The Business Inquirer #155
A plumbing/HVAC in MT, a commercial landscaper in WA, hazardous gas mitigation in CO, ice manufacturer in AZ, online education for yacht crew, a no-code directory, SaaS for pet groomers.
Hello Friends!
In this week’s issue:
☁️ SaaS - 1 listing
💼 Online Service - 2 listings
🏡 Main Street - 4 listings
⚒️ Tools & Resources
💡 How I Can Help
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☁️ SaaS
Management Software for Pet Groomers - $335k
Launched in 2019
Offers essential business management tools from online bookings to client management
Revenue: $120k
Profit: $75k
Margin: 63%
Multiple: 4.47x
💬 Quick Take
The SaaS business within the pet industry presents a good opportunity with its high conversion rate from trial to paid users, underscoring the software's value and market demand. Large TAM with strong potential for growth. The business's operational model, requiring minimal technical expertise from the owner, makes it an attractive proposition for a wide range of acquirers. However, the relatively high asking price suggests that a buyer must have a clear strategy for scaling the business.
✅ What I Like
High Conversion Rate
Demonstrates the software's effectiveness and market need.
Niche Market
Targeted solution for pet groomers, a distinct and growing sector.
Scalability
Significant opportunity to expand within the pet grooming market. Very large TAM. Using existing white-label software makes it easier.
Low Operational Requirements
Seller's minimal time commitment indicates efficient operations.
Flexible Ownership
No need for a technical background due to white-labeled, licensed software.
Proven Growth Strategies
Past success with pet grooming shows and other marketing efforts meanings that there are tested strategies.
❓ Concerns
Technical Dependence
Reliance on third-party software could introduce risks.
Marketing and SEO
Requires investment in marketing and SEO to drive traffic and conversions.
💼 Due Diligence Questions
Customer Satisfaction: Can you provide details on customer feedback and retention rates?
Technical Support: Information on the current arrangement with the software developer?
Market Analysis: Insights into the pet grooming market and competitive landscape?
Growth Metrics: Historical data on user acquisition, conversion rates, and churn?
Marketing Strategies: Detailed breakdown of past and planned marketing efforts?
Operational Workflow: Overview of business operations and time commitment required?
Future Plans: Seller's vision for potential growth and expansion areas?
🚀 Growth Levers
Expand Market Reach: Aggressively target the untapped market of pet groomers through digital marketing.
Enhance SEO Efforts: Optimize the website to attract organic traffic.
Leverage Pet Grooming Shows: Reengage with industry shows to boost sign-ups and build relationships.
Cold Outreach Program: Implement a structured cold outreach to potential users.
Referral Programs: Encourage existing customers to refer new users with incentives.
Feature Development: Continuously update and add features based on user feedback.
Strategic Partnerships: Form alliances with pet industry players for mutual growth.
Content Marketing: Create valuable content to establish authority in the pet grooming industry.
🙋🏻♂️ The Buyer
Entrepreneurial Spirit: Motivated individual or team with a passion for the pet industry.
Marketing Savvy: Experience in digital marketing, SEO, and growth hacking to drive business expansion.
Operational Efficiency: Ability to streamline operations and manage business with minimal direct involvement.
Customer-Centric: Focus on maintaining high customer satisfaction and engagement.
💼 Online Service
No-Code Directory & Community - $120k
Launched in 2020
Revenue: $124k
Profit: $39k
Margin: 31%
Multiple: 3.08x
💬 Quick Take
The no-code tools directory and online community present a compelling opportunity for buyers in the tech and entrepreneurial space. I like the niche focus in a growing segment of the market. The business's revenue streams are diversified, including partnerships, newsletters, advertisements, and sponsorships, suggesting a robust business model with room for growth.
✅ What I Like
Niche Market Focus
Specialization in the no-code tools sector targets a growing trend in the tech industry.
Diversified Revenue Streams
Multiple sources of income provide financial stability and growth potential.
Scalability
The business model offers significant opportunities for scaling and expansion.
Community Engagement
A dedicated online community enhances customer loyalty and brand strength.
❓ Concerns
SEO and Marketing
Current need for improvement in marketing and SEO to drive traffic and engagement.
Competition
The growing popularity of no-code solutions has attracted many competitors into the space. Important to differentiate in this market.
Technology Upkeep
Keeping the platform updated with the latest no-code tools and trends.
