The Business Inquirer #142
Sharing a fitness subscription box, a real estate SaaS and info products biz, an accounting practice, a multi-line HVAC business, B2B janitorial services, and a commercial laundromat in SoFlo.
Hello Friends!
In this week’s issue:
🛒 eCommerce - 1 listing
☁️ SaaS - 1 listing
🏡 Main Street - 4 listings
⚒️ Tools & Resources
💡 How I Can Help
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🛒 eCommerce
Fitness Subscription Box - $1.8M
Launched in 2016
$55 AOV; $900 CLTV; 60% repeat orders;
Revenue: $1.2M
Profit: $418k
Margin: 35%
Multiple: 4.3x
💬 Quick Take
This evergreen subscription box service for fitness enthusiasts exhibits a strong position in a growing market with a 62% repeat order rate and $900 LTV. The combination of a loyal customer base and a diversified sales strategy makes this listing attractive. However, reliance on third-party brands, elevated valuation, and the challenge of maintaining uniqueness in a competitive fitness market are areas of concern.
✅ What I Like
Strong Repeat Customer Base
A 62% repeat order rate indicates a high level of customer satisfaction and loyalty, crucial for sustainable revenue.
High Lifetime Customer Value
An LTV of $900 suggests customers find significant value in the products, indicating strong market fit.
Diverse Sales Channels
Sales through both a branded website and Amazon provide multiple revenue streams and market penetration.
Recurring Revenue Model
The subscription-based model ensures a steady and predictable income stream.
❓ Concerns
Market Saturation
The fitness subscription market is highly competitive, posing challenges in differentiation and customer acquisition.
Dependency on Third-Party Brands
Reliance on other brands for products could limit control over product quality and uniqueness.
Seasonal Revenue Fluctuations
Sharp spikes around holidays suggest potential revenue variability throughout the year.
Operational Expansion Needs
Growth may require more hands-on management and resource allocation.
💼 Due Diligence Questions
Supplier Relationships: How stable and exclusive are the relationships with suppliers providing the fitness products?
Customer Retention Strategies: What strategies are in place to maintain the high repeat customer rate?
Brand Product Development: What plans exist for increasing the range of proprietary products?
Marketing Effectiveness: How effective are current marketing strategies in terms of ROI and customer acquisition costs?
Inventory Turnover Rate: What is the inventory turnover rate, and how does it impact cash flow?
Operational Efficiency: How has the business managed operational challenges, especially with no full-time employees?
Market Trends: How does the business plan to adapt to changing trends in the fitness and subscription box markets?
Customer Feedback Mechanisms: What systems are in place to gather and respond to customer feedback?
Legal Compliance: Are there any legal or regulatory concerns related to the business operation?
🚀 Growth Levers
Enhance Brand Products: Developing more proprietary products could enhance brand identity and customer loyalty.
Expand Marketing Channels: Exploring new marketing avenues, like influencer partnerships and expanded social media campaigns, could increase reach.
Customer Engagement Programs: Implementing loyalty and referral programs could boost customer retention and attract new subscribers.
Seasonal and Themed Boxes: Offering limited edition or themed boxes can create buzz and attract new customers.
Cross-Sell Opportunities: Leverage the email database to offer complementary products or services to existing customers.
Explore International Markets: Expanding into new geographical markets could significantly increase the customer base.
🙋🏻♂️ The Buyer
eCommerce Experience: Ideally, the buyer should have experience in eCommerce, particularly in subscription models.
Fitness Industry Insight: A background or interest in the fitness industry would be beneficial for understanding customer needs.
Marketing Savvy: Strong skills in digital marketing and social media are crucial for continuing the brand's growth.
☁️ SaaS
Real Estate Investor Training & SaaS - $7.5M
Launched in 2018
Revenue from digital info products, SaaS, and coaching
2 founders + 4 employees; All marketing & fulfillment is automated;
Revenue: $1.7M
Profit: $1.3M
Margin: 76%
Multiple: 5.8x
💬 Quick Take
This Real Estate Investor Training & SaaS Business presents a lucrative opportunity with its 76% profit margin and diverse revenue streams including info-products, SaaS, and coaching. Its automated systems and outsourced teams offer ease of management. However, the business's reliance on external sales and marketing teams and the necessity for a new spokesperson may pose transition challenges. The high valuation also requires careful consideration of future growth potential and market stability.
