The Business Inquirer #164
Sharing a niche SaaS for nutrition coaches, a peer group, an IT MSP, construction material distributor, and a landscaping business in Napa Valley.
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In this week’s issue:
☁️ SaaS - 2 listings
💼 Online Service - 1 listing
🏡 Main Street - 2 listings
⚒️ Tools & Resources
💡 How I Can Help
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☁️ SaaS
Platform for Nutrition Coaches - $198k
Established in 2020
SaaS model with monthly or annual contracts
Revenue: $101k
Profit: $54k
Margin: 53%
Multiple: 3.7x
💬 Quick Take
I like niche SaaS businesses such as this one. The platform provides nutrition coaches with essential tools to enhance their services. However, there is a lot of competition in this space and scaling this type of business takes a lot of investment.
✅ What I Like
Specialized Market Focus: Developed by sports nutritionists, it addresses the specific needs of sports nutrition coaches and their clients.
Comprehensive Toolkit: Offers a wide range of features, including habit building, education delivery, and tailored nutrition programming.
Subscription Model: Recurring revenue from monthly and annual subscriptions ensures steady cash flow.
Large TAM: A large target audience of 1.3 million sports nutritionists and 3.6 million personal trainers and coaches.
Flexibility for Expansion: Potential to pivot and expand services to a broader market of online health and fitness coaches.
❓ Concerns
Market Saturation: The online coaching space is highly competitive, with many SaaS solutions available.
Scalability: Scaling user adoption and maintaining customer satisfaction as the platform grows could be challenging.
Technology Upkeep: Continuous updates and improvements to the platform are necessary to stay competitive.
Client Retention: Keeping coaches and their clients engaged and renewing their subscriptions is crucial for long-term success.
💼 Due Diligence Questions
User Retention Rates: What are the current user retention and churn rates?
Customer Acquisition Cost: How much does it cost to acquire a new customer?
Technological Roadmap: What is the current development roadmap for platform improvements?
Customer Support: What kind of customer support is currently provided, and are there plans to expand it?
Competitive Analysis: How does this platform compare to competitors in terms of features and pricing?
Market Penetration: What percentage of the target market has been penetrated so far?
Subscription Plans: Are there plans to introduce new subscription tiers or pricing adjustments?
Feedback Mechanisms: How is customer feedback collected and integrated into product development?
🚀 Growth Levers
Expand Market Reach: Increase marketing efforts to attract more personal trainers and online health coaches.
Introduce New Features: Add new features based on customer feedback to enhance the platform's value proposition.
Partnerships: Form strategic partnerships with fitness equipment manufacturers or nutrition brands.
Referral Programs: Implement a referral program to incentivize current users to bring in new clients.
Content Marketing: Invest in content marketing to establish thought leadership and attract organic traffic.
Webinars and Workshops: Offer educational webinars and workshops to attract potential clients and showcase platform capabilities.
Localized Marketing: Tailor marketing campaigns to specific regions to increase market penetration.
Enhanced Customer Support: Improve customer support services to ensure high customer satisfaction and retention.
🙋🏻♂️ The Buyer
Experience in SaaS: Ideally, someone with a background in SaaS or technology-based businesses.
Health and Wellness Knowledge: Familiarity with the health, fitness, or nutrition industry to understand market needs.
Sales and Marketing Skills: Proficient in driving user acquisition and growth through effective sales and marketing strategies.
Tech-Savvy: Comfortable with managing and improving a technology platform.
Customer-Centric: Focused on providing excellent customer service and support to retain users.
Hands-On Management: Willing to be actively involved in day-to-day operations and strategic planning.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Peer Groups for Entrepreneurs - $120k
Launched in 2023
Revenue: $53k
Profit: $50k
Margin: 94%
Multiple: 2.4x
💬 Quick Take
This is a unique opportunity for a branding/marketing expert. Despite a recent pause in operations due to leadership changes, the business shows proven traction and high customer retention. The right operator can leverage existing assets and affiliate networks to revitalize and scale this promising venture.
✅ What I Like
High Margin: The community business model can be very profitable when properly executed and scaled.
Proven Traction: Demonstrated product-market fit and customer retention validate the business model.
Strong Customer Value: Clients paid $500 per month, showing willingness to invest in the service.
