Acquisitions Anonymous - #1 for business buying, selling and operating - $17M Facilities Management Business for Sale: ETA Opportunity?

Episode Date: February 4, 2025

In this episode, we break down a $17M revenue, $1M EBITDA property management and facilities maintenance business in the Great Lakes area. We discuss its appeal to ETA buyers, the impact of private equity moving down market, employee structure, growth opportunities, and financing options. Chelsea from Acquisition Lab and Heather from Viso provide expert insights on the market and lending environment.Business Listing - https://www.caldergr.com/business-listing/286-contractual-facilities-management-company/🔹 Sponsored by Acquisition LabReady to buy a business but don’t know where to start? Acquisition Lab provides hands-on support, world-class resources, and a community of like-minded entrepreneurs to help you succeed. Learn more and schedule a free consultation at AcquisitionLab.com — and tell them Acquisitions Anonymous sent you!🔹 Sponsored by NearHiring global talent is easier than you think! Near helps you find top-tier Latin American candidates for hard-to-fill roles like accountants and CPAs. Get 5% off your first hire at HireWithNear.comKey Highlights:Breakdown of the $17M revenue, $1M EBITDA businessWhy this business is attractive to ETA buyersThe impact of private equity moving down marketEmployee mix and service delivery modelGrowth opportunities and strategic considerationsHow to finance an acquisition like thisExpert insights from Chelsea (Acquisition Lab) & Heather (Viso)Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Every lender, that's the first question they're going to ask is break down the revenue mix, project revenue they're not going to like as much. And they're even going to want to go to like what are the margins for each of those revenue channels. I would just want to make sure whoever's buying it is okay with it maybe not having huge growth potential. Or they have something like Heather was saying, something very specific that makes them the right buyer to grow it, right? Connections to new markets or something like that. So the more I think about this, why is the broker only asking for $300,000 of available capital? I mean, you got Heather's best SBA line.

and it's 10% down, like that's a $3 million purchase price. And we all think it's going to go for more than that. The 37 employees is throwing me off. But if they were subbing out a lot of this and they were just like a project procurement business and they're just helping link you with trades, the margins would make sense to me. Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Hey, everybody.

Welcome back to another episode of Acquisitions Anonymous, the internet's number one podcast for buying and selling small businesses. Mills Snell, one of your co-hosts, we talk about a fascinating business today. It is right down the middle of exactly what ETA entrepreneurship through acquisition is looking for. It's $17 million in revenue, a million dollars in EBITDA. They are a contractual property management, facilities maintenance and management company in the Great Lakes area. It checks a lot of boxes for that type of buyer profile. We talk about private equity moving down market buying these types of businesses. We talk about their employee mix and what that means about the way that they probably deliver services. The growth opportunities, how financeable is this,

what do we think people would be willing to pay for it? We're joined by Chelsea from Acquisition Lab again, one of our repeat co-hosts. She has a great perspective about what she's seeing in the market. Heather has a great perspective from Vizzo about the lending environment for this type of business. I think it's a great episode. Stick around for a quick word from our sponsors. Are you ready to take the leap into business ownership but you don't know where to start? Well, look no further than Acquisition Lab, the premier resource for entrepreneurs seeking to buy their dream business. Founded by Harvard MBA and acquisition expert Walker Dibble, the lab is your fast-tracked success in the search diligence and acquisition process. With hands-on support, world-class resources, and a community of like-minded entrepreneurs, Acquisition Lab gives you the tools and confidence to navigate every step of the journey.

And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream of reality. Visit AcquisitionLab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. All right. Another episode of Acquisition Anonymous. Thanks for being here, Chelsea.

