2024.09.15 - Online Biz Acquisition Opps

Author

Corey Philip
September 15, 2024

Happy Sunday Peeps!

Today weā€™ve got 3 deals that I REALLY like andā€¦ a few deals that didnā€™t make the ā€˜cutā€™.

Iā€™m not including a section of ā€˜interesting, but not for meā€™, and hard ā€˜nopeā€™s below the good deals.

Hereā€™s the list of ā€˜good onesā€™.

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?

This is tough. I like the 3 businesses.

I would go with the recertification business for HR professionals. Itā€™s a ā€˜requiredā€™ digital product that is backed with some type of accreditation ā€” much like the business I recently bought which does CPE courses for accountants. And the multiple is low at 2.5x.

// SaaS Business | AI Business Plan & Financial Modeling Tools | 45% EBITDA | 3.9x Multiple

šŸ’° Asking Price: $1,900,000
šŸ“Š Gross Revenue: $934,959
šŸ’¼ Cash Flow: $487,879
šŸ“… Established: 2012

Overview:
This SaaS business offers AI-driven business plan development and financial modeling tools, with impressive 45% EBITDA margins. The company has a team of 7 employees, allowing for minimal involvement from the owner. Since it was established in 2012ā€”before AI became mainstreamā€”itā€™s crucial to understand how the business has evolved. Reviewing past versions of the website on archive.org could provide insight into what the business was like pre-AI.

The company generates revenue through a mix of consulting services and its subscription-based AI software platform. It has a strong online presence with top SEO rankings, a growing subscriber base, and over 260 5-star reviews.

Highlights:

  • High Margins: 45% EBITDA margins, which is excellent for a SaaS business.

  • Established: Operating for 12 years with a proven track record.

  • Digital Product Offering: Combines AI-driven business plan tools, financial modeling, and consulting services.

  • Fully Staffed: Team of 7 employees runs day-to-day operations, with minimal owner involvement.

  • Strong Reputation: 260+ 5-star reviews and 20,000 subscribers.

Questions:

  • ā“ What was the business model like before AI became a core offering, and how has it evolved?

  • ā“ Are the 45% margins sustainable as the market for AI-driven solutions becomes more competitive?

  • ā“ What growth opportunities exist, particularly in expanding to new markets?

// Online Recertification Training Business | 40%+ Margins | 2.5x Multiple

šŸ’° Asking Price: $600,000
šŸ“Š Gross Revenue: $315,670
šŸ’¼ Cash Flow: $238,307
šŸ“… Established: 2007

Overview:
This online business provides recertification training for HR professionals, offering e-learning courses that are required every three years for certifications from HRCI and SHRM. With high margins typical of digital products, this business stands out by pricing slightly below other major providers, which could be driving customer loyalty. The recurring need for certification makes this business evergreen, with a renewal rate of 75-80%.

While content creation is likely required occasionally, it seems the courses would last a few years without significant updates, making this a low-maintenance business. Currently, the owner only spends 2-3 hours per week on the business, and there is plenty of room for growth through increased marketing efforts, as only $20-25K is spent annually on advertising.

Highlights:

  • Evergreen Market: Courses are required every three years, providing steady recurring revenue.

  • High Margins: Achieves strong margins typical of digital products while pricing competitively.

  • Loyal Customer Base: Serves around 16,000 HR professionals, with a high renewal rate.

  • Low Involvement: The owner only spends 2-3 hours per week managing the business.

Questions:

  • ā“ How often does new content need to be created or updated for the courses?

  • ā“ What is the potential to scale by increasing marketing spend, given that only $20-25K is spent on ads annually?

  • ā“ Are there any industry changes on the horizon that could affect the recertification requirements?

// Synthetic Diamond eCommerce Brand | 2.9x Multiple


šŸ’° Asking Price: $615,000
šŸ“Š Gross Revenue: $1,334,184
šŸ’¼ Cash Flow: $214,866
šŸ“… Established: 2019

Overview:
This synthetic diamond eCommerce brand offers proprietary designs with 40% repeat customers, which is impressive for any business. Its small, lightweight products make warehousing and shipping efficient. The listing mentions proprietary manufacturing based on internal designs, but thereā€™s no specific detail on how inventory is managed, which could be an important consideration for a new owner.

The product line isnā€™t a trend-driven offeringā€”itā€™s here to stay. The business has cultivated a loyal customer base, with glowing reviews and strong sales on platforms like Etsy. With a 40% repeat rate, customers clearly love the brand. However, margins appear lower, raising questions about the cost of goods sold (COGS) and whether a large portion of revenue is spent on advertising.

Highlights:

  • Small, Easy-to-Ship Products: Efficient for warehousing and shipping, keeping logistics manageable.

  • Proprietary Manufacturing: Based on internal designs, which adds value and limits direct competition.

  • High Customer Loyalty: A 40% repeat customer rate and glowing reviews point to high customer satisfaction.

  • Stable Product Line: The brand isnā€™t reliant on trends, ensuring longevity.

Questions:

  • ā“ How is inventory managed, and what is the current strategy for handling stock?

  • ā“ What are the gross margins after COGS? Could advertising costs be eating into profits?

  • ā“ What percentage of revenue is driven by paid ads, and how reliant is the business on influencer marketing?

View Listing

// Other deals, Interesting but not for meā€¦.

Maybe Iā€™m missing something.

Custom Pop Art Making 570k Asking 2.5x

This one is interesting because the numbers are juicy, and the customers seem happy. Beyond the surface numbers however, what I see is ā€˜trendyā€™ product (pop art is cool until it is not), without any real barriers to entry. But hey this one has been around since 2017, so maybe I am missing something.

Faceless Youtube Channel Making 145k Asking 2.5x

In my opinion Youtube Channels are like Niche sitesā€¦ great to own, shitty to buy. Theyā€™re a one trick pony, entirely at the mercy of the Youtube algo. Faceless Youtube channels being sold are nothing rare, but this one unique in that it actually produces faceless instructional screen share videos as opposed the typical voice over stock footage. And the production of those videos is outsourced.

Gym Management & Lead Gen SaaS Making 400k Asking 6.75x

This gym SaaS is well established in Australia with over 100 clients. The 6.75x asking price is very steep for a small CRM and marketing SaaS, which is a competitive space. I think there are better opportunities out there at the 4-5x valuation.

// Ahh Nope!..

These are deals that seemed alright but after determined they were a hard no.  

Ecom Pet Product Brand Making 206k Asking 2.0x

This pet product business has good margin and a fair bit of highlights, but reading between the lines, they've got a non proprietary product that has benefitted from good distribution, but not much of a business.

Reply

or to participate.