Monetization Strategy
Refining and expanding monetization methods to boost profitability.
Brand Awareness
Building and maintaining brand awareness in a niche yet expanding market.
💼 Due Diligence Questions
User Metrics: Can you provide detailed metrics on user engagement and retention?
Market Analysis: Insights into the no-code market growth and potential competitors?
SEO Strategy: What SEO and marketing efforts have been made, and what are the results?
Partnership Details: Information on current partnerships and terms?
Technical Infrastructure: Overview of the platform's technical setup and maintenance requirements?
Operational Costs: Detailed breakdown of operational costs and potential areas for efficiency?
🚀 Growth Levers
Expand Product Offering: Introducing new tools and resources to attract a broader audience.
Enhance SEO and Marketing: Investing in SEO and marketing to increase visibility and user acquisition.
Leverage Community: Utilizing the community for feedback, beta testing new features, and word-of-mouth marketing.
Partnership Expansion: Forming new partnerships with no-code tool providers and tech companies.
Content Strategy: Developing a robust content strategy to drive engagement and SEO.
Monetization Innovations: Exploring additional revenue streams such as premium memberships or exclusive content.
Data Analytics: Leveraging data analytics to refine user experience and product offerings.
🙋🏻♂️ The Buyer
Tech-Savvy Entrepreneur: Ideal for individuals or companies with an understanding of the no-code market.
Marketing and SEO Focus: Buyers with expertise in digital marketing and SEO to drive growth.
Community Builders: Those with experience in building and nurturing online communities.
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Training for Yacht Crew & STCW - $677k
Launched in 2020
Revenue: $400k
Profit: $252k
Margin: 63%
Multiple: 2.69x
💬 Quick Take
This yacht crew training platform could be a great acquisition for someone interested in the e-learning space. Doubling profits annually speaks volumes about its operational efficiency and market demand. What's impressive is its ability to offer a comprehensive package—from certifications to CV assistance, ensuring job seekers are not just trained but truly ready for the industry. The potential to expand into over 20 countries is intriguing. The asking price feels reasonable given its growth trajectory, though it demands a deeper dive into its scalability and competitive landscape.
✅ What I Like
Explosive Growth Potential
Doubling profits yearly showcases robust demand and a scalable business model, highlighting the service's value to its target audience.
Niche Market Leadership
Specializing in yacht crew training sets it apart, offering specialized services in a high-value industry.
Comprehensive Service Offering
From online courses to CV assistance, the platform provides an all-in-one solution, increasing its appeal to job seekers.
High Profit Margins
A 63% gross margin is impressive, indicating efficient operations and significant pricing power.
Global Expansion Opportunity
The potential to expand into over 20 countries could dramatically increase the business's footprint and profitability.
Online Delivery Model
Offers scalability and the ability to quickly adapt to market demands without the need for physical presence.
❓ Concerns
Market Penetration Challenges
Expanding into new countries may present regulatory, cultural, and operational hurdles.
Quality Control
Ensuring consistent quality of training and support as the business expands internationally.
Regulatory Compliance
Navigating and complying with varied international regulations for training and certification.
💼 Due Diligence Questions
Customer Satisfaction Metrics: How is customer satisfaction measured, and what are the current levels?
Competitor Landscape: Who are the main competitors, and what are their strengths and weaknesses?
Operational Costs Breakdown: Detailed analysis of current operational costs and projected changes with scaling.
Regulatory Requirements: What are the specific regulatory hurdles for expanding into new countries?
Technology Stack: Details on the technology platform and any proprietary software or content.
Marketing Strategy: How does the business attract new customers, and what is the cost of acquisition?
Staffing and Support: Overview of the staffing model, especially for customer support and content delivery.
Success Stories: Testimonials or case studies of job seekers who have successfully landed positions through the platform.
🚀 Growth Levers
Market Expansion: Strategically enter new countries with high demand for yacht crew positions.
Partnership Development: Collaborate with yachting agencies and companies to create a pipeline for trained professionals.
Curriculum Enhancement: Continually update courses to include emerging trends and technologies in the yachting industry.
Marketing Diversification: Employ a multi-channel marketing approach to reach a broader audience.
Customer Referral Program: Implement a referral program to leverage word-of-mouth in tight-knit yachting communities.
Online Community Building: Foster an online community for alumni and current participants to network and share opportunities.
Mobile App Development: Launch a mobile app to make learning more accessible and engaging.