We have a guest today. Thanks for having me. So Chelsea, if you all don't know, Chelsea, she is a recurring co-host with us from Acquisition Lab. And Chelsea tells everybody a little bit about what you do in case I haven't heard you on the show before. I am the co-founder of Acquisition Lab. We are an accelerator to help people buy businesses. We have kind of the distinct, I guess, piece with us in the market is that we are a lifetime membership. So we will help our members buy any companies that they want to buy because most of our members want to buy multiples and your first and your second and your third

and your fourth or none of them are ever alike. And so we want to make sure that we're there to support all of them. Wow. I didn't realize that you had so many kind of serial acquisition and entrepreneurs. Yeah, we have one member who just join our search forum Tuesday, and I think he's working his fifth deal. It's to grow through acquisition, though, most of the time, right? They're not buying a bunch of completely disparate companies. Do you guys, do you have a focus on any industry or is it literally everything?

Literally everything. Things I've never heard of. Which is hilarious. Although yesterday I heard of a business and I can't remember what it was now. And I was like, I thought I've heard of it all, but this is one I've never heard of. Well, I remember the first, I think. episode we ever did with you, Chelsea, was the one with the fitness classes of the drumming on the balls. Cardio drumming. I'd never heard of that before. That's for sure. Cardio drumming, yeah.

Still sounds exciting. I would do it. So Mills has a good one today. Mills, I think you picked this one because this is like a classic search your darling industry. Is it? Bill, you stole my thunder, man. God, go. I'm just kidding. So this business is from Calder Capital. And, And it is in the Great Lakes area. It says it's a contractual facilities management company doing 17.1 million in revenue, a little over a million dollars in cash flow. And the I'm interested button is just tempting me right now. But I'll read for a little bit.

Headquartered in the Great Lakes region, the contractual facilities management company is a trusted provider of comprehensive facility management solutions. its diverse range of services includes electrical repairs, parking lot maintenance, exterior upkeep, snow removal, and landscaping, leveraging an extensive network of skilled vendors, the contractual facilities management company that is such a mouthful, ensures that every project is executed by the most qualified professionals. Additionally, it's robust operational platform empowers customers with real-time updates and actionable insights into the status of their project, delivering unparalleled convenience and transparency.

Company benefits from a balanced mix of contractually secured and project-based revenue streams, providing stability and reducing revenue risk. Furthermore, it's established facility management platform, establishes customers to seamlessly request services and track work orders and projects, ensuring efficiency and transparency. They operate primarily from their main facility while complemented by a smaller satellite office, The main facility owned by a related party is not included in the proposed transaction. Ownership is seeking to divest the business as a part of a planned retirement, but has indicated

a willingness to remain involved in a limited capacity to support the transition. Buyers will be required to have a minimum. This is in bold, if you're not on YouTube, $300,000 in available capital, comma, solid credit, comma, and preferably industry experience to qualify for financing. interested in other sellers coming to market soon. Check out our upcoming opportunities here. There's a hyperlink to other businesses they have for sale. Thanks for reading. There's some, you know, process stuff about signing the NDA, making sure it doesn't go to your junk mail. It's in the Great Lakes. They have 37 employees, not including ownership. And then everything else is repeated there. So a couple investment highlights. They have a national geographic service area, fully integrated technology. suite and some contractually secured revenue streams. The growth opportunities are integratable or I think that's a typo, but integratable operational model, Canadian market penetration and implementing digital

marketing solutions, our favorite. Just do digital marketing. It'll help. What do you guys think? I really like this broker, like the brokerage. They typically have good CIMs and they don't inflate. stuff, it's like real good listings. You know what I mean?

And so that carries a lot of weight with me as a human. When you're reading it to me, it sounds just like the ETA playbook. Like, this is somebody that bought a bunch of companies. And so I'm curious if it's actually integrated because then at the bottom, it's like, hey, you could integrate stuff and it'll be better. And so I would, my, I love how it sounds, but I would want to know in reality is this a bunch of acquisitions that are disjointed and they're positioning it trying to to appeal to PE because it's over a million in cash flow.

