film production. However, the business has been somewhat neglected and runs on outdated Ruby on Rails technology, which might require an update.
✅ What I Like
Diverse Customer Base
A wide range of industries use the platform, suggesting the product has a universal appeal and isn't limited to a particular niche.
Low Maintenance
The business reports only 3-4 customer support tickets per month, suggesting that the platform is stable and requires minimal ongoing operational support.
❓ Concerns
Outdated Technology
The technology stack is based on an old version of Ruby on Rails, which may require an update for security and feature improvements.
Limited Focus
The owners admit to neglecting this business to focus on other ventures, suggesting there may be hidden or unattended issues.
💼 Due Diligence Questions
Customer Churn Rate: What is the customer churn rate and lifetime value?
Feature Requests: Can you provide a list of requested features and integrations?
Revenue Breakdown: What percentage of revenue comes from each customer segment?
Technology Audit: Is the Ruby on Rails platform up to date with the latest security patches?
Intellectual Property: Is all the software’s intellectual property clearly owned by the business?
Competitive Landscape: Who are the closest competitors and what's the business's USP?
🚀 Growth Levers
Niche Specialization: Focus on one or two niches where the software could become an industry standard.
Feature Expansion: Add requested features to increase customer retention and attract a larger user base.
Marketing Push: Invest in targeted marketing to increase brand awareness and customer acquisition.
Pricing Strategy: Experiment with different pricing tiers or models to maximize revenue.
🙋🏻♂️ The Buyer
Tech-Savvy: An owner with software development expertise to modernize the technology stack.
Experience in SaaS: Familiarity with subscription-based business models would be a plus.
Strategic Investor: Someone looking to acquire a profitable, low-maintenance SaaS business to add to a larger portfolio.
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B2C User Experience SaaS Testing Tool - Open to Offers
Launched in 2010
Competitors: Userlytics, UserFeel, Lookback, Maze
Based in Australia
Revenue: Subscriptions, panel recruitment, professional services
Revenue: $550k
Profit: $110k
Margin: 20%
Multiple: N/A
💬 Quick Take
SaaS business that specializes in user experience testing, providing both qualitative and quantitative insights. The recent ChatGPT integration has improved its customer experience. The business has grown mostly through inbound marketing, pointing to untapped growth potential via outbound sales.
✅ What I Like
Evergreen Niche
Usability testing is a service that is consistently in demand.
Innovative Technology
The integration of OpenAI's ChatGPT has been transformative for this business.
Flexible Founder
The founder is open to various exit scenarios, providing potential buyers with multiple options for transaction structures.
❓ Concerns
Low Revenue
The revenue and profit numbers may not be sufficient to invest in marketing without additional capital.
Limited Growth So Far
Primarily relying on inbound marketing indicates that the business might be missing out on aggressive growth strategies.
Technology
The implementation of ChatGPT also introduces the risk of dependence on third-party technologies.
💼 Due Diligence Questions
Customer Retention Rates: What's the average subscription length and churn rate?
Technology Stack: Are there any proprietary technologies or is the business reliant on third-party solutions?
Competitive Landscape: Who are the main competitors and how does the business differentiate itself?
Revenue Streams: What is the current breakdown of revenue? Is there potential for additional revenue streams apart from subscriptions and user panel recruitment?
Product Roadmap: What are the upcoming features or plans for the SaaS tool?
Intellectual Property: Does the company hold any patents or IP relevant to its technology?
🚀 Growth Levers
Outbound Sales Team: Establishing an outbound sales team would potentially accelerate revenue growth.
B2B Partnerships: Partnering with other platforms or larger businesses could enhance distribution and credibility.
Marketing Investment: Dedicating resources to digital marketing channels could boost customer acquisition.
International Expansion: Localizing the platform to enter non-English-speaking markets offers a pathway to additional revenue.
Additional Service Offerings: Expanding into consulting or other professional services can diversify revenue streams.
🙋🏻♂️ The Buyer
Tech-Savvy Entrepreneur: A buyer with a background in SaaS or technology businesses would be advantageous.
Strategic Acquirer: Companies in a related field looking to add a user experience tool to their suite would benefit.
Growth-Oriented: Given the untapped opportunities for growth, the buyer should have experience in scaling businesses.