✅ What I Like
High Profit Margin
The 76% profit margin suggests exceptional operational efficiency and strong pricing strategies.
Automated Systems
Over 500 automations using off-the-shelf software technology ensure streamlined operations.
Diverse Revenue Streams
Multiple products and services cater to various customer segments within the real estate investment community.
Established Reputation
High customer satisfaction and a highly rated reputation in the industry build trust and credibility.
Scalable Model
The business's plug-and-play structure and outsourced teams allow for scalability and adaptability.
Large Subscriber Base
An email list of over 180,000 subscribers presents significant marketing and upselling opportunities.
❓ Concerns
Dependence on Outsourced Teams
Reliance on external teams for critical functions like sales and marketing could pose risks.
Transition Challenges
Replacing the founders, especially the spokesperson, may affect customer relationships and brand identity.
High Valuation
The asking price of $7.5M warrants a thorough evaluation of future growth projections and market risks.
Market Volatility
The real estate and training markets can be volatile, potentially impacting future revenues.
Content Updating Needs
Over 2,000 hours of video content will require regular updates to stay relevant.
Customer Acquisition Cost
A CAC of ~$110 to $150 needs to be maintained or improved for sustainable growth.
💼 Due Diligence Questions
Customer Retention Strategies: How does the business plan to retain and upgrade customers from lower-tier to high-ticket offers?
Market Analysis: How does the company plan to adapt to changing real estate market trends and customer preferences?
Team Dynamics: How integral are the current team members, including founders, to the business's operations?
Content Relevance: What strategies are in place to ensure the training content remains current and relevant?
Customer Acquisition Strategy: How sustainable and scalable are the current customer acquisition methods?
Technology Updates: How often are the SaaS and other technological tools updated?
Legal and Regulatory Compliance: Are there any legal or compliance issues related to the business's operations or content?
Customer Feedback and Satisfaction: How is customer feedback collected and used to improve products and services?
Success Stories Verification: Can the success stories of millionaires created be verified and utilized for marketing?
🚀 Growth Levers
Content Expansion: Leveraging the extensive video content to create more engaging and updated training materials.
Market Diversification: Expanding into new real estate markets or offering additional services related to real estate investing.
Technology Advancement: Continuously updating and enhancing the SaaS platform to offer more value to subscribers.
Community Building: Creating a more robust online community for real estate investors to enhance customer engagement.
Strategic Partnerships: Forming partnerships with real estate firms or other relevant businesses for mutual growth.
International Expansion: Exploring opportunities in international real estate markets to diversify customer base.
🙋🏻♂️ The Buyer
Real Estate Background: Ideally, the buyer should have experience or a strong interest in real estate investing.
SaaS and Digital Marketing Knowledge: Familiarity with SaaS platforms and digital marketing strategies is crucial for continued growth.
🏡 Main Street
Chicago Accounting Practice - $1.5M
Launched in 2003
Based in SW Chicago, IL; 6 employees;
Revenue: $1.3M
Profit: $522k
Margin: 40%
Multiple: 3.1x
💬 Quick Take
The accounting firm, with its diverse client base and robust service offerings, exhibits a strong and steady revenue stream. The mix of monthly, quarterly, and annual clients provides a stable cash flow, and the varied services cater to a broad spectrum of client needs. However, the reliance on the owner for transition and the potential need for technology upgrades are areas to consider. The firm's established reputation and loyal clientele base are significant assets, while the challenge lies in ensuring a smooth transition and keeping pace with technological advancements in the accounting field.
✅ What I Like
Diverse Client Base
A broad mix of clients, from monthly to annual, ensures a consistent revenue stream.
Established Firm
With a history since 2003, the firm has a solid footing in the market.
Experienced Staff
A team of six skilled staff members adds to the firm's operational strength.
Owner's Support During Transition
The owner's willingness to assist during the transition period can ensure continuity and client retention.
❓ Concerns
Owner-Dependent Relationships
Client relationships might be heavily reliant on the owner, which could be a risk during the transition.