But in theory, this is everyone's dream, isn't it? I really thought that this was an employee light business until I got down to the 37 employees because what I was imagining is a small core kind of project management team, the facilities manager from, you know, the concrete plant that manages six concrete plants, you know, is calling and saying, hey, I have. I have too much on my plate already. I need to make sure the snow gets removed. You can fix, you know, the electrical problems we have and, you know, that the fence gets fixed

when the guys run into it. But I can't call and maintain all those different trade relationships. I just want to make one call to you. And I want you to make my life easy, which is why, you know, I thought their margins were, you know, relatively low for this size of revenue because it was just all passed through and kind of, you know, marking up the in trades. but I would like that, but they have 37 employees, which makes me think that maybe some of this they are doing in-house, self-performing. Yeah, that confused me as well. It's like $460,000 of revenue per employee. And if it was a lot of projects, like you said, sort of the pass-through revenue of these other contractors or projects, you'd think it would be higher than that. So it does seem like maybe they're doing some of the services directly. I agree.

The financials will be so fun to look at on this because if they're accurate or if they're detailed enough, you would immediately see the recurring revenue versus the project revenue. And I'm not scared of the project revenue and something like this, but I would just love to know what is it kind of day in and day out? What's the nature of it? Is it one or two big? Like we've repaved a parking lot for you. Those are big expensive things that could fluctuate your revenue by half a million dollars, you know, just. based on a couple projects. And then what's the, what's the fee arrangement?

Is it, is there a retainer? Is there kind of some ongoing service revenue or availability revenue that you're collecting to be on call? There's so many, there's so many things that like 30 seconds in the financials, just a peak would tell you so much. So I'm not afraid of the fact that they actually self-perform a lot of these services. Because every time I have talked to somebody or looked at a business doing, you know, I'll call local services like this. Everybody says that when you use contractors, the service is

garbage. And then they, the real differentiator to deliver a quality product is to have committed W2 employees. And it's not like you're preached. That's my soapbox. Yeah, maybe this is like compiled into my brain from 350 episodes with you mills. But like, you know, I like it. It probably means that they're, what they probably do is they've got some services on 1099, you know, like it probably doesn't make sense to have enough people to do all the snow removal, right? Because it snows. Everybody needs snow removal. Like that's something that makes sense to contract out. But something, you know, like janitorial or electric repairs or something like that, like they probably got a couple of electricians on staff and they just kind of keep them going.

And that's probably more profitable than 1099ing it out and higher quality service. So I like that they're not totally employee like. This is like we alluded to it in the beginning. but this is really in the crosshairs of a lot of private equity sponsors right now because they, you know, home services has been, you know, highly picked over and then commercial and industrial services, especially when it comes to, you know, B2B property management, property maintenance. They're very sticky. I mean, we, you know, I don't know, we don't shop around.

Like I'm just thinking about our building, whenever we need, you know, a new light fixture added outside or we need, you know, some little kind of annoying thing done like our garage door, you know, our roll up doors fixed. We don't get three quotes. We just get the guy who will show up first because it's disruptive. That's the, that's the market these folks play in.

And it's so, it's so nice in that, in that regard. You're not dealing with in-home sales. You're not dealing with, you know, your guys backed over my sprinkler head on my driveway and, you know,

you knocked over my lawn ornament. Like there's just a different level of, you know, customer interface that has to happen. Right. I would want to know about customer churn. I'm with you, Mills,

I want to know about the revenue mix. And I think every lender, that's the first question they're going to ask is break down the revenue mix, project revenue they're not going to like as much. And they're even going to want to go to like, what are the margins for each of those revenue channels? But,

you know, next, and I'm surprised it's not in the SIM. It's contractual. There's, you know, these contracts that they have. I'd want to know about customer churn.

and whether they've been adding net new customers, you know, what does the growth look like? Anytime it's something contractual, it's something you really want to know. And that's really going to change the multiple or, you know, the valuation I might pay, that low churn combined with, you know, what does the sales cycle look like to grow? You know, how long does it take them to add new facilities to, you know, their customer base? Hey, Michael here. And for just a few seconds, I want to tell you about my company near. Before 2020, I thought what a lot of people do, that hiring global talent wasn't serious enough for my small business, and it was just impossible.