💼 Online Service, Media, Marketplace
Translation & Copywriting Agency Providing Language Services - $53k
Launched in 2019
Competitors: PoliLingua, Atlas Translations, Language Reach, Rosetta Translation Services
Managed as a side-project; UK-based;
Revenue: $56k
Profit: $37k
Margin: 66%
Multiple: 1.43x
💬 Quick Take
This acquisition opportunity is right in the sweet spot for small business buyers looking for a venture with high profitability, low operational demands, and untapped growth avenues. However, the lack of dedicated marketing and SEO strategies may limit its online visibility and reach. The buyer also has to think about the long-term impact that AI may have on this business.
✅ What I Like
Untapped Growth Potential
Despite only a part-time focus, the business has demonstrated substantial growth and profitability, suggesting much greater potential with dedicated attention.
Low Valuation
The valuation seems reasonable at only 1.43x profit.
Turnkey Operations
The seller is willing to provide a comprehensive list of freelancers and linguists, making it easier for a new owner to hit the ground running.
❓ Concerns
Limited Marketing
The business has not invested in any dedicated marketing or SEO efforts, which could hamper its long-term growth. New owner may have to spend considerable capital to test new marketing strategies.
Part-time Attention
Although the business has done well with limited focus, it's unclear what hidden challenges may surface with more detailed operational scrutiny.
💼 Due Diligence Questions
Client Retention: What is the rate of client retention and how often do clients return for additional services?
Freelancer Contracts: Are there any contractual obligations with freelancers or linguists?
Website Metrics: Can you share key performance indicators (KPIs) for the website, such as traffic and conversion rates?
Project Management Fees: What is the breakdown of project management fees within the total revenue?
Client References: Are there direct testimonials or references from satisfied clients?
Market Diversification: Have any steps been taken toward entering new markets?
SEO Strategy: Is there any existing SEO work or plans?
🚀 Growth Levers
Implement SEO: Investing in a comprehensive SEO strategy can increase online visibility and attract more clients.
Targeted Marketing: Launching targeted marketing campaigns can elevate brand visibility and attract a larger client base.
Pricing Strategy: Given the high quality of work, the business may have room to increase prices slightly, thereby increasing revenue streams.
Social Media Engagement: Actively engaging in social media can enhance brand awareness and bring in a new customer base.
🙋🏻♂️ The Buyer
Detail-Oriented: Due to the complexity involved in translation and copywriting, an individual with a keen eye for detail would be ideal.
Marketing Skills: Someone with a background in digital marketing can leverage unexploited avenues for growth.
Flexible Time Commitment: As the business has thrived with part-time attention, it could be ideal for someone not looking for a full-time commitment.
🏡 Main Street
B2B Signs, Graphics, and Large Format Print Franchise in Miami, FL - $1.4M
Launched in 2006
Franchise business
Revenue: $1.8M
SDE: $604k
Margin: 34%
Multiple: 2.3x
💬 Quick Take
This Miami-based B2B signs, graphics, and large format print franchise has shown impressive growth, with revenue growing by 37% in 2022. It offers a blend of recession resistance, turnkey operations, and high profit margins. However, the prospective buyer should carefully consider the implications of buying into a franchise.
✅ What I Like
Strong Growth Metrics
Revenue growth exceeding 37% in 2022 is impressive, indicating a strong market demand.
Recession Resilient
The focus on B2B clients and essential services such as signage makes the business relatively resistant to economic downturns.
Tenured Staff
An experienced team in place means a smoother transition and less initial hand-holding for the new owner.
Franchisor Support
As part of a world-class franchise network, the business benefits from initial training and ongoing support, reducing operational risks.
❓ Concerns
Franchise Limitations
Being part of a franchise network can limit flexibility in decision-making and will involve ongoing royalty payments.
Local Competition
The Miami area is a competitive market, and standing out will require strategic marketing and customer service.
💼 Due Diligence Questions
Client Diversity: Is the customer base diverse in terms of industry and size?
Franchise Terms: What are the specific terms and conditions of the franchise agreement?
Equipment Lifespan: How long is the remaining useful life of the in-house production equipment?
Client Acquisition: What are the primary channels for new client acquisition?
Employee Turnover: What is the annual employee turnover rate?
Marketing Strategy: How is the current marketing strategy executed and monitored?