Certification Expansion: Explore additional certifications that could increase the marketability of trainees.
🙋🏻♂️ The Buyer
Industry Enthusiast: Ideally passionate about the yachting industry, understanding its nuances and appeal.
Educational Background: Experience in online education or training platforms, understanding the dynamics of effective content delivery.
Growth-Oriented: Ready to tackle the challenges of scaling a business internationally, with a vision for global expansion.
Operational Expertise: Skilled in managing operational complexities, especially in customer support and technology integration.
🏡 Main Street
Ice Manufacturer in AZ - $450k
Launched in 2021
40+ steady clients
Revenue: $275k
Profit: $100k
Margin: 36%
Multiple: 4.5x
💬 Quick Take
Break The Ice AZ stands out in the niche market of large cocktail ice manufacturing, serving over 40 steady accounts in the Phoenix area. The company's impressive growth metrics, boasting a 63% year-over-year growth and a projected expansion to $1 million in sales with adequate resources, underscore its significant potential. However, the reliance on further financial backing for expansion and the elevated valuation raise concerns.
✅ What I Like
Strong Growth Trajectory
The business has shown strong year-over-year growth, indicating a solid demand for its product.
High Profit Margin
A 30% return, potentially reaching 40% at full capacity, showcases efficient operations and pricing strategy.
Expanding Customer Base
Over 40 steady accounts with more interested parties suggest a strong market presence and potential for further penetration.
Unique Market Niche
Specializing in large cocktail ice offers a distinct competitive edge in the beverage industry.
Scalable Model
The business model presents clear paths for scaling, especially with additional capital.
Proven Demand
Demonstrated interest from additional accounts indicates untapped market potential.
❓ Concerns
Dependence on Additional Financing
Expansion heavily relies on acquiring further financial support, adding a layer of risk.
Market Saturation Risk
The specialized nature of the product may face challenges in broader market saturation.
Customer Concentration
Overreliance on a limited number of accounts could pose risks if key relationships are lost.
💼 Due Diligence Questions
Customer Retention: What strategies are in place for retaining key accounts and managing customer satisfaction?
Market Analysis: Is there comprehensive research on market trends and consumer demand in the ice industry?
Competitive Landscape: How does Break The Ice AZ differentiate itself from competitors in the same market?
Growth Projections: What are the specific strategies for reaching the projected $1 million in gross sales?
Operational Capacity: What are the current production capacities, and what investments are needed for expansion?
Technology Utilization: How does the business leverage technology in production and customer management?
🚀 Growth Levers
Strategic Partnerships: Collaborating with distributors and event organizers can open new channels for growth.
Digital Marketing: Enhancing online presence through targeted digital marketing campaigns can increase brand visibility.
Operational Efficiency: Investing in automation and technology can improve production efficiency and reduce costs.
Geographic Expansion: Exploring markets outside the Phoenix area could significantly increase revenue streams.
Customer Experience: Focusing on superior customer service and engagement to foster loyalty and referrals.
Sustainability Initiatives: Adopting eco-friendly practices could appeal to environmentally conscious consumers.
🙋🏻♂️ The Buyer
Entrepreneurial Spirit: An individual or team with a strong entrepreneurial drive, ready to take on the challenge of scaling a unique product in a niche market.
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Hazardous Gas Mitigation in Denver, CO - $1.8M
Launched in 2012
Bullet Point
Revenue: $2.5M
Profit: $778k
Margin: 31%
Multiple: 2.31x
💬 Quick Take
This Hazardous Gas Mitigation Company presents a solid investment opportunity with its impressive 31% net profit margin, far above the industry average for service companies. The business's consistent growth in both revenue and earnings, strong online presence, and positive customer reviews stand out as significant strengths. However, potential buyers should be mindful of the reliance on a relatively small team and the need for strategic marketing and operational enhancements to sustain growth. The reasonable valuation, coupled with the business's scalability potential, makes this a compelling proposition for the right buyer.
✅ What I Like
Strong Profit Margins
The business boasts a 31% net profit margin, indicating efficient operations and pricing strategies.
Consistent Growth
With a 20% annual increase in revenues and over 50% in earnings, the company demonstrates robust growth.
High Customer Satisfaction
Excellent ratings across Google, Home Advisor, Yelp, and Angie highlight a loyal customer base and strong market reputation.
