The Business Inquirer #158
Sharing a niche SaaS for financial advisors, a tourist attraction in Mexico, and a residential landscaping firm in Miami.
Hello Friends!
In this week’s issue:
☁️ SaaS - 1 listing
🏡 Main Street - 2 listings
⚒️ Tools & Resources
💡 How I Can Help
This issue of The Business Inquirer is sponsored by:
Assemble Your Dream M&A Team!
Whether you're a searcher, a private equity firm or family office, or an ambitious SMB, DueDilio is your go-to platform for assembling your dream M&A deal team.
Why Choose DueDilio?
A Vast Network: Discover your ideal M&A advisors, due diligence providers, and post-acquisition support from our curated collection of M&A service providers.
Customized Matchmaking: Skip the stress. Submit your project and receive tailored proposals from qualified M&A service providers that match your needs and budget.
Expertise Where It Counts: Specializing in transactions ranging from $1M to $25M in enterprise value, we speak your language.
Free Resources: Gain an edge with free access to our professionally written templates, checklists, and guides.
🌐 Visit us at DueDilio.com to learn more and start your journey towards a seamless M&A transaction.
☁️ SaaS
Risk Profiling Solution for Financial Advisors - $475k
Launched in 2013
120 paying clients
Revenue: $127k
Profit: $112k
Margin: 89%
Multiple: 4.24x
💬 Quick Take
This business represents a specialized B2B SaaS offering with a solid track record. Its impressive profit margins and streamlined, turnkey operational model are particularly appealing. However, concerns arise from its modest scale and potential risk of customer concentration. I’d question the past barriers to its growth and how a new owner might overcome them. This opportunity could be highly attractive for an individual possessing an extensive network within the financial advisor sector, suggesting that the right buyer could leverage connections to unlock the business's full potential.
✅ What I Like
Profit Margin
With an 87% profit margin, the business demonstrates exceptional financial health and operational efficiency.
Established Customer Base
Serving 120+ customers globally, including prestigious names, indicates a solid market position and brand trust.
Low Churn Rate
The approximate 2% churn rate underscores customer satisfaction and product stickiness.
Automated Operations
Requiring only 24 hours a month to manage, it's a turnkey solution for those seeking a low-maintenance business.
Developer Support
The willingness of the existing developer to continue collaboration ensures a smooth transition and ongoing innovation.
❓ Concerns
Low Scale
Despite its high profit margins and established client base, the business's relatively low total revenue poses concerns regarding its market penetration and scalability
Digital Marketing
Limited experimentation with paid advertising could mean untapped potential or a lack of marketing agility.
In-House Development
A notable risk involves the possibility that financial planners or institutions could opt to develop similar software in-house, especially if they perceive the solution as non-complex or cost-effective to replicate.
💼 Due Diligence Questions
Customer Satisfaction: What feedback mechanisms are in place to gauge customer satisfaction and product improvement suggestions?
Market Analysis: What comprehensive market research has been conducted to identify current and future competition?
Product Roadmap: Is there a detailed product development roadmap, including planned features and integrations?
Regulatory Compliance: How does the business ensure compliance with regulations in all operating regions?
Intellectual Property: What intellectual property rights does the business hold, and how are they protected?
Customer Acquisition Cost: What are the historical and current customer acquisition costs, and how effective are the marketing strategies?
Revenue Concentration: Is revenue heavily concentrated in a few customers, and if so, what risks does this pose?
Succession Planning: What transition support and training will be provided to ensure a smooth handover?
🚀 Growth Levers
Product Expansion: Developing additional features or complementary products could attract new customers and increase revenue per user.
Strategic Partnerships: Forming alliances with financial planning software providers could enhance product utility and market reach.
Salesforce Utilization: Leveraging the Salesforce integration more aggressively could open up new sales channels among IFAs.
Digital Marketing Initiatives: Exploring paid advertising campaigns could increase brand visibility and customer acquisition.
Enterprise Deals: Further pursuing enterprise-level contracts, especially in markets outside the US, could significantly boost revenue.
Subscription Model Flexibility: Offering more flexible or customizable pricing tiers might improve customer retention and attract a wider audience.
Community Building: Establishing a user community for sharing best practices could enhance customer loyalty and product feedback.
🙋🏻♂️ The Buyer
Tech-Savvy Entrepreneur: An individual with a strong grasp of technology and SaaS business models would be ideal.
Financial Industry Acumen: Knowledge of the financial services industry and regulatory environments is crucial for navigating market challenges.
