2024.08.22 - Online Biz Acquisition Opps

Hey hey peeps. Itā€™s been 10 days since I sent out my last deal round up.

And in that time I have been business with the new business I acquired. Iā€™m not ready to name drop it yet, but it is in the ā€˜Accredited CPE courses for accountantsā€™ space. The first move was has been a switch to a faster server and improvements to pass Core Web Vitals ā€” one of the ā€˜easy seo winsā€™ identified. This has been a headache as the site is very 'complexā€™ (wordpress with Learndash and Woosubscriptions) and has live users taking courses with subscriptions consistently rebilling. For those curious I am using a Cloudways Vultr HF this has been the highest quality/simplicity for cost I have found and has gotten some very difficult sites to pass the CWV. Yes that was an affiliate link. Iā€™ll be sharing more about the acquisition in time.

šŸ”« Gun to my head question:

If I had to write a check for one of the businesses in this email, with no other details which one would it be?

I like all these businesses tbh. It would have to be the medical writing service. 20 years of history. A well fleshed out team. Yea it does have 2 owners working in the business.. but if I buy a 2.8mm business; Iā€™m going to be diving in anyways.

Letā€™s jump into it!

// 100% Dropship Business | Photochromic Cycling Sunglasses & Accessories

šŸ’° Asking Price: $287,000
šŸ“Š TTM Revenue: $531,965
šŸ’¼ TTM Profit: $106,548
šŸ“… Established: 2019

This 5-year-old dropshipping business specializes in Photochromic Cycling Sunglasses, with a solid 17% profit marginā€”remarkably high for dropshipping. The business thrives on Facebook Ads, driving 80% of sales, and 17% of revenue comes from effective email marketing. The 4.8-star rating and high customer lifetime value (LTV) reflect a strong market position.

2 cents: at a 2.7x multiple with decent margins, this dropship business is fairly priced for a skilled marketer or ecom entrepreneur to acquire, particularly if their is some brand recognition behind it.

Highlights:

  • High Margins: 17% profit margin despite heavy reliance on paid ads.

  • Minimal Involvement: Requires just 6-10 hours/week from the owner.

  • Growth Potential: Significant opportunities to diversify ad channels and expand into platforms like TikTok.

Questions:
ā“ How stable is the supplier relationship?

ā“ Are they selling any other products? Besides sunglasses.

// 23-Year-Old B2B Medical Writing Company | 70 Writers with Advanced Degrees

šŸ’° Asking Price: $2,880,000
šŸ“Š TTM Revenue: $2,826,764
šŸ’¼ TTM Profit: $720,450
šŸ“… Established: 2001

This established B2B medical writing business has been a leader in the medical education industry for 23 years, employing 70 writers with advanced science degrees (MD, PhD, PharmD, etc.). The company has sustained its operations with minimal advertisingā€”less than $1,000 spent over the last yearā€”relying almost entirely on word-of-mouth due to its impeccable reputation.

With impressive longevity and reputation, the 4x asking price appears fair, though the profit margin might seem low. This could be attributed to the high cost of employing writers with advanced degrees. A seasoned project manager handles the day-to-day operations, raising questions about the specific roles of the two owners, who each work 20 hours per week.

Highlights:

  • Long-Established Business: 23 years in the medical education niche.

  • High-Quality Content: Cannot be AI-generated; relies on expert writers with advanced degrees.

  • Minimal Owner Involvement: A seasoned project manager runs day-to-day operations.

  • No Advertising: Almost zero ad spend, sustained by word-of-mouth.

Questions:

ā“ What do the two owners contribute in their 20 hours per week each, given the project manager's role?
ā“ Is the lower margin a result of the high cost of expert writers, and how could this impact profitability?
ā“ Are there opportunities for growth through introducing paid advertising or expanding into new markets?

// 13-Year-Old Custom Software Development Company | Healthcare Focus

šŸ’° Asking Price: $1,200,000
šŸ“Š TTM Revenue: $975,000
šŸ’¼ TTM Profit: $275,000
šŸ“… Established: 2011

This well-established software development company has carved out a niche in the healthcare industry, with over 90% of its portfolio dedicated to healthcare organizations and HealthTech startups. The companyā€™s deep expertise in healthcare regulations and privacy laws makes it a trusted partner in developing custom software solutions that meet strict industry standards. With 70% of its revenue being recurring, this business offers a stable and reliable income stream.

2 cents: Valuation seems a little high at 4.4x but this could be a good opp for a skilled biz dev person to crush it with a established/incumbent offer in a high ticket industry.

Highlights:

  • Healthcare Focus: 13 years in the industry, specializing in custom software for healthcare.

  • Regulatory Expertise: Deep experience with healthcare laws and regulations.

  • Stable Revenue: 70% recurring revenue, indicating strong client retention.

  • Sticky Software: High client loyalty due to the essential nature of the software.

Questions:

ā“ How are they currently acquiring customers?
ā“ Why arenā€™t they bigger? Healthcare software is HUGE

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