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- 📢 Deal Alert - 5/2/24
📢 Deal Alert - 5/2/24
Harry & Carter
May 02, 2024
Welcome to this week’s edition of Acquisition Alert!
Every Thursday morning you will get 5 of our favorite SMB deals from around the country.
-Harry & Carter
Table of Contents
1. Outdoor Deck Design & Installation
Location: Illinois
Asking Price: $2,475,000
EBITDA: $894,744
Multiple: 2.77x
Revenue: $2,923,650
EBITDA Margin: 31%
Employees: Unknown
List Date: 4/30/2024
Reason for selling: Retirement
Harry & Carter’s thoughts:
A low multiple and a high EBITDA margin - what a great start. While this company brands itself as an outdoor deck and installation business, we like to approach it as a specialty construction business. With this lens, the low multiple and high EBITDA margin characteristics begin to make a little more sense. Specialty construction spending tends to be discretionary, more cyclical and more heavily concentrated in the residential space. That being said, we do like several other of the business’s attributes. For instance, with over three decades of history under the same owner, the company is a recognized brand in its market region. Built in brand reputation and stable market presence is an invaluable characteristic of any small business and should always be recognized as such.
From a financial perspective, the company has consistently maintained profitability and boasts a six-month backlog of projects. While backlogs are a sign of strong product demand, we would like to know what the average backlog over the past couple years has been. Looking at a single data point for backlog data isn’t very helpful, as this figure can be easily manipulated by the seller. The broker also tells us that 2023 marked a milestone year in terms of revenue and cash flow, and the first quarter of 2024 has already seen a 20% increase in revenue compared to the previous year. We’d like to better understand this 20% increase…is it a new customer? A repeat customer? It’s crucial to understand the nature of revenue when valuing any small business.
Inquire:
Link to listing here
Broker: Sun Acquisitions
Contact: 773-825-3077
2. Scaffolding Rentals & Sales
Location: Florida
Asking Price: $3,350,000
EBITDA: $608,293
Multiple: 5.51x
Revenue: $1,875,488
EBITDA Margin: 32%
Employees: 8
List Date: 4/29/2024
Reason for selling: Retirement
Harry & Carter’s thoughts:
A construction equipment rental company with a diversified product offering - no wonder the multiple is north of 5.5x earnings! Any regular reader of this newsletter knows that we love equipment rental companies, especially if the equipment is for a commercial or construction endeavor. This Florida-based company offers rental and sales services for various construction projects, including masonry scaffolding, systems-style scaffolding, temporary stair access, temporary construction trash chutes, post-shoring, and shoring scaffolding. Moreover, they specialize in the design, engineering, and installation of these systems, as well as the capability to design and engineer additional products for the safe support and bracing of structures.
Not only does this business generate revenue from the rental of hardware, but it offers design and engineering services. Revenue diversification is a beautiful thing. We would like to better understand the percentage breakdown of revenue sources and to see where the company’s current strengths lie and where growth opportunities exist.
Inquire:
Link to listing here
Broker: Wayne Fuller (BusinessBroker.net)
Contact: N/A
3. Insurance Adjuster Services
Location: Palm Beach, FL
Asking Price: $3,000,000
EBITDA: $766,000
Multiple: 3.92x
Revenue: $1,738,576
EBITDA Margin: 44%
Employees: Unknown
List Date: 4/27/2024
Reason for selling: Retirement
Harry & Carter’s thoughts:
This Florida-based company has been around since 2011, specializing in all sorts of insurance claim representation services. They're your go-to experts for water damage, roof leaks, hurricanes, floods, fires, mold, and even business interruptions. Before we go further, it’s probably worth explaining what this business actually does: An insurance adjuster investigates insurance claims to determine the extent of the insurance company's liability and the amount of compensation owed to the policyholder. Adjusters negotiate with the policyholder or their representatives to reach a fair settlement amount.
With offices strategically scattered in Boca Raton, Fort Lauderdale, Fort Myers, Orlando, Tallahassee, Tampa, and Jacksonville, this business has the majority of Florida major metro areas covered. While the broker boasts that the company handled 657 claims last year, this single data point is not very helpful. I’d want to know how this figure stacks up against previous years, the average revenue per claim, the cities with the most claims etc. More details around the business activity are required. The owner is described as a behind-the-scenes admin type, not your typical adjuster. While this is great news, a statement like that should always be investigated to determine the owner’s true level of involvement. We always suggest shadowing the owner for a day and see how many times his phone rings or is pulled away from what he was currently focused on.
Inquire:
Link to listing here
Broker: Russel Cohen (BusinessBroker.net)
Contact: N/A
4. IV Therapy and Wellness Spa
Location: Southeast, US
Asking Price: N/A
EBITDA: $1,093,000
Multiple: N/A
Revenue: $4,011,000
EBITDA Margin: 27%
Employees: Unknown
List Date: 4/30/24
Reason for selling: Other opportunities
Harry & Carter’s thoughts:
The popularity of medical spas has surged in recent years, driven by a growing demand for high-end wellness services. This particular establishment offers a comprehensive range of treatments including IV therapy, peptide therapy, vitamin injections, medical weight loss programs, hormone replacement therapy, and medical aesthetics. The rising demand for such services, particularly in affluent regions, underscores the lucrative nature of this market.
Financially, the company demonstrates strong performance, achieving an EBITDA of $1,093,000 alongside gross margins of 80% and EBITDA margins of 27%. These figures reflect strong operational efficiency.
One of the most attractive aspects of the medical spa industry is the recurring revenue stream, and this spa excels in that regard, generating $341,000 per month in recurring revenue! With four existing locations and plans to open two more in 2024, the company is clearly on a growth trajectory.
However, acquiring businesses in this sector often involves navigating complex licensing requirements associated with medical practices. It is reassuring to note that the current owners are willing to provide advisory support, potentially ensuring the retention of necessary licenses. Understanding the role of the key employee and their licensure is crucial; if they possess essential licenses, the buyer could consider incorporating them into the ownership structure to maintain continuity and compliance with regulatory requirements.
Inquire:
Link to listing here
Broker: Sean Fechtmann (Benchmark International)
Contact: 813-898-2350
5. Medical Transport Business
Location: Denver, CO
Asking Price: $1,600,000
EBITDA: $401,619
Multiple: 4x
Revenue: $718,510
EBITDA Margin: 56%
Employees: 9
List Date: 4/25/24
Reason for selling: Other opportunities
Harry & Carter’s thoughts:
This medical transportation company has been operating for over ten years, offering non-emergency transportation services to patients requiring medical assistance. With a fleet of vehicles equipped for wheelchair access, they bill Medicaid, resulting in a 56% profit margin. We're curious about their adjusted EBITDA, as this margin appears high, especially for an insurance-billing company. We like that the company has contracts with healthcare facilities, as this ensures a consistent flow of recurring revenue.
As many of our readers know, we like the senior care sector and see potential for growth in this business as Baby Boomers retire. With nearly 10,000 baby boomers retiring daily, there's a growing need for transportation assistance. Although the listing mentions minimal owner involvement, we'd like clarity on the owner's weekly commitment and responsibilities. Moreover, we like the owner's openness to seller financing, indicating their confidence in the business and willingness to remain engaged.
Inquire:
Link to listing here
Broker: Mike Krieger (BusinessBroker.net)
Contact: N/A
What was your favorite deal this week? |
Disclaimer
This publication is a newsletter only and the information provided herein is the opinion of our editors and writers only. Any transaction or opportunity of any kind is provided for information only. Acquisition Alert does not verify nor confirm information. Acquisition Alert is not making any offer to readers to participate in any transaction or opportunity described herein.