📢 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.

🤝 To see more deals, please visit our website.

📋 For our exclusive company lists, click here.

-Harry & Carter

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Table of Contents

• Landscaping Franchise

• Irrigation Business

• Pool Service & Supply Company

• Event Rental Business

• Auto Products Distributor

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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

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