💼 Due Diligence Questions
Client Retention Strategies: What strategies are in place to retain clients during the ownership transition?
Staff Retention and Expertise: Can you provide details about the staff's expertise and their likelihood of staying post-transition?
Technology Integration: How integrated is the current technology, and what upgrades are needed?
Financial Trends: What are the historical financial trends, and how have they influenced the firm's growth?
🚀 Growth Levers
Technology Upgrades: Implementing the latest accounting software and technology can enhance efficiency and attract a broader client base.
Marketing and Branding: A refreshed marketing and branding strategy could attract new clients, especially in the digital space.
Service Expansion: Expanding services, such as financial advisory or specialized tax services, can open new revenue streams.
Networking and Partnerships: Establishing partnerships with complementary businesses could provide referral opportunities and expand client reach.
🙋🏻♂️ The Buyer
Background in Accounting or Finance: Ideal for buyers with a background in accounting or finance, understanding the industry's nuances.
Vision for Technology Integration: A buyer who recognizes the importance of technology in modern accounting practices.
Client-First Approach: The ideal buyer should prioritize client relationships and retention.
Growth-Oriented Mindset: A buyer looking to expand the business and explore new market opportunities would be well-suited.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
HVAC/Refrigeration Service, Installs, and Rentals - $1.9M
Launched in 1960
Based in Tennessee; Licensed in AR, MS, TN
Revenue: $3.2M
Profit: $580k
Margin: 18%
Multiple: 3.3x
💬 Quick Take
This established HVAC and refrigeration service company presents a lucrative acquisition opportunity, with a notable history of steady growth and diverse service offerings. Its specialization in servicing and renting equipment to a broad range of clients, including medical facilities and restaurants, underlines its market adaptability. The company's recurring revenue model and trusted brand in the metroplex are significant strengths, but the new owner must also consider the ongoing need for skilled technicians and potential market expansion strategies.
✅ What I Like
Diverse Service Offerings
Providing a wide range of HVAC services and specializing in equipment rental ensures multiple revenue streams.
Longstanding Industry Presence
A 63-year legacy in the industry builds trust and reliability among clients.
Strong Recurring Revenue
The proforma indicating $310,000 in earnings from rental equipment and PM revenues highlights a stable income source.
Trusted by Landmark Businesses
The company’s reputation among well-known businesses in the metroplex adds to its credibility.
❓ Concerns
Skill-Intensive Industry
The need for highly skilled technicians is crucial for maintaining service quality.
💼 Due Diligence Questions
Client Retention and Satisfaction: How does the company ensure client retention and what are the satisfaction levels?
Employee Skills and Training: What are the current employee skill levels and training programs in place?
Equipment and Technology Update Needs: Are there any immediate needs for updating equipment or technology to meet current industry standards?
Market Expansion Strategies: What potential strategies exist for expanding the company’s market reach?
🚀 Growth Levers
Technological Upgrades: Investing in the latest HVAC technologies can improve service efficiency and attract more clients.
Marketing Expansion: Implementing a comprehensive marketing strategy can help reach new markets and increase brand awareness.
Employee Training Programs: Developing robust training programs for employees can ensure high-quality service delivery.
Partnership Development: Forming strategic partnerships with complementary businesses could provide additional growth opportunities.
🙋🏻♂️ The Buyer
Experience in HVAC or Related Industry: Ideal for a buyer with experience in the HVAC industry or a similar technical field.
Vision for Technological Adaptation: A buyer who is adept at incorporating new technologies would be advantageous.
Strong Operational Management Skills: The ideal buyer should possess solid skills in managing operations and maintaining service quality.
Growth-Oriented Approach: A buyer with a vision to expand the business's reach and explore new markets would be a good fit.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Janitorial Services in Miami, FL - $2.8M
Launched in 200
Based in Miami, FL
32 contract clients with 52 locations
Revenue: $1.8M
Profit: $708k
Margin: 39%
Multiple: 4.0x
💬 Quick Take
This 23-year-old janitorial service company offers a recession-resistant opportunity, underscored by its diverse client base and high profit margins. The absence of a sales team, web presence, and social media engagement suggests untapped growth potential in marketing and online visibility. Its solid foundation in Miami-Dade and Broward counties, along with a diverse service offering and loyal clientele, makes it an attractive acquisition. The primary challenge lies in modernizing its marketing strategies and maintaining its quality of service during the transition period after the owners' retirement.