Lease Terms: What are the key terms of the existing lease agreement?
Scalability: Are there existing plans or strategies for scaling up the business?
🚀 Growth Levers
Niche Focus: Consider narrowing down to specific industries to offer specialized services.
Online Marketing: Leverage digital channels to broaden reach and attract new clients.
Expansion: Consider adding more locations or franchising out to rapidly scale the business.
Up-Selling: Introduce additional services like design consultancy to existing clients for added revenue streams.
Customer Retention Programs: Implement loyalty programs to increase repeat customer rates.
🙋🏻♂️ The Buyer
Experienced in B2B Sales: A buyer with a background in B2B sales will find it easier to navigate the customer landscape.
Financially Equipped: The buyer should have enough capital not just to purchase the business but also to invest in growth.
Committed Full-Timer: This business requires a full-time commitment, particularly to maintain the rapid growth rate.
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Landscaping Maintenance and Installation Firm in Long Beach, CA - $3.5M
Launched in 1989
43 employees; 62% recurring revenue;
Revenue: $3.6M
Profit: $1.0M
Margin: 28%
Multiple: 3.5x
💬 Quick Take
This well-established landscaping firm offers a compelling business opportunity with over 62% recurring revenue and an efficient operational structure. The business comes with a seasoned team, a branded fleet, and an 8-acre lot that can support growth. Potential buyers should consider the location-specific licensing requirements.
✅ What I Like
Strong Recurring Revenue
Over 62% of revenue comes from long-term maintenance contracts, providing predictable cash flow.
Room for Expansion
The 8-acre lot and well-equipped office can accommodate growth and even potential strategic acquisitions.
Management in Place
With operational managers already on board, the transition to new ownership should be smooth.
❓ Concerns
License Requirement
The ideal buyer should have or be willing to acquire a C27 Landscaping license.
Limited Marketing
The business has thrived without advertising, but this may also mean untapped growth potential or unknown competition.
Geographic Concentration
Operating in Long Beach, California, could mean susceptibility to local economic shifts.
💼 Due Diligence Questions
License Pathway: What is the mentored path to obtaining a C27 Landscaping license?
Client Contracts: How many clients are under long-term contracts, and what are the renewal rates?
Equipment Condition: What is the state and lifespan of the current fleet and equipment?
Employee Tenure: What is the average tenure of the 43 employees?
Ownership Transition: How long is the seller willing to mentor and train the new owner?
Customer Concentration: How diversified is the customer base?
Market Analysis: What is the size of the addressable market?
🚀 Growth Levers
Digital Marketing: Given that the business has never advertised, a strong digital marketing campaign could open new growth avenues.
Service Expansion: The addition of complementary services could add multiple revenue streams.
Client Retention Programs: Introduce customer loyalty and referral programs to further stabilize and increase revenue.
Strategic Partnerships: Form partnerships with real estate firms or construction companies to secure large, long-term contracts.
Technology Utilization: Implementing modern management software could improve operational efficiencies.
🙋🏻♂️ The Buyer
Experienced Manager: Someone with a background in managing large teams will fit right in.
Has or Willing to Acquire C27 License: A buyer should either have the C27 landscaping license or be prepared to acquire it.
Interested in Scalability: With facilities and management in place for growth, the buyer should aim to scale the business.
How did you like this issue of the newsletter?
⚒️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.
PrivSource - PrivSource helps you source deals and connect with transaction partners without ever paying a success fee.
X5 Deals - Proprietary deal sourcing. They do the outreach and send you relevant, actionable deals directly into your inbox.
Rejigg - Platform that connects searchers/investors directly with owners of off-market small businesses ($500k - $10m revenue) considering exits. All deals are sourced by the Rejigg team. Their team adds 7-10 new deals each week.
Acquisition Lab - The Premier Accelerator for Buying a Business created by Walker Deibel, Author of Buy Then Build: How Acquisition Entrepreneurs Outsmart the Start-up Game. They combine world-class education, a vetted community, extensive group coaching, and resources to provide the first do-it-with-you buy-side advisory service.
Smash.vc - Whether you're looking to sell minority stakes in your business to take some chips off the table, looking for a partner to acquire an asset, or needing capital to complete an SBA deal, we'd love to chat with you.
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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