This Week In SMB PE | July 29th, 2024

A Weekly Recap of SMB Deal + Opportunities

Author

Dennis Unrein
July 30, 2024

Welcome to This Week In SMB PE. Our weekly recap of deals in the SMB M&A and Micro Private equity 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.

This Week In SMB PE: Deal Summary

  1. Auto Repair & Service Shop - $300K Cashflow (SMB PE Brokered Deal)

  2. Pool Service & Supply - $828K Cashflow

  3. Landscaping Installation Company - $1.4M Cashflow

  4. Pavement Line Painting - $375K Cashflow

  5. DENNY'S Franchise Location - $333K Cashflow

  6. Landscaping Company - $774K Cashflow

  7. Asphalt Repair Company - $465K Cashflow

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SMB PE Paid Resources

We receive inquiries about how to find SMBs for purchase. We launched a community last month to advise and potentially invest in other Searchers. Below are digital products to help speed up your search process.

All-Inclusive Paid Community - $99 Standard Skool Month-to-Month Subscription:

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  • Month 1 Lesson/ Resource Examples:

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One-Time Purchases - No Subscription Required:

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  • 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.

This Week In SMB - Video Deal Reviews (Links Below)

  1. Auto Repair & Service Shop - $300K Cashflow (SMB PE Brokered Deal)

  2. Pool Service & Supply - $828K Cashflow

  3. Landscaping Installation Company - $1.4M Cashflow

  4. Pavement Line Painting - $375K Cashflow

  5. DENNY'S Franchise Location - $333K Cashflow

  6. Landscaping Company - $774K Cashflow

  7. Asphalt Repair Company - $465K Cashflow

If interested in looking into these businesses, we have included more information below.

Disclaimer: Informational purposes only. None of This is not investment advice. Please do your own research (DYOR) and consult your professional tax advisor and legal advisor before making a decision. This is not professional tax advice or legal advice. Any examples used in this material are generic and hypothetical in nature. We list our deals at Seller’s Ask Price to be consistent with online listings and use publicly available information where we can.

1. Auto Repair & Service Shop - Florida - $300K Cashflow

Note: SMB PE LLC may receive affiliation fees on sale as we co-represent the underlying deal. This is our first deal on BizBuySell.

Deal Summary:

  • $1.2M Ask Price

  • $1.3M Revenue

  • 4.0x Multiple

  • $300K Annual Cash Flow

What does the Company do?

  1. Family owned business with 60+ years of operating history

  2. General service, electrical diagnostics, inspections, transmissions

  3. Revenue 30-40% routine services and 60-70% high-margin jobs

  4. Excellent staff in place and loyal, repeat customer base

  5. Strategically positioned in high-visibility area Northeast Florida

Highlights:

  1. Long time history of profitability, Owner retiring

  2. High-end auto with Average Repair Order (ARO) 30%+ vs market

  3. Little to no professional marketing completed to-date, word of mouth

Risks/ Concerns:

  1. Owner-Dependency: How will Owner leaving impact business

  2. Team has great people in place to help with transition, any at risk?

  3. Owner owns underlying Real Estate, have to negotiate terms

2. Pool Service & Supply - Kentucky - $828K Cashflow

Deal Summary:

  • $1.6M Ask Price

  • $2.8M Revenue

  • 2.0x Multiple

  • $828K Annual Cash Flow

What does the Company do?

  1. Established business with 48+ years in operation.

  2. Pool Services: Maintenance + cleaning for 75+ customers.

  3. Pool Supplies: Supply products to commercial clients.

  4. Customers include commercial & residential clients.

  5. Well-trained, tenured staff of 6 with proven systems in place.

Highlights:

  1. Maintenance and recurring revenue on 75+ customers.

  2. Fragmented Market: Opportunities for consolidation.

  3. Established, 48+ years in business and retiring owner.

Risks/ Concerns:

  1. Seasonality: Revenue fluctuations + cash flow stability.

  2. Labor: Talent retention challenges for skilled pool technicians.

  3. Competition: Market saturation and local competitors.

3. Landscaping Installation Company - Louisiana - $1.4K Cashflow

Deal Summary:

  • $3.2M Ask Price

  • $2.0M Revenue

  • 2.2x Multiple

  • $1.4M Annual Cash Flow

What does the Company do?

  1. Established in 1996, business with 25+ years in operation.

  2. Landscaping Services: Installation, Design & Maintenance.

  3. Customers include commercial & residential clients.

  4. Expanded to outdoor spaces (plants, pavers, outdoor structures).

  5. 70% of revenue from landscape installation.