Untapped Affiliate Network: Over 100 affiliates with large followings remain an underutilized asset.
Pre-Paid Vendors: Content production vendors are pre-paid, providing immediate resources for growth.
Founders' Support: Founders are willing to advise and stay on board, ensuring a smooth transition.
Scalable Model: Potential to reach 200 customers a year, equating to $1M ARR with effective marketing.
Ease of Transfer: All necessary hires, IP, tools, and subscriptions are intact and easy to transfer.
❓ Concerns
Paused Operations: The business is currently on pause, which presents uncertainty when operations are resumed.
Marketing and Branding: Requires significant effort in marketing and branding to reach its potential.
Customer Acquisition: Restarting and scaling customer acquisition from a paused state could be challenging.
Competition: The market for peer support and accountability services is competitive.
Affiliate Activation: Activating and managing a large network of affiliates needs focused efforts.
Dependence on Facilitators: Quality of service depends heavily on the skills of professional facilitators.
💼 Due Diligence Questions
Customer Retention: What was the customer retention rate before operations were paused?
Affiliate Engagement: How have affiliates been engaged previously, and what are their current terms?
Operational Plan: What is the plan for resuming operations and re-engaging paused subscriptions?
Competitive Analysis: Who are the main competitors, and what differentiates this business from them?
Facilitator Quality: What are the qualifications and retention rates of the professional facilitators?
Customer Feedback: What feedback have customers provided about the service?
Affiliate Agreements: What are the terms of the agreements with the 100 affiliates?
Content Production: What is the status of the pre-paid content production and the expected output?
Growth Projections: Are there detailed growth projections and strategies for the next 1-3 years?
🚀 Growth Levers
Reactivate Affiliates: Leverage the large affiliate network to drive customer acquisition and brand awareness.
Targeted Marketing: Invest in targeted marketing campaigns to reach founders, executives, and creatives.
Enhance Branding: Revamp branding efforts to make the service more appealing and recognizable.
Content Utilization: Utilize pre-paid content to create valuable resources and attract new customers.
Webinars and Workshops: Offer free webinars and workshops to showcase the value of the service.
Referral Programs: Implement referral programs to incentivize existing users to bring in new clients.
Partnerships: Form strategic partnerships with organizations that align with the target audience.
Customer Feedback Integration: Use customer feedback to continuously improve and tailor the service.
🙋🏻♂️ The Buyer
Marketing Expertise: Ideally, someone with a strong background in marketing, branding, and customer acquisition.
Experience in SaaS & Community: Familiarity with SaaS business models and operations will be beneficial.
Strategic Vision: Able to develop and implement strategies for growth and market expansion.
💼 Online Service
IT MSP - $2.5M
Established in 2010
Based in Milwaukee
Revenue: $2.6M
Profit: $620k
Margin: 24%
Multiple: 4.03x
💬 Quick Take
With strong monthly recurring revenue from educational, nonprofit, and professional service sectors, the company is well-positioned in a lucrative market. However, the high revenue concentration from its top five clients and the sellers' desire to include real estate in the sale may pose challenges for potential buyers.
✅ What I Like
Recurring Revenue: Strong monthly recurring revenue from service agreements ensures steady cash flow.
Diverse Client Base: Serves educational, nonprofit, and professional service industries, reducing dependency on any single sector.
Growth in Access Control Services: Recent initiative in access control and monitoring for education clients shows proactive market adaptation.
Positive Supplier Relationship: Partnership with a hardware provider enhances lead generation and client acquisition.
Experienced Senior Technician: A senior technician manages high-quality leads, ensuring effective sales conversion.
Cyclical Revenue Stability: Strong demand from education clients provides predictable, though cyclical, revenue streams.
Established Management: The business is supported by a business manager and outside accountant, ensuring smooth operations.
❓ Concerns
Client Concentration: The top five clients account for 50% of revenue, posing a risk if any major client is lost.
Sellers' Dual Roles: The husband and wife team hold critical roles, and their exit needs to be carefully planned. Ensuring a smooth transition post-sale could be challenging given the sellers' active involvement.
Real Estate Inclusion: Sellers prefer to sell the building with the business, complicating the transaction for buyers not interested in real estate.
Market Competition: The IT managed services market is competitive, requiring constant innovation and investment into marketing.