✅ What I Like
Recession-Resistant Business
The company's services are essential and in constant demand, regardless of economic conditions.
Diverse Clientele
A broad client base including banks, car dealers, and office buildings ensures stable revenue streams.
Long-Term Operation
Over two decades in business has established the company's reliability and market presence.
Qualified and Loyal Staff
A strong team with a field supervisor contributes to the company's operational efficiency.
❓ Concerns
Lack of Digital Presence
The absence of a website and social media limits the company's visibility and growth potential.
Dependence on Owner's Expertise
The impending retirement of the owners could impact client relations and operational consistency.
Language Barrier
Miami is predominantly Spanish-speaking. The new owner may have to be well-versed in the language.
💼 Due Diligence Questions
Client Contract Details: What are the terms and durations of current client contracts?
Staff Retention Plans: How does the company plan to retain its staff post-acquisition?
Digital Marketing Potential: What are the opportunities for establishing a digital presence to enhance visibility and customer acquisition?
Operational Systems: Are there any established operational systems or processes in place for managing the business?
🚀 Growth Levers
Digital Marketing Strategy: Developing a website and social media presence can significantly increase the company's market reach.
Sales Team Establishment: Hiring a sales team could lead to new client acquisitions and expansion of services.
Service Diversification: Expanding the range of services offered could attract new clients and increase revenue streams.
Geographic Expansion: There's potential for expanding services beyond the current territories to neighboring regions.
🙋🏻♂️ The Buyer
Experience in Service Industry: Ideal for a buyer with a background in the service or janitorial industry.
Digital Savvy: A buyer skilled in digital marketing could capitalize on the untapped online potential.
Operational Management Expertise: The ideal buyer should have strong operational management skills to maintain service quality.
Growth-Oriented Vision: A buyer with a vision for expansion and modernization would find this business particularly appealing.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Commercial Laundry in South Florida - $4.7M
Launched in 2019
27 FT and 32 PT employees
Revenue: $4.5M
Profit: $950k
Margin: 21%
Multiple: 4.9x
💬 Quick Take
This commercial laundry business represents a compelling acquisition, especially considering its solid B2B clientele and recent contract signings. However, the business’s heavy reliance on utilities like gas and water and the significant wage bill point towards operational costs that need careful management.
✅ What I Like
Solid Client Contracts
Established B2B contracts provide a stable and predictable revenue stream.
Scalable Operations
The availability of additional space for expansion supports future growth possibilities.
Strong Employee Base
A sizeable team of direct and staffing employees indicates a robust operational structure.
New Business Contracts
Recent contract signings with a hotel and restaurants demonstrate growing market reach.
❓ Concerns
High Utility Costs
Substantial expenses on utilities like gas and water highlight operational cost concerns.
Dependence on Staffing
Reliance on a large number of staffing employees may pose challenges in maintaining service quality and consistency.
💼 Due Diligence Questions
Client Contract Durations: What are the durations and terms of current B2B contracts?
Utility Cost Management: Are there any strategies in place to manage or reduce high utility costs?
Staffing Model: How sustainable is the current staffing model, and are there plans to convert staffing employees to direct hires?
Expansion Feasibility: What are the specifics regarding the feasibility and costs associated with the potential expansion?
🚀 Growth Levers
Operational Efficiency: Implementing cost-saving measures in utilities and operations can boost profitability.
Marketing and Branding: A focused marketing strategy could attract new clients and sectors.
Technology Integration: Investing in technology for operational efficiency and service tracking.
Expansion into New Markets: Exploring opportunities in untapped markets or sectors for business growth.
🙋🏻♂️ The Buyer
Experience in Commercial Operations: Ideal for buyers with experience in commercial services or laundry operations.
Strategic Vision for Expansion: A buyer with a clear vision for scaling the business and managing operational costs.
Operational Management Expertise: The ideal buyer should possess the capability to efficiently manage a large team and complex operations.
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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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