Marketing Proclivity: A buyer with digital marketing expertise could unlock new growth channels and enhance customer acquisition.
Strategic Network: Access to a network in the financial services industry could facilitate partnerships and enterprise sales.
🏡 Main Street
Pirate Ship Party Boat in Mexico - $3.9M
Based in Ensenada, Mexico
Includes 3 boats
Revenue: $8.5M
Profit: $7.5M
Margin: 88%
Multiple: 0.52x
💬 Quick Take
I had to mention this listing when I saw it. The World Famous Devil's Gauntlet Pirate Ship Party Boat presents a unique acquisition opportunity with its high-profile recognition and extensive asset value. Its proven attraction to tourists and celebrities alike, coupled with a comprehensive set of licenses and permits, sets a solid foundation. While the business boasts a strong customer demand and a potentially lucrative revenue stream, the reliance on continuous tourist influx and the challenges of maintaining a specialized service in Ensenada, MX, add complexity to its operation. Heavy due diligence is needed on this one.
✅ What I Like
Celebrity Endorsement
The business has attracted numerous A-list celebrities. The allure of celebrity visits can significantly enhance the brand's appeal to a broader audience.
Turnkey Operation
With trained staff and operational assets in place, the business is primed for a smooth transition to new ownership, ensuring continuity of operations without significant downtime.
Strategic Location
Situated in a prime tourist destination with adjusted cruise liner schedules to accommodate visits, the business is poised to capture a significant share of the tourist market.
Low Owner Involvement
Designed as a lifestyle business, it requires minimal owner intervention, allowing for a more passive investment or the opportunity to focus on growth strategies.
Unique Market Position
Being one of the largest attractions in Ensenada, MX, and offering a unique party experience, sets this business apart from standard tourist offerings, creating a niche market advantage.
❓ Concerns
Market Dependency
The business's success is heavily reliant on the tourist market, making it vulnerable to fluctuations in tourism trends and economic factors affecting travel.
Operational Complexity
Managing a business of this scale, especially with specialized entertainment services and multiple vessels, requires meticulous oversight and effective coordination.
Weather Dependency
Being an outdoor and seasonal operation, weather conditions can significantly impact business performance, particularly during off-peak seasons.
High Operational Costs
The extensive overhead, including staff wages, maintenance, and fuel, although covered within the projected cash flow, remains a considerable financial commitment.
Potential for Unforeseen Expenses
The unique nature of the business and its assets may lead to unexpected maintenance or upgrade costs, particularly given the custom-built nature of the boats.
💼 Due Diligence Questions
Regulatory Compliance History: Have there been any past issues with regulatory compliance, particularly with US Coast Guard certifications and Mexican maritime authorities?
Asset Condition and Maintenance: What are the maintenance records and current conditions of the vessels and retail store inventory?
Staff Retention and Training: What systems are in place for staff training, retention, and morale, especially given the specialized service provided?
Market Analysis: Is there detailed research on the tourist market in Ensenada, MX, including trends, competitor analysis, and customer demographics?
Customer Satisfaction and Feedback: What mechanisms are in place for gathering and addressing customer feedback, and how has this impacted the business?
Legal and Tax Compliance: Can all legal and tax obligations, both in Mexico and regarding any US operations, be thoroughly reviewed and confirmed?
Operational Risks and Insurance: What insurance coverage is in place, and does it adequately cover the range of operational risks, including for international operations?
Expansion Feasibility: What opportunities or plans exist for expanding the business, either through additional services or geographical expansion?
🚀 Growth Levers
Digital Marketing Expansion: Leveraging social media and digital marketing to showcase celebrity visits and unique experiences can broaden the customer base.
Partnership Development: Establishing partnerships with travel agencies, hotels, and cruise lines could secure a steady influx of tourists.
Seasonal Offerings: Introducing seasonal or themed events could attract a wider audience and encourage repeat visits.
Market Diversification: Exploring opportunities to cater to corporate events, weddings, or other private parties could open new revenue streams.
Customer Loyalty Programs: Developing loyalty programs or incentives for repeat customers can enhance brand loyalty and increase repeat business.
Merchandise Expansion: Expanding the retail offering to include online sales of branded merchandise could capitalize on the brand's popularity.
🙋🏻♂️ The Buyer
Entrepreneurial Spirit: Ideal for an individual with a passion for unique business ventures and the drive to engage directly with a dynamic, service-oriented business.
Operational Management Experience: Experience in managing complex operations, preferably in the tourism or entertainment industry, would be crucial for maintaining service quality and efficiency.
