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- 📢 Deal Alert - 5/9/24
📢 Deal Alert - 5/9/24
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
(P.S. Give our Instagram a follow to see recent completed SMB deals)
Table of Contents
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1. Landscaping Franchise
Location: Chicago, IL
Asking Price: $640,000
EBITDA: $900,000
Multiple: 0.71x
Revenue: $4,470,000
EBITDA Margin: 20%
Employees: 5
List Date: 5/6/2024
Reason for selling: Retirement
💬Harry & Carter’s thoughts:
Besides HVAC and plumbing companies, landscaping businesses are at the top of our list for sought-after SMB targets. Landscaping service companies have relatively low capex and often have a great recurring-revenue model. The reason this business is selling for a .71x is most likely because it is a franchise. Franchises typically have protected territories to safeguard revenue, however, many franchises have corporate restrictions in place that may limit the businesses upside potential. There is also the possibility that a steep franchise fee exists (the ‘cost’ to operate this franchise) which is typically a percentage of revenue.
60% recurring revenue
Serves residential and commercial clients
Low capex
3 different revenue streams:
Tree care and removal
Pest control
Lawn care
❓️How is the franchise fee structured?
❓️Does the business have long term contracts in place?
❓️What is the percentage of customer concentration?
Inquire:
Link to listing here
Broker: Karen L. (BusinessBroker.net)
Contact: N/A
2. Irrigation Business
Location: Long Island, NY
Asking Price: $3,350,000
EBITDA: $685,000
Multiple: 4.9x
Revenue: $2,500,000
EBITDA Margin: 27%
Employees: 12
List Date: 5/7/2024
Reason for selling: Retirement
💬Harry & Carter’s thoughts:
This irrigation company has been running for over 20 years, servicing a mixture of residential and commercial clients. It has a built in “moat” due to its employees all being certified irrigation technicians. With 27% EBITDA margins, it makes sense that this business is priced at almost 5 times.
50% of revenue from maintenance work
50% of revenue from installation
Clean books
Certified technicians
❓️Are there any contracts with builders or is this just relationship based?
❓️Is the owner the primary troubleshooter?
❓️Is this business seasonal?
Inquire:
Link to listing here
Broker: Kensington Company
Contact: N/A
3. Pool Service & Supply Company
Location: Kentucky
Asking Price: $1,633,000
EBITDA: $828,109
Multiple: 1.97x
Revenue: $2,807,346
EBITDA Margin: 50%
Employees: 6
List Date: 5/5/2024
Reason for selling: Retirement
💬Harry & Carter’s thoughts:
This swimming pool service and supply company has been around for 48 years and services central Kentucky. The company has healthy margins and seems like it has strong systems and staff in place. This is an opportunity we would like to investigate further as it is priced at only about 2x cashflow.
Residential and commercial clients
Retail and service
High margin
❓️What is the owner’s role in the business?
❓️What percentages of revenue come from service vs retail sales?
❓️Does the company have service contracts with these 75+ clients?
Inquire:
Link to listing here
Broker: Sunbelt of St. Louis
Contact: 314-227-1222
4. Event Rental Business
Location: Sarasota, FL
Asking Price: $980,000
EBITDA: $535,587
Multiple: 1.83x
Revenue: $999,851
EBITDA Margin: 54%
Employees: Unknown
List Date: 5/4/24
Reason for selling: Retirement
💬Harry & Carter’s thoughts:
Event rental businesses are great businesses that will not be going obsolete anytime soon. This company rents tents, chairs, linens, and other event paraphernalia to businesses and organizations in Sarasota, Florida. The listing states that the owner is not involved in the business, and they have an “excellent” general manager in place. While this seems very attractive, the 54% EBITDA margin and 1.83x EBITDA multiple, lead me to believe this is not quite a “passive” operation.
High margin
Uninvolved owner
General manager in place
B2B
❓️What is the owner’s role in the business?
❓️What is the average transaction size per rental order?
❓️What condition is the equipment in and what is it’s “shelf life”?
❓️Why is the EBITDA margin so high?
Inquire:
Link to listing here
Broker: BizMLS
Contact: 727-232-0609
5. Auto Products Distributor
Location: Houston, TX
Asking Price: $2,500,000
EBITDA: $798,822
Multiple: 3x
Revenue: $3,835,974
EBITDA Margin: 21%
Employees: Unknown
List Date: 5/7/24
Reason for selling: Unknown
💬Harry & Carter’s thoughts:
This is a company we are very intrigued by - 25 years old, clean books, runs on “auto pilot”, healthy margins, and the owner is offering seller financing… What more could you want? We would be very interested to take a closer look at the financials here and see if this business looks as good on paper as it does on the listing.
Healthy margin for distribution
Business runs on “auto pilot”
Owner lives in Florida and visits the business 3-4 days per month
Seller financing available
Clean tax returns
❓️If the business runs on “auto pilot” why are you selling?
❓️Why is it only priced at 3x for a passive business?
❓️Prior to the last 3 years what did the financials look like?
Inquire:
Link to listing here
Broker: Executive Business Brokers
Contact: N/A
Thanks for reading and don’t hesitate to reach out! - Harry & Carter
👀 Have a favorite industry and need SMB targets? Check out our verified company lists compiled by our expert team: Company Lists
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.