Highlights:

  1. Established business with 25+ year operating history.

  2. Active customer base of 1,200 and high retention rate %'s.

  3. Attractive multiple for someone with experience at 2.2x Cashflow.

Risks/ Concerns:

  1. 70% of the revenue project-based - landscape installation.

  2. Labor: Team of 12 + 10 contracts - learn more about the team.

  3. Cash margin at 70% - want to review with Owner to understand.

4. Pavement Line Painting - Maine - $375K Cashflow

Deal Summary:

  • $1.1M Ask Price

  • $1.1M Revenue

  • 3.0x Multiple

  • $375K Annual Cash Flow

What does the Company do?

  1. Pavement painting company for stripes and markings.

  2. Established in 2011, 13 years in business and Seller is retiring.

  3. Jobs: Town Roadway, Helipads, Airports, Crosswalks, Parking Lots.

  4. Offer regular paint, reflective glass beads and thermoplastic striping.

  5. Does not do Interstate-highways, could be expanded to include.

Highlights:

  1. Established business with 10+ years of operating history (70% fail).

  2. Listed as turnkey business w/ solid team of 8 (2 FT, 1PT, 5 Season).

  3. Materials (paints, glass beads, etc.) all meet federal specifications.

Risks/ Concerns:

  1. Major Highways: Why is now the time to work on major highways.

  2. Seasonality: Fair amount of seasonality in the job - how is that?

  3. Additional FF&E $519K + Inventory $95K not included in ask price.

5. DENNY'S Franchise Location - Maryland - $333K Cashflow

Deal Summary:

  • $1.2M Ask Price

  • $1.9M Revenue

  • 3.6x Multiple

  • $333K Annual Cash Flow

What does the Company do?

  1. Full-Service / Family Style Restaurant offering variety of food items.

  2. Denny's operates under comprehensive franchise system.

  3. Breakfast All Day: Known for serving breakfast items all day.

  4. Casual Dining atmosphere with moderately-priced food.

  5. Appeal to broad spectrum of customers and a diverse menu.

Highlights:

  1. Established location with 34 year operating history.

  2. FF&E good condition, Owner remodel $100K in 2019 roofing + HVAC.

  3. No direct competitors in nearby area. Busy location w/ high volume.

Risks/ Concerns:

  1. Requires the Franchisor to have $1M net worth and $500K liquid.

  2. Franchise rules and limitations on how you want to run the business.

  3. At least 5 years of restaurant management experience required.

6. Landscaping Company - Massachusetts - $774K Cashflow

Deal Summary:

  • $2.2M Ask Price

  • $1.9M Revenue

  • 2.8x Multiple

  • $774K Annual Cash Flow

What does the Company do?

  1. Thriving Landscaping Business in Southeast Massachusetts.

  2. In business for 39 years servicing Residential + Commercial clients.

  3. Lawn maintenance (mowing, edging, trimming).

  4. Landscape design & installation, tree and shrub, seasonal services.

  5. Fertilization and weed control for overgrown plants.

Highlights:

  1. Recurring revenue streams from long-term customer base.

  2. Established company with 39 years operating + Retiring Owner.

  3. Fragmented industry with M&A and Roll-Up opportunities in future.

Risks/ Concerns:

  1. Licensing: General Licenses + Landscaping specific licenses.

  2. Employees + Contractors: What is the breakdown of the team?

  3. Customer Concentration: Any customers accounting for major %?

7. Asphalt Repair Company - Michigan - $465K Cashflow

Deal Summary:

  • $1.2M Ask Price

  • $1.1M Revenue

  • 2.6x Multiple

  • $465K Annual Cash Flow

What does the Company do?

  1. Spray injection & patching to prolong the lifespan of asphalt surface.

  2. Founded in 2009, Owners are ready to retire.

  3. Customers are local municipalities and commercial parking lots.

  4. Owner owns 2,740 sq. ft. building with office space available for sale.

  5. Seasonal Business operating from April through December.

Highlights:

  1. Diversified client base and strong reputation of quality service.

  2. Lower competition market - only a few companies in area.

  3. Strong field managers/supervisors with company 10+ years.

Risks/ Concerns:

  1. Labor Issues: Difficulty retaining skilled talent following deal.

  2. Customer Concentration: Understand % of revenue breakdown.

  3. Capex: Any significant Capex needs for the business next 36 months

SMB PE Disclaimer

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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