The Business Inquirer #166
Sharing a printing and signage business in WY, a landscaping business, a social listening SaaS, a B2B sales enhancement tool, and an ecommerce brand selling 4x4 parts and accessories.
Hello Friends!
In this week’s issue:
🛒 eCommerce - 1 listing
☁️ SaaS - 2 listings
🏡 Main Street - 2 listings
⚒️ Tools & Resources
💡 How I Can Help
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🛒 eCommerce
Offroad Parts & Accessories for Trucks - $1.3M
Launched in 2014
3 employees; $1,265 AOV; 60k products;
Revenue: $13.5M
Profit: $412k
Margin: 3%
Multiple: 3.15x
💬 Quick Take
This eCommerce brand specializing in off-road parts and accessories for 4×4 trucks boasts a diverse product catalog and proprietary technology stack. The business presents a compelling acquisition opportunity for someone well-versed in the e-commerce space. However, potential buyers should consider the relatively low profit margin and the competitive nature of the eCommerce auto parts market. I think the new owner would need to have a clear plan on increasing the margin of this business.
✅ What I Like
Proprietary Products: Exclusive brands of fog light kits and suspension parts for popular models like Ford F150 Raptor and Ford Bronco.
High AOV: An average order value (AOV) of $1,265 indicates strong customer spending and potential for high revenue per transaction.
Diverse Customer Base: Broad demographic appeal with increasing female shopper presence and a large segment of 25-44-year-olds.
Strategic Marketing: Effective use of PPC ads, email marketing, and SEO to drive traffic and sales.
Operational Efficiency: Well-managed logistics with a US-based warehouse and a proficient team handling key operations.
Growing Market: The off-road and performance auto parts market is experiencing robust growth, providing ongoing opportunities for expansion.
❓ Concerns
Low Profit Margin: A profit margin of 3% is relatively low, which could be a concern for potential buyers looking for higher returns.
Competitive Market: The eCommerce auto parts market is highly competitive, with numerous established players.
Dependence on Digital Marketing: Heavy reliance on PPC and social media ads means fluctuations in ad costs or changes in platform algorithms could impact traffic and sales.
Operational Complexity: Managing a large inventory and multiple supplier relationships adds complexity to operations.
Seasonal Sales Fluctuations: Sales peak during specific months, which could lead to cash flow variability.
Outsourced Functions: SEO and software development are outsourced, which may affect control and agility in making quick strategic changes.
💼 Due Diligence Questions
Inventory Turnover: How often is inventory turned over, and what measures are in place to manage stock levels effectively?
Marketing ROI: What is the return on investment for various digital marketing channels?
Supplier Agreements: Are there long-term agreements with key suppliers, and what are the terms?
Competitive Landscape: How does the business differentiate itself from competitors in the market?
Customer Demographics: Is there detailed demographic data available for the customer base?
Profitability: Are there opportunities to improve the profit margin, such as through cost reductions or price adjustments?
Technology Stack: What technologies power the proprietary tech stack, and how frequently are they updated?
Growth Strategy: What strategies have been implemented for growth, and what are future plans?
Customer Feedback: Are there detailed reports on customer satisfaction and feedback?
🚀 Growth Levers
Expand Product Line: Introducing new products, especially high-margin proprietary items, can attract more customers and increase sales.
Partnerships and Collaborations: Forming partnerships with other brands or influencers in the off-road niche can boost visibility and sales.
Loyalty Programs: Implementing loyalty programs to encourage repeat purchases and improve customer retention.
Content Marketing: Leveraging content marketing, including how-to videos and blog posts, can drive organic traffic and establish authority in the niche.
Optimize SEO: Continuing to enhance SEO efforts can improve organic search rankings and reduce dependence on paid ads.
Enhance Customer Experience: Improving the website user experience and customer service can lead to higher conversion rates and customer satisfaction.
Diversify Marketing Channels: Exploring additional marketing channels, such as affiliate marketing or influencer partnerships, can reduce reliance on PPC ads.