💼 Due Diligence Questions
Client Contracts: What are the terms and durations of the existing service agreements?
Transition Plan: What transition support will the sellers provide to ensure continuity?
Client Renewal Rates: What is the renewal rate of service agreements, especially among top clients?
Staff Retention: What measures are in place to retain key staff post-acquisition?
Technological Capabilities: What is the current state of the company's technological infrastructure?
Sales Process: How are sales outside the existing lead funnel generated and managed?
Financial Projections: Are there detailed financial projections available for the next 3-5 years?
Market Position: How does the company position itself against competitors in the Milwaukee area?
Real Estate Terms: What are the terms and potential benefits of including the real estate in the transaction?
Regulatory Compliance: Are there any regulatory or compliance issues that need to be addressed?
🚀 Growth Levers
Expand Service Offerings: Introduce new IT services such as cloud computing, cybersecurity, or data analytics.
Geographic Expansion: Extend services to nearby regions or states to increase market reach.
Marketing Campaigns: Invest in targeted marketing to attract new clients in the education and nonprofit sectors.
Referral Programs: Implement client referral programs to leverage existing relationships for new business.
Partnerships: Form alliances with other tech providers to offer bundled services.
Client Retention Strategies: Develop loyalty programs and regular check-ins to ensure high client retention rates.
Technology Upgrades: Regularly upgrade hardware and software to maintain a competitive edge.
🙋🏻♂️ The Buyer
Industry Experience: Ideally, someone with a background in IT managed services or technology consulting.
Hands-On Management Style: Willing to be actively involved in daily operations, especially during the transition.
Sales and Marketing Skills: Proficient in sales and marketing to drive new client acquisition and growth.
🏡 Main Street
Construction Materials Distribution - $4.9M
Established in 1990
HQ in San Bernardino County, CA
17 FT employees
Revenue: $9.4M
Profit: $1.1M
Margin: 11.7%
Multiple: 4.52x
💬 Quick Take
This well-established construction materials distributor boasts solid financials and a strong market presence in Southern California. The absence of installation services eliminates the need for a contractor license, broadening the pool of potential business buyers. However, the requirement for hands-on management may not appeal to absentee business owners.
✅ What I Like
Established Market Presence: Over 30 years in the business highlights stability and market knowledge.
Diverse Inventory: Offers a wide range of construction materials, catering to both contractors and the general public.
Experienced Staff: Includes key roles such as Operations Manager, Purchasing Manager, and Office Manager, ensuring smooth operations.
Excellent Documentation: Well-prepared financial statements and tax returns indicate transparency and ease of due diligence.
Prime Location: Located in Southern California, a region with high demand for construction materials.
❓ Concerns
Active Management Required: The new owner must be hands-on, which might not suit all buyers.
High Valuation: At 4.5x, the valuation does appear to be elevated.
No Installation Services: Limits revenue streams and potential market reach.
Dependence on Local Market: Economic downturns in Southern California could impact sales.
Inventory Management: Requires careful oversight to avoid overstocking or stockouts.
Employee Retention: Maintaining a skilled workforce is crucial, particularly for key management roles.
Delivery Logistics: Managing a fleet of delivery trucks adds operational complexity.
💼 Due Diligence Questions
Financial Trends: How have the company's sales and profits trended over the past five years?
Customer Base: What is the breakdown of sales between contractors and the general public?
Supplier Relationships: Who are the key suppliers, and what terms are currently in place?
Inventory Management: How is inventory tracked and managed?
Employee Contracts: Are there any long-term employment contracts or key person dependencies?
Lease Terms: What are the terms of the lease for the showroom and warehouse space?
Growth Opportunities: What strategies have been considered for business growth?
Delivery Operations: What are the logistics and costs associated with the delivery service?
Training Plan: What specific training will the seller provide to the new owner?
Competitive Landscape: Who are the main competitors, and what are the company’s competitive advantages?
🚀 Growth Levers
Expand Product Range: Introduce new product lines to attract a broader customer base.
Online Sales Platform: Develop an e-commerce site to reach customers beyond the local market.
Marketing Campaigns: Invest in targeted marketing to increase brand awareness and attract new clients.
Customer Loyalty Programs: Implement programs to retain and reward repeat customers.
Partnerships with Contractors: Strengthen relationships with contractors through exclusive deals and incentives.
