2025.01.26 - Online Biz Acquisition Opps

Good business, but likely over priced. 991k SDE with Food & Cultural Tours.

Author

Corey Philip
January 26, 2025

Happy Sunday folks!

Food & Cultural Tours Company - Asking $5.5M - $991K SDE - 5.55x

Overview:
This 15-year-old business operates fully remotely, providing culinary and cultural tours with a unique blend of food, history, art, and architecture. With $2.7M in revenue and $991K in SDE, the company boasts 17% YoY growth and 37% net margins. Its reputation as a top global experience, backed by over 33,000 positive reviews, sets it apart in the competitive experiential tourism market.

The business runs with a lean structure, utilizing a remote team of contractors to handle operations while maintaining minimal owner involvement. Its ability to operate without a physical office and weather economic challenges like COVID and Zika demonstrates both resilience and scalability. Growth opportunities include enhancing customer experiences, introducing thematic tours, and leveraging technology like mobile apps or augmented reality to attract repeat customers and reach new demographics.

Corey’s Take:
The experiential nature of this business is a massive strength, especially as Millennials and Gen Z continue to prioritize spending on unique and memorable experiences over physical goods. Research consistently shows that this demographic values meaningful interactions, and the company’s tours are well-positioned to capitalize on this trend. Enhancing the experiences further, such as introducing VIP options or more immersive storytelling, could drive growth and increase customer loyalty.

The brand equity here is impressive. Having over 33,000 positive reviews and recognition as a top global experience creates a moat against competitors. This kind of reputation takes years to build and is a major factor in ensuring long-term sustainability.

The operational scalability is intriguing. Achieving this level of success with only two employees and a network of contractors is remarkable, but it does raise questions about quality control. I’d want to understand the management structure for vetting and onboarding contractors and whether the business relies on any key individuals for oversight. It’s possible that the company had a larger internal team during its scaling phase, which could be a consideration for future growth.

In terms of growth, enhancing the tours themselves should be the focus. Adding variety or introducing new themes could increase the repeat customer rate and expand offerings in existing markets. Technology, like mobile apps or augmented reality, could also elevate the customer experience and position the company as a leader in innovation within experiential tourism.

The fact that the business weathered challenges like COVID and Zika speaks volumes about its resilience. Dependence on tourism will always carry some risk, but the evergreen appeal of food and cultural experiences helps mitigate that.

The $5.5M asking price at a 5.55x multiple feels steep unless the brand is organically growing. A high valuation requires evidence of strong, repeatable demand driven by brand recognition and word-of-mouth referrals. If the business can demonstrate that customers actively seek it out and return for more experiences, the valuation could be justified — even then it would be high. However, any reliance on paid marketing to sustain growth would raise concerns about its ability to maintain that multiple.

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