🙋🏻♂️ The Buyer
Tech-Savvy: The ideal buyer should have a strong understanding of eCommerce platforms and digital marketing.
Automotive Enthusiast: A passion for off-road vehicles and the automotive industry will help in understanding the customer base and product offerings.
Operational Expertise: Experience in managing inventory and supplier relationships is crucial for maintaining operational efficiency.
Marketing Proficiency: Proficiency in digital marketing strategies, including PPC, SEO, and social media, is essential for driving traffic and sales.
Customer Focused: A focus on customer satisfaction and retention will be key to sustaining and growing the business.
☁️ SaaS
B2B Sales Enhancement Tool - $3.1M
Launched in 2006
Revenue: $1.2M
Profit: $788k
Margin: 66%
Multiple: 3.93x
💬 Quick Take
This B2B website tracking platform offers a lucrative acquisition opportunity with a robust 66% profit margin and a valuation of approximately 3.93x cash flow. With a solid base of 500 paid users and consistent traffic, the business presents significant growth potential. However, the elevated valuation and competitive industry landscape warrant careful consideration.
✅ What I Like
High Profit Margin: The business boasts a substantial profit margin of 66%, indicating efficient operations and strong revenue generation.
Stable Customer Base: With 500 paid users, the platform has a reliable and recurring revenue stream, providing financial stability.
Consistent Traffic: Attracting 110,000+ visitors annually, the platform demonstrates strong market interest and engagement.
Scalable Model: The digital nature of the service allows for easy scalability without significant increases in overhead costs.
Market Demand: The growing importance of sales intelligence and lead generation tools in B2B sales ensures ongoing demand for the platform.
Diverse Clientele: Serving a wide range of B2B companies minimizes dependency on any single industry or client.
Established Reputation: Years of operation and a proven track record build trust and credibility in the market.
❓ Concerns
High Competition: The market for B2B sales enhancement tools is competitive, with numerous players offering similar services.
Technology Risk: Rapid technological advancements could render current offerings obsolete if the platform fails to innovate.
Economic Sensitivity: B2B spending on sales tools can fluctuate with economic cycles, potentially affecting revenue.
Integration Challenges: Integrating the platform with existing CRM and sales systems can be complex and time-consuming for clients.
💼 Due Diligence Questions
Churn Rate: What is the current customer churn rate, and what measures are in place to reduce it?
Customer Acquisition Costs: What are the costs associated with acquiring a new customer? Can it be broken out by marketing channel?
Technology Stack: What technologies underpin the platform, and how frequently are they updated? Will the dev team transfer with the business?
Competitive Landscape: Who are the main competitors, and how does this platform differentiate itself?
Customer Feedback: Are there detailed reports on customer satisfaction and feedback?
Growth Strategy: What strategies have been implemented for growth, and what are future plans?
Scalability: How scalable is the platform, and what are the costs associated with scaling?
Retention Strategies: What strategies are in place to retain existing customers?
Regulatory Compliance: How does the platform ensure compliance with data protection and privacy regulations?
🚀 Growth Levers
Expand Features: Introducing new features and functionalities can attract more users and enhance the value proposition.
Market Penetration: Aggressive marketing and sales strategies can increase market share in existing markets.
Partnerships: Forming strategic partnerships with CRM providers and other sales tools can boost user acquisition.
Pricing Strategy: Introducing tiered pricing or subscription models can attract a broader range of customers.
Content Marketing: Leveraging content marketing to educate potential customers and drive traffic to the platform.
Customer Support: Enhancing customer support services can improve retention and satisfaction.
Technology Integration: Ensuring seamless integration with popular CRM and sales tools can increase usability and appeal.
🙋🏻♂️ The Buyer
Tech-Savvy: The ideal buyer should have a strong understanding of technology and digital platforms.
Sales Experience: Experience in B2B sales and lead generation will be crucial for leveraging the platform's capabilities.
