🟠 Fire & Gas Protection Biz | What happens if you buy 'too small'?

The SMB Scoop is highlighting a fire and gas protection business for sale. Then after that, three awesome tweets that you likely missed on 1) risks of buying too small 2) beginners guide to buying an SMB and 3) identifying a great deal.

So let’s review this business for sale together:

The Deal 🚀: Fire & Gas Protection, Suppression, Monitoring, Detection, and Alarm Business in the South

• Listing Link: Teaser and NDA Link

• Revenue: $8.0M (2023E)

• EBITDA: $1.6M (2023E)

• CapEx: not provided

What I like the deal:

• This company provides fire and gas protection for petroleum based customers. They provide mandatory, mission critical services that their customers can’t live without. Necessary = good

• Technicians must be on-call, again showing the importance of the services provided and high margins the company is able to achieve

• Nice diversified revenue mix of different components within a facility (general maintenance, fire alarms, sprinklers, emergency lights, etc)

• This business has a tenured history and the technical nature of the technical nature of the company provides a moat vs competitors and new entrants.

Issues: 

• This deal has been on the market for a long time (over a year based on the language in the offering), and was just re-posted. Signals price expectations are too high or seller isn’t serious, figure this out ASAP (seen this a lot with Generational Equity deals)

• Growth over the last few years $4.6M in 2019 to $8M in 2023 may present some financing challenges or limitations? Means you may have to come up with more equity to make the deal work

• 15 customers - likely concentration issues. Figure out who the customers are, how they picked this company as the service provider, how important the seller is. Underwrite the deal assuming you lose the top 2 customers, will you survive? A seller note tied to performance seems smart in a high customer concentration deal like this.

• Claims to be serving ‘multiple industries’ - I don’t buy it based on the services provided but would want to understand the customers here quickly

Listing Teaser Link with NDA

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Bonus offer: Get $500 after you spend your first $1K right here.

1. Nothing inherently wrong with buying smaller <$500K EBITDA, but know the risks going into it

2. Beginner guide to buying an SMB

3. How to identify a great deal

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The SMB Scoop 

Ben Tiggelaar

www.bardocapital.com