And I also assumed it was just call centers and low-level employees. But then I started a company with my colleagues, Franco and Hayden, and realized it'd been taking too small. There's incredibly high-level talent all over the globe. And for those jobs that are hard to hire for like accountants or CPAs, there's suddenly no shortage of top-tier candidates when you search well everywhere. And I saw a need for international talent in a bunch of my companies, and that's where I started near. So they can help you too. They can make you a list of high-quality Latin American candidates for any role and then deal with all the red tape of hiring them. So go to hire withnear.com slash aAPod to get 5% discount on your first hire.

That's hire with near.com slash a AAPod for a 5% discount on your first hire. Tell them we sit in. Absolutely. The nice thing about these businesses too is that a lot of times they get into a niche. Like I mentioned concrete plants because I have some familiarity with those. The regulations are complicated. like concrete plants versus chemical plants versus food processing versus, you know, wood products. Like they're all, they all have their own quirks.

And if you become the people who, oh, yeah, we know how to get into, you know, food facilities, food safe facilities. And we know how to operate there and make sure that, you know, we're, we're abiding by your rules and also the state health authority rules. Like it opens a lot more doors. I'd be curious about, you know, they're in the Great Lakes region. Like, is there a segment of the market that they may not have specific customer exposure, but they may have kind of overweighted towards, you know, automotive or, you know, steel

manufacturing or whatever it may be. I'd be really curious about that. It may not show up on the customer list, but it might, you know, if you double click on some of those customers, they may have some things that are thematic. Sort of like categories of the types of facilities. I think that's probably right. you know, you could really develop some niches and maybe those are growth avenues as well. You know, if you happen to know some industries and there are a good number of those facilities

in the area, you may have a marketing plan towards that. I like that the broker pointed out that you might need some industry experience to qualify for financing. I think that's smart. Yes, that's smart to kind of ward off anybody that really doesn't have anything in their resume that, you know, kind of fits this kind of business. I don't think, you know, I think there are lenders who would lend if you don't have direct industry experience, but the closer you can get to some kind of experience that makes sense here. I think that would be wise.

I think it would be tough to get financing without that. What do you guys think this business sells for? Four million bucks, four times. I'd be willing to bet that there are aggregators out there who are paying eight million bucks or more. Eight X. I would not be surprised. I've seen, I've seen some. transaction data in the kind of, you know, B-to-B maintenance, property management,

property maintenance, industrial services. It's like a land grab. They are just trying to aggregate as much kind of revenue and find the synergies later. Elevator, you know, maintenance, parking lot maintenance, you know, industrial. Like, it just, it screams aggregation to me from some of the books that I. I've seen. And like, so for that very, they just very clearly did value planning, right, to like exit. And so they have allegedly a lot of value levers pulled.

And so I could see it going for if it's all true and this is actually a well functioning company. I could see it going for five. If PE gets introduced, I could see it going for six. Um, I mean, this is literally what everyone's looking for. Like if you read it, it's literally what everyone's trying to achieve. And so if they did it and they did it well, my concern for an acquisition entrepreneur is really just growth, right? Like they've already pulled a lot of value lovers, it sounds like.