Customer Focused: A focus on customer satisfaction and retention will be key to sustaining the business.
Resourceful: The ability to leverage existing resources and networks to drive growth and expansion.
Adaptable: The ideal buyer should be adaptable and capable of navigating the fast-changing landscape of sales technology.
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Social Listening Tool - $400k
Launched in 2015
Revenue: $457k
Profit: $130k
Margin: 28%
Multiple: 3.08x
💬 Quick Take
This social listening SaaS offers robust real-time analytics with a diverse feature set, including monitoring across major social platforms and extensive reporting capabilities. The business has a solid profit margin of 28% and is valued at approximately 3.08x cash flow. However, potential buyers should be cautious of the competitive landscape and the need for continuous innovation in the fast-evolving social media analytics space. This business also presents a lot of platform risk.
✅ What I Like
Diverse Monitoring Capabilities: The tool provides comprehensive social listening across major platforms like Twitter, Facebook, Instagram, LinkedIn, YouTube, and TikTok.
Real-Time Analytics: Real-time data analysis with up to 150 KPIs and graphics helps clients understand social chatter quickly and accurately.
Expert Team: The current team has deep expertise in social data management and report creation, providing full-service options for clients.
Strong Market Demand: The growing importance of social media analytics in marketing and opinion research indicates a strong demand for such tools.
❓ Concerns
High Competition: The social listening market is highly competitive, with numerous established players offering similar services.
Technology Dependence: The business relies heavily on its technology stack, which needs constant updating to stay relevant.
Scalability Challenges: As the business grows, maintaining the quality of real-time analytics and customer support could become challenging.
Data Privacy Issues: Ensuring compliance with data privacy regulations is critical, especially when dealing with social media data.
💼 Due Diligence Questions
Team: Will the existing team transfer with the business? What is the cost to replace them?
Churn Rate: What is the current churn rate of subscribers, and what strategies are in place to improve retention?
Technology Stack: What technologies are used to power the platform, and how often are they updated? How expensive is the maintenance?
Customer Feedback: Are there any detailed reports on customer satisfaction and feedback?
Competitive Analysis: How does the platform differentiate itself from competitors in the market?
Revenue Breakdown: What is the revenue breakdown across different subscription tiers and additional services?
Compliance Measures: How does the platform ensure compliance with data privacy regulations?
Innovation Pipeline: What are the plans for future product enhancements and innovations?
Support Structure: What is the current structure of customer support, and how scalable is it?
Historical Data Use: How often do clients utilize the historical data feature, and what impact does it have on customer retention?
🚀 Growth Levers
Enhance Feature Set: Introducing new features and integrations with other tools can attract more users and enhance the value proposition.
Partnerships and Integrations: Forming strategic partnerships with CRM providers and other marketing tools can boost user acquisition and retention.
Customer Education: Providing comprehensive training and support can help clients make the most of the platform, increasing satisfaction and retention.
Tiered Pricing Optimization: Reviewing and optimizing the pricing tiers can attract a broader range of clients, from small businesses to large enterprises.
Content Marketing: Leveraging content marketing to educate potential customers and drive traffic to the platform.
Advanced Analytics: Offering advanced analytics and insights can provide additional value to clients and justify higher subscription tiers.
Customization Options: Providing more customization options for alerts, reports, and dashboards can enhance user experience and satisfaction.
🙋🏻♂️ The Buyer
Tech-Savvy: The ideal buyer should have a strong understanding of technology and SaaS platforms.
Marketing Experience: Experience in digital marketing and social media analytics will be crucial for leveraging the platform's capabilities.
Customer Focused: A focus on customer satisfaction and retention will be key to sustaining the business.
🏡 Main Street
Landscape Design, Construction, Maintenance - $9.9M
Launched in 1991
Based in the Northwest
Revenue: $7.9M
Profit: $2.5M
Margin: 31.6%
Multiple: 3.96x
💬 Quick Take
This landscape design, construction, and maintenance business presents a strong acquisition opportunity with a solid 31.6% margin and a reasonable 3.96x valuation. Its long-standing reputation, skilled workforce, and diverse service offerings make it attractive. However, potential buyers should be mindful of the competitive market and the dependency on the current owner's relationships.