Minimal Owner Involvement
The current owner's limited involvement suggests a business that runs effectively with a competent management team.
Scalable Business Model
The potential for expansion into related services offers multiple avenues for growth.
Experienced and Committed Team
The presence of a knowledgeable management team and full-time employees, including a bookkeeper willing to stay, provides stability.
Effective Marketing Strategy: The business's reliance on SEO and online platforms for marketing has proven efficient and cost-effective.
❓ Concerns
Reliance on Key Employees
The dependence on a small management team poses risks if key personnel leave.
Operational Scalability
Ensuring the operational infrastructure can support growth without sacrificing service quality.
Regulatory Environment
Potential changes in environmental regulations could impact operational practices or costs.
💼 Due Diligence Questions
Customer Base: What is the breakdown of your customer base, and how do you ensure customer retention?
Supplier Relationships: Can you describe your relationships with suppliers and any contractual agreements in place?
Competitive Landscape: How do you position yourself against competitors, and what are your key differentiators?
Employee Turnover: What has been the employee turnover rate in the past two years?
Operational Challenges: What are the biggest operational challenges you face, and how do you address them?
Growth Strategy: What strategies do you have in place for growth, and how have they evolved?
Legal and Regulatory Compliance: Are there any current or past legal or regulatory issues?
Technology Use: How does the company utilize technology in its operations, and are there opportunities for improvement?
🚀 Growth Levers
Expand Service Offerings: Broadening the range of services to include home inspections, water damage, and fire mitigation can attract new customers.
Geographic Expansion: Entering new markets within and beyond Colorado can drive revenue growth.
Enhance Online Presence: Investing in digital marketing and SEO to reach a broader audience.
Strategic Partnerships: Forming alliances with real estate agents, builders, and property managers can generate referrals.
Operational Efficiency: Streamlining operations and adopting new technologies for service delivery can improve margins.
Customer Loyalty Programs: Implementing loyalty or referral programs to encourage repeat business and referrals.
Brand Building: Enhancing brand awareness through targeted marketing campaigns and community involvement.
Training and Development: Investing in employee training to improve service quality and expand capabilities.
🙋🏻♂️ The Buyer
Operational Savvy: A buyer with experience in managing and optimizing service-based businesses for efficiency and growth.
Marketing Expertise: Someone with a strong background in digital marketing to enhance the company's online visibility and customer acquisition.
Growth Orientation: An individual or entity looking to expand the business through geographic or service diversification.
People Management: A buyer who values and is skilled at managing relationships with employees and customers, ensuring a smooth transition and continued business success.
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Commercial Landscaping in WA - $2.1M
Revenue: $2.3M
Profit: $750k
Margin: 33%
Multiple: 2.8x
💬 Quick Take
This Commercial Landscaping Company represents a robust acquisition target with its deep-rooted presence in the landscaping sector, servicing a broad spectrum of public and private clients. The company's strengths lie in its diverse and growing project pipeline, valued at over $1.4 million, showcasing its capability to secure and deliver substantial contracts consistently. The family-owned nature and dedicated team add a personal touch to its professionalism, ensuring project excellence. However, reliance on a small core team for project execution could pose scalability challenges.
✅ What I Like
Diverse Client Base
Serves a wide range of sectors, ensuring revenue diversity and stability.
Strong Project Pipeline
With over $1.4 million in upcoming projects, the company demonstrates strong growth potential and reliability in securing contracts.
Flexible Premises Options
The option to lease or purchase the 2.35-acre location adds flexibility for the buyer.
Specialized Team
A dedicated and specialized team underpins the company's success and operational excellence.
❓ Concerns
Operational Scalability
The reliance on a small core team for key projects may limit scalability.
Economic Sensitivity
Fluctuations in public and private sector spending on landscaping projects could impact revenue.
Labor Market Challenges
Finding and retaining skilled labor in landscaping and irrigation installations remains a constant challenge.
💼 Due Diligence Questions
Contract Details: Breakdown of current and future project contracts, including terms and profitability?
Client Relationships: How are long-term client relationships managed and nurtured?
Operational Workflow: Detailed explanation of project management and execution processes?
Employee Retention: Strategies for attracting and retaining skilled labor?
Compliance and Regulations: Current status of environmental compliance and potential regulatory risks?
Technology Utilization: How is technology integrated into operations for efficiency and competitive advantage?
