EBIT Newsletter 003

Newly Listed Deals

Pest Control Business

A well-established pest control business with over 50% margins with large client base and streamlined operations.

• 📍 Location: Long Island, NY

• 💰 Asking Price: $2.0M

• 💼 Cash Flow: $0.50M

• 📊 Revenue: $0.86M


• ℹ️ Source: Businesses for Sale

• ⌛ Listed: 1 Days Ago

Overview: This turnkey pest control business, established in 2017, presents a remarkable opportunity to dominate the Long Island market. The current owner is prepared to license the brand name and grant exclusive rights to the Long Island territories. With over 800 active clients primarily in Suffolk and Nassau Counties, the business boasts high margins exceeding 50%, generating revenues of $859,000 and a cash flow of $500,000. Operating from a modern 2,000 sq. ft. office, the company utilizes integrated IT systems and online booking software for streamlined operations. The business has thrived on referrals and repeat customers without any advertising, indicating significant growth potential through targeted marketing strategies. The owner maintains an absentee role, focusing solely on backend management, making this a seamless transition for new ownership.

Commercial HVAC Business

A well-established commercial HVAC business with a 30+ year history and proven profitability.

• 📍 Location: Laredo, TX

• 💰 Asking Price: $2.35M

• 💼 EBITDA: $0.51M


• 📊 Revenue: $1.43M

• ℹ️ Source: Businesses for Sale

• ⌛ Listed: 6 Days Ago

Overview: This well-established commercial HVAC business, founded in 1981, has a 30+ year history of delivering reliable, high-quality services to an extensive list of repeat clients. With proven profitability and a reputation for excellence, the business is positioned for continued growth. Key assets include an owned office and warehouse, an experienced team of eight employees, a full set of equipment, service vehicles, and long-term service contracts. The current owners are retiring and offering training and support to ensure a smooth transition. This is a turnkey opportunity for a buyer seeking a thriving, reputable business.

Underground Utilities Construction Business

• 📍 Location: St. Lucie County, FL

• 💰 Asking Price: $7.90M

• 💼 Cash Flow: $2.08M

• 📊 Revenue: $5.37M

• ℹ️ Source: BusinessBroker.Net

• ⌛ Listed: 3 Days Ago

Overview: This 14-year-old construction business specializes in preparing sites for underground utility installations, focusing on digging and laying conduits and pipes without handling live wires. The company has a skilled crew and over $1.5M in contracted work in progress. It has experienced consistent growth over the past four years, with 2024 projected to be its strongest year. The business secures work on 95% of submitted bids, reflecting its strong industry reputation and high margins. The asking price includes all trucks, trailers, and equipment. The property features a cleared lot with an office, garage, and storage facilities, and the real estate is available for purchase separately at $1.3M. The current owner has held the business for less than a year, which warrants further examination.

SMB Industry Insights

• Sourcing Deals: Identify serious sellers by avoiding ‘might sell’ tire-kickers to streamline acquisitions @lawyer4SMBs

• Business Management: Key SMB performance metric: monthly cash spent to parent company @SievaKozinsky

• Deal Structuring: Business prices usually include working capital, but expect to negotiate for it @TheSMBInvestor

• Buyer and Seller Negotiation: Asset sales benefit buyers; stock sales benefit sellers — each with trade-offs in taxes and risks @TheSMBInvestor

• Financing: Explore self-funded searcher industry report to identify trends @mainshares

• Business Management: Applying lessons from ‘What It Takes’ helped scale an auto repair business from $6M to $45M+ @brianbeers

Self-Funded Search Investing

Stanford's latest search fund study highlights the continued growth and resilience of the model, analyzing 681 funds formed since 1984. In 2023, a record 94 new search funds were launched, though acquisitions slowed to 29 deals, reflecting a moderation from the 2021 peak. Total investor capital deployed was $682 million for 2022-2023, slightly down from $776 million previously.

Financially, search funds delivered strong returns, with an overall IRR of 35.1% and a 4.5x return on investment. Exited companies performed exceptionally, achieving a 42.9% IRR, with 11% of companies generating over 10x returns. The model is also becoming more diverse—79% of searchers are under 35, women now represent 18% of searchers (up from 11%), and more entrepreneurs are launching funds directly out of business school or without MBAs.

Target companies typically had a $14.4M purchase price, 27% EBITDA margins, and a 7.0x valuation multiple, with services, tech-enabled services, and healthcare leading acquisitions. Geographic flexibility continues to grow, with only 35% of acquisitions occurring in the same state as the search, reflecting increased comfort with remote management.

With 57% of searchers successfully acquiring companies and first-year CEO median compensation at $190K base salary plus a $25K bonus, the model remains attractive for entrepreneurs. Consistent returns, evolving demographics, and adaptability to market conditions reinforce the search fund model’s position as a strong path to entrepreneurship through acquisition.

Ask Me Anything with Chris Barrett

Chris Barrett, Managing Director of Midwest CPA, joined the EBIT community to share insights from his extensive experience helping acquisition entrepreneurs navigate deals. With his firm completing 61 Quality of Earnings (QoE) reports last year and currently supporting 70 successful buyers post-close, Chris offered valuable perspectives on what makes deals work – and what causes them to fail.

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