Showroom Enhancement: Update the showroom to improve customer experience and showcase products better.
Delivery Service Expansion: Expand delivery services to cover a wider geographic area.
Operational Efficiency: Invest in technology to streamline operations and reduce costs.
🙋🏻♂️ The Buyer
Experienced in Operations: Ideally, someone with a background in managing a small to medium-sized business.
Industry Knowledge: Familiar with the construction materials sector or a related industry.
Hands-On Approach: Willing to be actively involved in day-to-day operations.
Customer Service Focused: Committed to maintaining high customer satisfaction levels.
Strong Leadership Skills: Capable of managing a diverse team of employees.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Commercial Landscape Management - $2.7M
Established in 1991
Serves Napa Valley; 25 employees;
Revenue: $2.9M
Profit: $850k
Margin: 29%
Multiple: 3.18x
💬 Quick Take
Nice opportunity to be in Napa Valley. Established over three decades ago, it has built a reputation for high-quality, customized services in the region. Its commitment to environmental stewardship and community support enhances its appeal. However, the need for personalized service and the specialized nature of its offerings may limit scalability.
✅ What I Like
Established Reputation: Over 30 years in business highlights reliability and strong customer relationships.
Environmental Stewardship: Uses organic products and zero-emission tools, appealing to eco-conscious clients.
Professional Staff: Skilled employees who understand and meet customers' individual goals.
Financial Stability: Strong financials with a 29% margin indicate profitability and efficient operations.
Growth Potential: Current YTD figures are 8% higher than the previous year, showing positive growth trends.
Premium Clientele: Caters to a discerning clientele, which can lead to higher margins and repeat business. On the flip side, may also lead to customer complaints.
❓ Concerns
Personalized Service Requirements: High level of personalized service may limit scalability and require significant owner involvement.
Specialized Market: Niche market in Napa Valley may limit expansion opportunities.
Staff Retention: Maintaining a highly professional staff is crucial and could be challenging.
Environmental Regulations: Adherence to strict environmental standards may increase operational costs.
Equipment Maintenance: Regular updates and maintenance of zero-emission tools could be costly.
Seasonal Variability: Landscaping services might experience seasonal fluctuations in demand.
💼 Due Diligence Questions
Financial Trends: How have the company’s revenues and profits trended over the past five years?
Client Retention: What is the client retention rate, and how often do clients renew contracts?
Staffing: What is the turnover rate for key employees, and how are they compensated?
Equipment Inventory: What is the current state of the equipment, and is there a replacement schedule?
Environmental Practices: Are there any upcoming regulations that could impact the company’s operations?
Customer Demographics: Who are the primary customers, and what is the breakdown between residential and commercial clients?
Contractual Obligations: Are there any long-term contracts in place with clients?
Competition: Who are the main competitors, and what differentiates this company from them?
Growth Opportunities: What strategies have been implemented to achieve the current 8% YTD growth?
Training and Transition: What training and support will the seller provide during the transition period?
🚀 Growth Levers
Expand Service Area: Consider extending services beyond Napa Valley to increase market reach.
Digital Marketing: Invest in digital marketing to attract new clients and enhance online presence.
Service Diversification: Introduce additional services such as irrigation management or outdoor lighting.
Partnerships: Form partnerships with local nurseries and garden centers for cross-promotion.
Client Referral Program: Implement a referral program to encourage existing clients to refer new ones.
Sustainability Certification: Obtain certifications for sustainable practices to attract eco-conscious clients.
Seasonal Packages: Offer seasonal maintenance packages to ensure steady revenue throughout the year.
Technology Integration: Use technology to streamline operations and improve customer service.
🙋🏻♂️ The Buyer
Experience in Landscaping: Ideally, someone with a background in landscape management or horticulture.
Hands-On Management Style: Willing to be actively involved in the day-to-day operations.
Commitment to Quality: Shares the company’s commitment to high-quality, personalized service.
Eco-Conscious: Values and understands the importance of environmental stewardship.
Community-Oriented: Willing to maintain and enhance the company’s community involvement.
Strong Leadership Skills: Capable of managing a professional and skilled team.
Customer Service Focused: Prioritizes customer satisfaction and maintaining high service standards.
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⚒️Tools & Resources
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