This Week In SMB PE | October 22nd, 2024

A Weekly Recap of SMB Deal + Opportunities

Author

Dennis Unrein
October 22, 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.

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Prior Posts:

Weekly Deal Reviews SMB PE | Video Reviews

Interested In A Deal? Expanded information included below:

1. Profitable High-End Day Spa - New York | $1.4M Revenue | $1.4M Cashflow

Deal Summary:

  • $850- $1.4M Revenue

  • $1.4M Cashflow

  • $1.8M Ask Price

  • 1.3x Cashflow Multiple

What Do They Do?

  1. High-end day spa & couples massage

  2. Facials, massages, mani/pedi, scrubs

  3. Bachelorettes + birthday events

Highlights:

  1. Optimized for SEO, 4,000+ Five Star Reviews

  2. Fully staffed team, 3x over 10 years tenure

  3. Extensive client database of 56,000 individuals

Risks/ Concerns:

  1. Why sell now? Established in 2022

  2. Competition among NYC day-spa market

  3. Unknown liabilities & regulatory issues

2. 50+ Year Legacy Auto Repair & Service Shop - Florida | Revenue | Cashflow

Note: We are acting as the M&A advisor on this deal

Deal Summary:

  • $1.3M Ask Price

  • $1.3M Revenue

  • $388K Cashflow

  • 3.5x Cashflow Multiple

  • 1.0x Revenue Multiple

What does the Company do?

  1. Family-owned Auto Repair Shop, since 1960s

  2. General repair, maintenance, inspections

  3. Revenue 30-40% general, 60-70% specialized jobs

Highlights:

  1. Long-history of profitability, cashflow

  2. Owner retiring to spend time with family

  3. Little to no marketing to-date, majority word-of-mouth customer acquisition

Risks/ Concerns:

  1. Team transition + integration issues

  2. Owner owns underlying Real Estate, open to negotiate a new lease or purchase

  3. Owner dependency risk

3. Commercial & Government Roofing - New York | $18.1M Revenue | $1.7M Cashflow

Deal Summary:

  • $18.1M Revenue

  • $1.7M Cashflow

  • $6.6M Ask Price

  • 3.7x Cashflow Multiple

What does the Company do?

  1. Commercial & government roofing services

  2. Hospitals, schools, police, fire and gov agencies

  3. Founded 2014, 10+ years in operation

Highlights:

  1. 1. Established business, owner retiring

    2. Loyal customers, $12M in pipeline projects

    3. Includes $3.3M equipment + vehicles

Risks/ Concerns:

  1. Retaining key employees

  2. Team of 51 integration post-close

  3. Regulatory & compliance requirements

4. Business Focused-Podcast - Florida | $1.9M Revenue | $1.9M Cashflow

Deal Summary:

  • $1.9M Revenue

  • $1.9M Cashflow

  • $6.5M Ask Price

  • 3.4x Cashflow Multiple

What does the Company do?

  1. Entrepreneurial podcast brand

  2. Hosted over 3,500 episodes

  3. Interviews of successful business leaders

Highlights:

  1. Combined 145M Listens

  2. Lean team, 80-90% profit margins

  3. 10+ years in operation

Risks/ Concerns:

  1. Competition in podcast market

  2. Dependence on podcast host

  3. What is the reason for selling?

5. High-Profit Commercial Roofing - Utah | $5.0M Revenue | $1.5M Cashflow

Deal Summary:

  • $5.0M Revenue

  • $1.5M Cashflow

  • $4.7M Ask Price

  • 3.2x Cashflow Multiple

What does the Company do?

  1. Commercial roofing business

  2. Installation, replacements, repairs

  3. Loyal customer base + referral stream

Highlights:

  1. Established reputation high-quality service

  2. Experienced team, skilled craftsmen

  3. Dedicated project managers in place

Risks/ Concerns:

  1. Competition in local market

  2. Recent growth/ revenue trends

  3. Team retention post-close

6. Self-and Full-Service Laundry: Out of State Owner - North Dakota | $519K Revenue | $213K Cashflow

Deal Summary:

  • $519K Revenue

  • $213K Cashflow

  • $769K Ask Price

  • 3.6x Cashflow Multiple

What does the Company do?

  1. Self-service laundry

  2. Drop-off wash, dry, and fold services

  3. Shower facilities

Highlights:

  1. Strong cash flow profit margin

  2. $474K in hard assets included in purchase price

  3. Low competition in the area

Risks/ Concerns:

  1. Capex spending required on new machines

  2. Potential economic downturn in oil and agriculture sectors

  3. Overpaying for deal

7. Remote Government IT Solutions - | $3.9M Revenue | $1.9M Cashflow

Deal Summary:

  • $3.9M Revenue

  • $1.9M Cashflow

  • $8.0M Ask Price

  • 2.0x Revenue Multiple

  • 4.1x Cashflow Multiple

What does the Company do?

  1. Provider of IT solutions

  2. Serve public sector entities & municipalities

  3. Services ranging from ERP implementation to Microsoft 365

Highlights:

  1. Fully remote, no central office

  2. Steady government contract clients

  3. Internal employee up for promotion to CEO

Risks/ Concerns:

  1. Single client accounts for 60% of revenue

  2. Competitive landscape

  3. Founded in 2018, why sell now?

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)

  • How to scale to 90K followers in 90 days on Instagram ($999): Formula for posting social media on Instagram that we used to grow to 90,000 followers over 90 days (Link)

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

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