This Week In SMB PE | November 19th, 2024

A Weekly Recap of SMB Deals + Opportunities

Author

Dennis Unrein
November 19, 2024

Welcome to This Week In SMB PE. Our weekly recap of deals in SMB M&A, Micro Private Equity and Self-Funded Search space.

In this newsletter we highlight interesting opportunities from this past week in SMB M&A, Micro Private Equity, and Search Funds.

We target cash-flowing companies under $10MM in acquisition value.

SMB PE Expert Podcast: The Essential Guide to The Letter of Intent (“LOI”) in SMB M&A

For those looking for a deep dive in SMB, we are hosting weekly experts in the field.

Podcast available on both YouTube (@SMBPE) and Spotify (SMB PE Expert Interviews) for those interested.

The Essential Guide To The Letter Of Intent ("LOI") in M&A

  • What? Discussion with Albrecht Law Partner Eli Albrecht

  • Who? Albrecht Law, a SMB-focused law firm

  • Services? Albrecht Law specializes in M&A representation, tax structuring, and due diligence support for buyers and sellers, independent sponsors and lower middle market private equity firms

  • Experience? Eli Albrecht has extensive experience in M&A, private equity, and corporate law, having worked at top law firms like SMB Law Group, Gibson Dunn & Crutcher and DLA Piper, before founding his own M&A-focused practice, Albrecht Law

We discuss submitting a Letter of Intent (“LOI”) in this week’s episode available on both YouTube (@SMBPE) and Spotify (SMB PE Expert Interviews):

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Prior Posts:

Weekly Deal Reviews SMB PE | Video Reviews

Interested In A Deal? Expanded information included below:

1. 10+ Year Commercial Cleaning Co. - Florida | $1.1M Revenue | $480K Cashflow

Deal Summary:

  • $1.1M Revenue

  • $480K Cashflow

  • $1.6M Ask Price

  • 1.5x Revenue Multiple

  • 3.3x Cashflow Multiple

What Do They Do?

  1. Commercial cleaning services

  2. Churches, Schools, Medical Facilities, Law Offices

  3. Listed by owner (no broker)

Highlights:

  1. Founded 2013, 11 years in business

  2. Owner works 4 hours per week

  3. Fully trained staff and field manager

Risks/ Concerns:

  1. What is the reason for sale?

  2. Operationally heavy business

  3. High competition in cleaning service

2. 60+ Year Pool Company - New York | $8.2M Revenue | $1.3M Cashflow

Deal Summary:

  • $8.2M Revenue

  • $1.3M Cashflow

  • $4.8M Ask Price

  • 0.6x Revenue Multiple

  • 3.7x Cashflow Multiple

What does the Company do?

  1. Pool installation, renovation & service

  2. Inground and vinyl pools

  3. Winter closing and summer opening

Highlights:

  1. 60+ years in business, Est. 1960

  2. Long tenured staff, many 10+ years

  3. Yearly maintenance contracts – recurring revenue

Risks/ Concerns:

  1. Unknown liabilities and environmental

  2. Retaining key team members

  3. Revenue mix between projects vs recurring

3. 25-Year Commercial Sign Co. - Virginia | $2.0M Revenue | $339K Cashflow

Deal Summary:

  • $2.0M Revenue

  • $339K Cashflow

  • $625K Ask Price

  • 0.3x Revenue Multiple

  • 1.8x Cashflow Multiple

What does the Company do?

  1. Commercial signage solutions

  2. Monument signage and custom designs

  3. Small team of 5, 3 FTE + 2x Part-Time

Highlights:

  1. Award-winning national recognition

  2. Customers REITs, Retailers, Shopping Centers

  3. 25+ year in operation, Owner retiring

Risks/ Concerns:

  1. Quality control. What is outsourced?

  2. Customer acquisition costs/ pipeline

  3. Owner dependency risk

4. Set of 3x Laundromats - Oregon | $1.1M Revenue | $375K Cashflow

Deal Summary:

  • $1.1M Revenue

  • $375K Cashflow

  • $2.5M Ask Price

  • 2.3x Revenue Multiple

  • 6.7x Cashflow Multiple

What does the Company do?