Risk Tolerance: Comfortable navigating the inherent risks of a tourist-dependent business, including seasonal fluctuations and regulatory challenges.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Residential Landscaping Firm in Miami - $1.5M
Launched in 1989
Based in Broward Country, FL
Revenue: $1.9M
Profit: $640k
Margin: 34%
Multiple: 2.34x
💬 Quick Take
This landscaping business fits nicely into the Search Fund target criteria. The business doesn’t suffer from seasonality since it’s based in Miami. It has a great margin and valuation seems reasonable at first glance. However, reliance on traditional client acquisition methods and a lack of digital footprint could limit its reach. The balance between maintenance and installation services offers financial stability, making this a ripe opportunity for growth, especially through digital avenues.
✅ What I Like
Established Reputation
Known for quality, the business's strong word-of-mouth referrals highlight its exceptional standing in Dade County's affluent communities.
Financial Stability
A balanced mix of maintenance and installation services provides a stable revenue stream, promising for future operations.
Branding Presence
A distinctive and recognized fleet enhances visibility and brand recognition in the community, contributing to its reputational strength.
Historical Resilience
Operating since 1989, its longevity suggests resilience and a proven business model in the landscape industry.
❓ Concerns
Digital Presence
The absence of a website and digital marketing strategy could hinder broader market reach and customer engagement in today's digital age.
Market Dependence
Focused largely on a niche, affluent market might limit diversification and expose the business to economic fluctuations within that demographic.
Operational Complexity
High-end landscaping services require specialized skills, potentially making staffing and project management more complex.
Client Concentration
Reliance on word-of-mouth and existing clientele may pose risks if key clients are lost or if market dynamics shift.
💼 Due Diligence Questions
Client Base Analysis: What is the breakdown of the current client base, and how dependent is the business on key clients?
Operational Workflow: What systems are in place for project management, client communication, and quality control?
Employee Skills and Retention: What is the level of expertise among current employees, and what are the retention rates?
Digital Strategy Plan: Are there any plans or frameworks in place for establishing a digital presence and marketing strategy?
Competitive Landscape Review: How does the business currently position itself against competitors?
Client Satisfaction Metrics: Are there any client satisfaction surveys or feedback mechanisms that highlight strengths and areas for improvement?
Asset Condition: What is the condition of the physical assets, including the fleet, equipment, and any real estate?
Unprofitable Contracts: Are there any client contracts that are unprofitable or less profitable than others?
🚀 Growth Levers
Digital Marketing Launch: Develop and implement a comprehensive digital marketing strategy to enhance visibility and attract new clients.
Website Development: Create a user-friendly website showcasing project portfolios, testimonials, and service offerings to establish an online presence.
Service Diversification: Expand service offerings to include emerging landscaping trends and technologies, catering to evolving client needs.
Strategic Partnerships: Form partnerships with related businesses, such as home renovation companies, to cross-promote services.
Customer Loyalty Programs: Introduce loyalty programs or referral incentives to encourage word-of-mouth referrals and repeat business.
Operational Efficiency: Invest in project management and customer relationship management (CRM) tools to streamline operations and enhance client satisfaction.
Sustainability Practices: Incorporate eco-friendly and sustainable landscaping solutions to appeal to environmentally conscious consumers.
Brand Building: Enhance branding efforts, including fleet design and uniforms, to increase community presence and brand recall.
Talent Development: Invest in training and development for staff to ensure high-quality service and attract top industry talent.
🙋🏻♂️ The Buyer
Industry Experience: A buyer with experience in landscaping or a related industry would understand the operational and market nuances.
Operational Acumen: Ability to manage complex projects and maintain high service standards is crucial for sustaining the business's reputation.
Leadership Quality: Strong leadership to motivate and retain a skilled team, ensuring operational excellence and customer satisfaction.
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 ($1M - $10M of revenue) considering exits. All deals are sourced by the Rejigg team. Their team adds 7 to 10 new deals each week.
Kumo - 100,000+ deals sourced from thousands of brokers and marketplaces. Plus, AI-powered listings, robust data & analytics, and more.
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
Whenever you’re ready, here are a few ways for us to work together…
Schedule 1:1 consulting on deal sourcing, due diligence, M&A ecosystem, newsletters, entrepreneurship, or anything else you’d like to discuss
Promote your brand to business buyers, investors, SMB owners, and other M&A participants by sponsoring this newsletter
Access or share deal flow with your peers through Deal Flow Scout
Assemble your M&A deal team with DueDilio.
If you enjoyed reading this newsletter, why not share it?