And so I would just want to make sure whoever's buying it is okay with it maybe not having huge growth potential. Or they have something like Heather was saying, something very specific that makes them the right buyer to grow it, right? Connections to new markets or something like that. So the more I think about this, the why is the broker only asking for $300,000 of avail? capital. I mean, you get, you get Heather's best SBA loan and it's 10% down, right? So that like, that's a $3 million purchase price. And we all think it's going to go for more than that. Well, yeah, that's right. That number seems wrong. That's some fan. Well, in theory, what you hear in the market, right, is that at a minimum, you have to have 5% down. Right. And so that

could be, as a minimum, it's 5% because maybe the seller's willing to put in 5% on standby to count as the other half of your down payment. So like add a minimum. So like, add a minimum. It needs to be 300. $300 for $6 million. Right. I'm wondering. You've got to convince the seller to do that. And sometimes that means you're just paying 5% higher price. I just think that whole thing is a silly concept as a whole. Yes. It is whatever. Yep. The way I read that was this is what you need to have available for networking capital in addition to the equity at closed. So I think you're probably on to something. I think I was reading it the wrong way. They don't, yeah, most listings don't really tell you anything about working capital because they want to negotiate hard on that. Yeah, and this is a business where that would be important to know how much is included in the price here. You're going to need some when you're doing projects. A lot of AP, you know, if you're if you're passing through a lot of these on a project management basis, you know, you're effectively floating probably, you know, we just did. we do a fair amount of this work, you know, where we're self-performing and we're not

subbing it out, but it takes a long time for like, do work at Amazon. We just signed another contract in an Amazon facility. They pay net 90. They're the worst payer in terms of duration. I'm shocked. Mel. Bill, it's like I didn't see that coming.

But, you know, I think that you'd have to really underwrite. the payables and and the receivables and figure out, you know, how to navigate that. And if you haven't, if you haven't dealt with that dynamic of cash conversion cycle, you know, you could really take a bath in the in the wrong way. Well, there's also a lot of equipment in this, right? I don't know if parking lot repair maintenance means asphalt or like what that means exactly, but like some of, there's going to be, you know, some capital expenses that they need to be planned for, right? quite a bit probably, right? When you think about all the equipment that would be required to deliver on this between, you know, fleets of trucks and just the equipment itself.

Yeah. I do like the business for what it's worth. I don't, I can't imagine any of us don't. Is there anything wrong with it? I mean, is there anything you would like to be better? I don't like the margins. Yeah. Yeah, it's a little thin. But like, is that the nature of the beast here in this type of business? It just depends, I think. you if you look at it and you realize that, you know, the 37 employees is throwing me off.

But if they were, if they were subbing out a lot of this and they were just like a, you know, project procurement business and they're just helping link you with trades, the margins would make sense to me. But I just think they probably should, they should be extracting more on a net basis. I like it. I think this is going to go for $5 million plus. Probably. You're right. It's one's going to roll this up. Assuming it's big enough. That's the only, I mean, it's only quote unquote a million of EBITDA. So for an aggregate. Yeah, but I feel like they're dipping down pretty far these days. Like our members are coming up against PE quite often in smaller deals. Especially in sectors like this where they're already active rolling. Especially when they're,

I mean, they like I know that they've gone down to 500 grand in earnings because our members have come up against it in this space. So and we don't have a ton of members buying like HVAC type companies or anything like that. like we have had plumbing and electrical and landscaping. So I would say this is, and that's what, it's literally written like an ETA. Like this was the growth plan of like five years post close. And so they had a clear plan to maximize value upon exit because it looks like they did it.

I just want to know what it actually looks like. Like it's packaged up real, real pretty. And Calder's good. Like I do trust their listings. Assuming not all brokers are, you know, created equal, but I've liked every broker I've ever interacted with there. And so I have to believe that it's a high quality business or they probably wouldn't be bringing it to market.

But I would definitely want to go check to make sure it wasn't a bunch of disparate, unconnected, like, that it wasn't like a tangled mess in an effort to make more money. Yeah, like we acquired a pressure washing business, a landscaping business, and a parking lot maintenance business. And then we just happen to know a guy's an electrician and like, look, it's really pretty. And it's like, actually, that's a mess. Yes, right? Like, okay.