  1. Set of 3x laundromats

  2. Serves residential and commercial clients

  3. Dedicated commercial space for 10K daily pounds

Highlights:

  1. Dedicated residential and commercial capacity

  2. Diverse customer base including healthcare

  3. Includes $1.6M in equipment

Risks/ Concerns:

  1. Founded in 2019 - why sell now?

  2. Team hiring needs or concerns

  3. Listed at a high multiple

5. 30-Year HVAC Contractor - New York | $1.1M Revenue | $500K Cashflow

Deal Summary:

  • $1.1M Revenue

    - $500K Cashflow

    - $999K Ask Price

    - 0.9x Revenue Multiple

    - 2.0x Cashflow Multiple

What does the Company do?

  1. Founded in 1994, HVAC services

  2. Commercial and residential clients

  3. Includes 875 ft sheet metal workshop

Highlights:

  1. 30+ years in operation, owners retiring

  2. Major client includes West Point USMA

  3. No marketing budget or advertising

Risks/ Concerns:

  1. Customer concentration (West Point)

  2. Team of 3, owner dependency risk

  3. HVAC vs sheet metal revenue mix %

6. 50+ Year Commercial Rigging Co. - DC | $3.7M Revenue | $858K Cashflow

Deal Summary:

  • $3.7M Revenue

  • $858K Cashflow

  • $2.1M Ask Price

  • 0.6x Revenue Multiple

  • 2.4x Cashflow Multiple

What does the Company do?

  1. Commercial rigging and crane services

  2. Specializes in hauling and storage solutions

  3. Serves government agencies, museums, fortune 1000 clients

Highlights:

  1. 50+ Years in operation, Founded 1969

  2. $2.4M backlog of projects and bids

  3. Strong team, excellent reputation

Risks/ Concerns:

  1. Union-based workforce

  2. Lease expires in July 2025

  3. Retaining key employees

7. 34 Year Sign & Graphic Company - New Mexico | $1.5M Revenue | $392K Cashflow

Deal Summary:

  • $1.3M Ask Price

  • $1.5M Revenue

  • $392K Cashflow

  • 0.8x Revenue

  • 3.3x Cashflow

What does the Company do?

  1. Leading industry sign and graphic franchise

  2. Provides sign and graphic solutions

  3. Store has increased revenue 14 of last 15 consecutive years

Highlights:

  1. Founded in 1990, 34 years in business

  2. Experienced staff in place for new owner

  3. Well known in the community with several repeat customers

Risks/ Concerns:

  1. Franchise fees and obligations

  2. Why sell now? What happened at this specific location

  3. Competition from other signage providers

SMB PE 101 M&A Resources

Interested in learning more about Business Buying and if it is right for you?

We have received inquiries about resources to find, locate and underwrite potential SMBs potential acquisition targets. Beyond please options to follow along below.

1) Free Weekly Newsletter: 1x Weekly Deal Recap of SMB Deals

  • What Is It? Accelerator/ Incubator for Small Business M&A and Micro Private Equity deals

  • “How-To Buy A Business” Content Including: 

    • Process Timeline: Timeline for M&A deals

    • Models: Valuation and financial model for Pre-LOI analysis

    • Searching: Websites, Brokers, Off-Market Strategies

    • 1×1 Coaching Calls: 15 slots weekly for M&A Advisory Calls

    • Databases ($250 Value): Includes all SMB Databases below (60+ marketplaces, 111 Due Diligence Questions, 1,000+ Business Brokers)

  • Investors + SMB Accelerator (Optional): We have 125+ accredited investors that can invest at their discretion for live deals. We present them with interesting deals and they can choose to participate in deals if they choose to.

The average course is $2,000 in the market, so we priced our monthly community at $99 so that we can have something that is constantly adding over time. The average Search can take 12 - 24+ Months making us competitive with those in market for educational products.

  • SMB Marketplaces Database ($49): List of 60+ marketplaces + brokerages search for SMBs. (Link)

  • Due Diligence Volume I Database ($49): List of 111 questions to consider during due diligence. (Link)

  • Business Brokers Database ($149): List of 1,000+ business brokers to contact to increase deal flow. (Link)

Please reach out with any questions or recommendations for the newsletter. We will do our best to incorporate.

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For informational and illustrative purposes only. This communication does not constitute an offer to sell, a solicitation of an offer to buy or a recommendation of any security or any other product or service by SMB PE LLC. Prior to making any further decisions, investors should seek individual advice from their personal financial, tax, legal or other profession advisors to take into account the risks associated with their own specific situation.

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