✅ What I Like
Established Reputation: Over 33 years in the industry, this company has built a trusted brand known for quality and integrity.
Diverse Services: Comprehensive offerings from design to maintenance ensure year-round revenue and customer retention.
Skilled Workforce: Many employees have been with the company for over 20 years, indicating loyalty and expertise.
Strong Client Base: Loyal residential and commercial clients, including general contractors and landscape architects.
Organic Growth: The business has grown through word of mouth, minimizing marketing expenses.
Owned Real Estate: Control over facilities and a tree farm reduces dependency on external suppliers and rental costs.
Strategic Differentiation: Growing their own landscape materials and eliminating middlemen reduce costs and enhance competitiveness.
❓ Concerns
Competitive Market: The landscaping industry is highly competitive, requiring continuous innovation to maintain market position.
Owner Dependency: Transitioning relationships and knowledge from the retiring owner to the new owner could be challenging.
Market Saturation: The local market is flourishing but also crowded, which may limit rapid expansion opportunities.
Seasonal Variability: Dependence on seasonal services may result in fluctuating revenues.
Equipment Maintenance: The extensive fleet and equipment require regular maintenance, leading to ongoing operational costs.
Employee Retention: Long-term employee retention is beneficial but may also pose challenges with salary and benefit expectations.
Economic Sensitivity: Landscaping services can be discretionary, potentially impacted by economic downturns.
💼 Due Diligence Questions
Client Contracts: What percentage of revenue is generated from long-term contracts versus one-time projects?
Owner Transition: How will the current owner’s relationships with key clients and suppliers be transferred?
Employee Contracts: Are there employment contracts or non-compete agreements in place for key employees?
Equipment Condition: What is the current condition and age of the fleet and other essential equipment?
Growth Plan: What specific strategies have been identified for future growth and expansion?
Revenue Breakdown: Can you provide a detailed breakdown of revenue by service type and client category?
Seasonal Impact: How does seasonality affect cash flow, and what measures are in place to manage this?
Regulatory Issues: Have there been any past regulatory issues or fines, and how were they resolved?
Competitive Analysis: How does the company’s pricing and service offering compare to key competitors?
Financial Projections: What are the financial projections for the next 3-5 years, and what assumptions are they based on?
🚀 Growth Levers
Digital Marketing: Invest in digital marketing strategies to increase online presence and attract new clients.
Service Diversification: Expand service offerings to include emerging trends in landscaping, such as eco-friendly designs and smart irrigation systems.
Geographic Expansion: Explore opportunities to enter new geographic markets to increase client base.
Strategic Partnerships: Form partnerships with local businesses and contractors to create referral networks.
Upselling Services: Implement a strategy to upsell additional services to existing clients, increasing revenue per client.
Customer Loyalty Programs: Introduce loyalty programs to reward repeat customers and encourage referrals.
Technology Integration: Invest in the latest landscaping technology to improve efficiency and offer innovative services.
Training Programs: Develop comprehensive training programs for staff to enhance skills and service quality.
Brand Strengthening: Enhance brand recognition through community involvement and sponsorship of local events.
Operational Efficiency: Streamline operations to reduce costs and improve service delivery times.
🙋🏻♂️ The Buyer
Industry Experience: Ideal buyers should have experience in the landscaping or construction industry.
Leadership Skills: Strong leadership and team management skills to effectively lead the established workforce.
Growth-Oriented: A focus on growth and expansion strategies to leverage the business’s strong market position.
Client Relationship Management: Ability to maintain and develop long-term client relationships.
Operational Expertise: Experience in managing large-scale operations, including fleet and equipment maintenance.