And that's what made me concerned down below when it said about something about integrating. I'm like, ah, shit. It sounds really pretty, but if you're going to just hand me a bunch of completely unconnected businesses that don't make any sense. Yeah. And I find it interesting that they didn't do digital marketing. Like that was the one thing missing that everybody was like, just add ads and it'll be great. But you could, you know, I, or something about their Google reviews, like incentivize Google reviews.

Those are the two things I hear all the time. To your point, like that is, I do like Calder. Every time we've ever done a deal from them, it's always a solid teaser. And the Sims are good too. There's only two types of business brokers. There's business brokers who add trust to a listing and business brokers who say nothing. Like there are some logos you see at the top and you say what you just said earlier, Chelsea, which like this must be a quality business.

This broker only takes on quality businesses. There's a level of trust there. And then there are other brokers who should. shall not be named live right now, but if you listen to our back catalog, each of us, I think, has one or two. Yeah, our pet peeves. Where you see the logo at the top and you go, I already know this is a garbage business because it's represented by this broker,

which means none of the other brokers would take it. Yep. I just had to explain the distinction between different types of brokers on a call. I was like, I was like, I don't know, man. I'm sorry. I'm not being recorded. That's the big question. I was like, I don't want to, you don't want to bite the hand that feeds you, but yeah, things kind of start to patterns emerge, you know, and things kind of start the rhyme every time.

But I like the way that Bill said it, right? Like they are either going to add trust to it or not so much, right? And this one I do, I do like. I'm definitely thumbs up on it's worth finding out more. And I think, you know, within 30 minutes of reviewing the sim and looking at the financials, you answer probably. you know, 75% of the questions that we've posed about what they actually do, how they do it, is the revenue that stable? Like you could get very, very far into your analysis very quickly on this. So I'm thumbs up. I don't think I would pay what other people will pay, but I'm thumbs up. And I think when just for the sake of education, I think if somebody sees a listing like this, then this is the one you have to act very fast on because you know the market is hot and it's making it over a million, right? And so for everyone listening,

try not to overanalyze. Yeah, that's a great, that's great caution. All right, we like it. So, Chelsea, thanks for being with us today. If people want to learn more about Acquisition Lab, where can they do that? Visit the website, acquisition.com. If you're interested in applying, you can click apply now, or you can visit AcquisitionLab.com,

forward slash application. You can email me at Chelsea at bythenbill.com or find me on LinkedIn. Is there a certain type of person who's a really good fit? Yes, I don't want anyone that wants to use solar financing only. That is not my gig. I don't want to talk to you. I'm very sorry. I mean, I'll talk to you to tell you how bad of an idea that is, but I won't let you come into the lab.

Sorry. And then, I mean, you do need to have capital, right? So we require a minimum of $100,000, but that's like just a minimum. If I talk to you and your goals need more than that, I need you to have that much more or have the capacity to get that much more. And preferably some work experience. I'm 17 years old. I want to buy a business and I have, I have $150. I have some, I have a plan for you, but it's not the lab.

We can still talk. That's good. So yeah, I want somebody that should be qualified to actually run a business, right? Like you want the seller to look at you and the broker and the lender and say like, yes, this is a reasonable successor to take over a company. Awesome. And you can't be an asshole. Sorry.

You can't be mean. Those are my requirements. That's, that's fair. Not a high bar. I think we have some. listeners that clear that bar, I would hope. So go find Chelsea and AcquisitionLab at AcquisitionLab.com. And Chelsea, thanks for being here.

Thank you for listening. If you like this episode, we have a whole bunch of back episodes at A-C-Q-U-Anon.com. They're all tagged by industry. So if you want more facility services businesses, there are a couple more of them on there. You want more e-commerce. You want more construction. Whatever floats your boat, you can find it on ACQ-A-C-U-Anon. ACQ-U-Anon.com.

Thanks for listening to this. this episode of Acquisitions Anonymous. We'll see you next week.