Market Analysis: Insights into market trends and the company's position within the competitive landscape?
Growth Strategies: Plans for business expansion and addressing potential scalability issues?
Seller's Motivation: Reason behind selling and expectations from the transition?
🚀 Growth Levers
Geographic Expansion: Exploring new markets to extend the company's reach.
Service Diversification: Adding related services such as eco-friendly landscaping and advanced irrigation solutions.
Technology Integration: Leveraging technology for project management, design software, and customer relations.
Strategic Partnerships: Collaborating with construction firms, architects, and property developers for referral business.
Marketing and Branding: Enhancing online presence and engaging in targeted marketing to attract new clients.
Operational Efficiency: Streamlining operations through process improvements and equipment upgrades.
Staff Training and Development: Investing in employee development to enhance skill sets and service offerings.
Sustainability Initiatives: Emphasizing sustainable and environmentally friendly landscaping solutions to meet growing demand.
🙋🏻♂️ The Buyer
Industry Experience: Ideally has background in landscaping, construction, or related sectors.
Operational Expertise: Possesses strong operational and project management skills to maintain and grow the business.
Growth Mindset: Seeks to expand the business through new services, markets, and strategic initiatives.
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Plumbing & HVAC in MT - $4.4M
Launched in 2000
69% plumbing services, 11% HVAC installs/replacements, 10% boiler replacements, 7% boiler repairs/service and 3% HVAC services
Revenue: $4.2M
Profit: $1.1M
Margin: 26%
Multiple: 4.0x
💬 Quick Take
This business with its 24-year tenure and near-monopoly in its service radius underscores a proven business model and a strong, recognizable brand. The mix of services, leaning heavily towards plumbing, with growing HVAC segments, shows diversification and an ability to capture market needs. The openness of the current owners to support transition significantly de-risks the acquisition. However, the practice of running personal expenses through the business, despite meticulous record-keeping, requires careful due diligence. The need for a new GM might be a challenge but also an opportunity for streamlining and potential operational improvements. The valuation does seem elevated at first glance.
✅ What I Like
Diverse Service Offering
A healthy mix of plumbing and HVAC services caters to a wide customer base.
Strong Brand Recognition
A well-established brand in Montana known for quality and reliability.
Owner Support
The willingness of the owners to provide licenses and technical support post-sale.
Solid Staff
A robust team that underscores the business's operational strength.
Consistent Growth
Year-over-year growth showcases the business's resilience and market demand.
Transition Flexibility
Owners' openness to a longer transition period or part-time involvement provides continuity.
❓ Concerns
Management Transition
The necessity to hire a new GM could introduce operational risk.
Personal Expenses
The practice of running personal expenses through the business necessitates thorough due diligence.
Licensing Requirements
The technical and licensing aspects of plumbing and HVAC services require specific expertise.
Staff Retention
Ensuring the retention of key staff members during the transition is critical.
💼 Due Diligence Questions
Staff Structure: Insights into the current staff hierarchy and roles?
Market Analysis: Detailed analysis of market share, competitors, and growth potential?
Customer Base: Breakdown of residential vs. commercial clients and revenue distribution?
Operational Processes: Overview of current operational processes and efficiency measures?
Growth Strategy: Plans for future growth and expansion, including potential markets or services?
🚀 Growth Levers
Service Expansion: Broadening the scope of HVAC services given its current smaller revenue share.
Geographic Reach: Expanding service areas beyond the current 75-mile radius to capture more market share.
Technology Integration: Leveraging technology for operational efficiency and enhanced customer experience.
Marketing Strategies: Enhancing digital marketing efforts to strengthen brand presence and customer acquisition.
Training and Development: Investing in staff training to elevate service quality and expand service offerings.
Partnership Development: Establishing partnerships with construction companies and real estate developers.
Sustainability Practices: Integrating eco-friendly and energy-efficient solutions into service offerings.
Customer Loyalty Programs: Developing loyalty programs to encourage repeat business and referrals.
🙋🏻♂️ The Buyer
Industry Expertise: Ideally has experience in plumbing, HVAC, or related fields.
Operational Leadership: Capable of stepping into a GM role or hiring suitable management.
Technical Understanding: Appreciates the technical complexities of plumbing and HVAC services.
Customer-Focused: Committed to maintaining high service standards and customer satisfaction.
Community Oriented: Values the business's local presence and aims to strengthen community ties.
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