__ __ __ __ __ __ __ __ ____ __ ____ __ __
Printing & Signage in WY - $400k
Launched in 2016
Operates throughout Wyoming
Revenue: $385k
Profit: $187k
Margin: 49%
Multiple: 2.14x
💬 Quick Take
This full-service printing and signage company offers a compelling acquisition opportunity for those looking for an SMB in Wyoming. The business has demonstrated consistent year-over-year growth and benefits from a loyal customer base, with 60% of revenue generated from repeat clients. However, potential buyers should be aware of the regional market limitations and the hands-on management of the current owner.
✅ What I Like
High Repeat Client Rate: 60% of revenue comes from repeat clients, indicating strong customer satisfaction and loyalty.
Diverse Service Offerings: The company offers a wide range of services, including digital printing, large format printing, custom signage, and vehicle wraps.
Specialized Signage Production: Expertise in producing illuminated signs, such as Channel Letters, Cabinet Signs, Monument Signs, and LED Message Centers.
Strong Cash Flow: The business generates a solid cash flow of $187k from $385k in revenue.
Consistent Growth: Demonstrated consistent year-over-year growth, supported by the expanding population in their areas of operation.
Experienced Team: Employs a team of approximately 20 skilled professionals, including graphic designers, printing technicians, and sales reps.
Referral Program: Effective referral program incentivizes existing clients to bring in new business, enhancing growth potential.
New Market Expansion: Recent entry into the digital press market, expected to grow significantly, providing additional revenue streams.
❓ Concerns
Regional Market Limitations: Operating primarily in Wyoming, the business may face growth limitations due to the regional market size.
Competitive Landscape: While a primary competitor recently closed, new competitors could emerge, affecting market share.
Customer Acquisition Costs: Costs associated with acquiring new clients and expanding into new markets could be substantial.
Operational Dependency: Current ownership is heavily involved in administrative and strategic planning. The transition has to be properly managed.
Scalability Challenges: Scaling the business beyond the current geographic regions may present logistical and operational challenges.
Economic Sensitivity: The printing and signage industry can be sensitive to economic downturns, affecting demand for services.
💼 Due Diligence Questions
Competition: Why did the biggest competitor recently close?
Customer Feedback: Are there any detailed reports on customer satisfaction and feedback?
Competitive Analysis: How does the business differentiate itself from competitors in the market? What is the overall TAM of the market?
Revenue Breakdown: What is the revenue breakdown across different service offerings?
Support Structure: What is the current structure of customer support, and how scalable is it?
Operational Efficiency: Are there opportunities to improve operational efficiency and reduce costs?
Market Expansion: Are there plans to expand into new geographic markets or service areas?
🚀 Growth Levers
Expand Service Offerings: Introducing new printing and signage services can attract more clients and increase revenue.
Geographic Expansion: Targeting new geographic regions within and beyond Wyoming can open up additional revenue streams.
Partnerships and Collaborations: Forming partnerships with local businesses and organizations can boost visibility and sales.
Customer Loyalty Programs: Implementing loyalty programs to encourage repeat purchases and improve customer retention.
Content Marketing: Leveraging content marketing, including case studies and customer testimonials, can drive organic traffic and establish authority in the niche.
Optimize SEO: Continuing to enhance SEO efforts can improve organic search rankings and reduce dependence on paid ads.
Enhance Customer Experience: Improving the website user experience and customer service can lead to higher conversion rates and customer satisfaction.
Diversify Marketing Channels: Exploring additional marketing channels, such as social media advertising or influencer partnerships, can reduce reliance on traditional marketing methods.
🙋🏻♂️ The Buyer
Industry Experience: The ideal buyer should have experience in the printing and signage industry or related fields.
Operational Expertise: Experience in managing a team and overseeing day-to-day operations is crucial for maintaining efficiency and growth.
Marketing Proficiency: Proficiency in digital marketing strategies, including PPC, SEO, and social media, is essential for driving traffic and sales.
Community Engagement: Familiarity with the local market and community engagement can help strengthen the business's presence and reputation.
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⚒️Tools & Resources
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