Acquisitions Anonymous - #1 for business buying, selling and operating - $550K Profit Just Doing Paperwork? This Deal Has Us Shocked

Episode Date: August 22, 2025

In this episode, the hosts dive into a lean, high-margin FDA compliance service business with outsourced operations and uncover whether it's a sustainable gem or a ticking regulatory time bomb.Business Listing – https://quietlight.com/listings/16053420/Welcome to Acquisitions Anonymous – the #1 podcast for small business M&A. Every week, we break down businesses for sale and talk about buying, operating, and growing them.💰 Sponsored by:Heron Finance – build a personalized private credit portfolio for steady monthly income—without the market rollercoaster. In minutes, take a quiz, see your custom plan, and invest in 12+ top-tier funds from managers like Ares, Apollo, and KKR, overseeing $1T+ with loss rates under 0.5%. Higher returns than bonds, lower volatility than stocks—start earning today at https://www.heronfinance.comCapital Pad – The modern back office for dealmakers. Capital Pad helps acquisition entrepreneurs, searchers, and private equity firms streamline deal tracking, investor updates, and portfolio management — all in one easy-to-use platform. Explore more at https://www.capitalpad.comThis week's deal is a Florida-based, relocatable FDA compliance business offering digital services like registration and agent support for food, drug, cosmetic, and medical product companies. With just $790K in revenue and $550K in EBITDA, its margins are astonishing—thanks largely to a contracted overseas team and minimal operational overhead.Key Highlights:- Asking price: $1.9M | Revenue: $790K | EBITDA: $550K- Business operates with just one employee and an overseas team- 70% net margins and 50% recurring revenue from renewals- Possible registered agent model for FDA compliance—highly specialized niche- Heather pre-approves the deal for SBA financing live on the showSubscribe 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]

Welcome to another edition of Acquisitions Anonymous. I'm Heather Anderson, one of your co-hosts. Today, Bill Mills and I talked about a really interesting, a deal I actually liked, I'm going to give you that up front, FDA compliance business with unbelievable margins. Really, really interesting business. Lots to talk about on this one. I hope you like it. We'll say acquisition anonymous.

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The information in this ad is for informational purposes only. Friday, Acquisitions Anonymous. Always my favorite ones. I don't know if these get published on Friday. Not mine. Not mine. Because it's early for Heather. It's early.

It's early. And it's Friday. So can you imagine it's really hard to get up. But it's like starting off the day making your bed. You know, you've done the difficult thing, and now the whole day is ahead of you. Yes, it's true. It's very true. Yeah.

Yep. It's, we record on Fridays at 1030 Eastern 730, California. So Heather is a champ for being with us. So she's always got her coffee on our Friday. I do. I polished off an espresso just now. Yep. No, I love the Friday ones.

Everybody's in a good mood. I don't know if these published on Friday or not, but if you're listening to this, not on Friday, enjoy the Friday interview. It's Friday. Yeah. Yeah. So we have a fun deal today. If I can find the share screen button for our YouTubers,

this is an interesting one. I wonder if Heather Mills have any experience with this. This is from Biz Buy Sell, but it's by Quietlight. It is a growing FDA compliance digital service business. So let's learn what that means. First of the size, they are asking $1.9 million. and it has $790,000 of revenue and $550,000 of EBITDA. How about them margins right there?

So they're asking, it looks like, well, under four times, like 3.8 times, something like that. It was established in 2017, and here's what it's all about. It says, as FDA compliance requirements continue to expand, this growing digital services company has established a significant competitive advantage through its expertise and strong reputation in that 50% of revenue is generated through renewal services, despite the owner's limiting growth due to personal preferences. Okay. Established in 2017, this business helps companies comply with FDA regulations, providing registration, agent services, and various compliance services for food, medical products, drugs, and cosmetics. The operational model,

is remarkably efficient, requiring minimal working capital to operate, with a contracted overseas team handling the technical work at just 7.5% of monthly revenue. Despite its success, the current owners have deliberately limited growth to personal preferences and geographical constraints. This creates exceptional opportunities for a new owner to capitalize on untapped potential through expanded digital marketing, service diversification, and affiliate network development. The trend toward increased FDA regulatory requirements positions the company to capture significant market share as these requirements continue to evolve.

The business transfer includes a comprehensive three-month training period with the current majority owner, while the minority owners, who each own 25% will remain involved, ensuring continuity and established relationships for a smooth transition. The buyer will enjoy immediate cash flow from an established client base while having complete freedom to implement growth initiatives like expanding into various compliance services or developing proprietary AI tools.

Have to slide the AI in there for improving the services. This business represents a rare opportunity to acquire a profitable, stable business in the growing regulatory compliance sector with mineral operational overhead and considerable untapped growth potential. Heather, you'll be happy to know

this business has been pre-qualified with funding options. So your work is done. It's all done. Yeah, it's approved. Okay. No problem. It says there's no industry experience required.

The business can be successfully run without FDA or pharmaceutical knowledge. It says obviously the martyrs are very high, 90% gross, 70% net. 50% of revenue comes from renewal services. 70% of website traffic comes from organic sources because they have strong SEO, it says. 20% of revenue is generated through existing foreign agents, creating diversified client acquisition channels. Many clients have maintained relationships with the company for over eight years. And the overseas team operates at predictable costs, creating exceptionally efficient cost structure that scales with growth. The company serves over a thousand clients across multiple industries.

The owners will provide three months of transition, and it is a home-based business. It says they are selling because the owners feel the business has outgrown their capabilities. Since there's only one... There's only one employee. one employee. I glossed over that. But an overseas team. Oversees team. There's more.

It did. In the heading, it did say it's based in Florida, but relocatable. Yes. Right. And this is being sold by the folks at Quietlake, Mark Douse, who is one of the senior brokers over there at Quietly, who I know. So what do you guys make of this? I think it's some kind of form or, you know, some kind of document. because they're saying digital services. So I feel like it's something that they offer to,

you know, you'll take, you know, you feed the data in and we'll put the form together for you, the government form together for you. And maybe it's a pay as you go, like rather than a subscription, because this is why, you know, they say 50% revenue is generated through renewal services. It doesn't sound like it's a subscription model, but it does sound like it's some kind of government form preparation. Mm-hmm. it's probably an FDA form that like you have to file every year or something like that. So they probably sign you like let's say you create a, I'm making this up.

Let's say you create a new supplement product. It needs to be FDA registered. There's probably like an initial registration that you got to fill out the right way. It's probably like a whole bunch of homework that you got to do that most entrepreneurs don't want to do. So they probably have an overseas team, does a bunch of homework, fills out the form, files it for you. And then maybe every year you need to file a refreshed version and they just take care of it. And it sounds like maybe you just pay each time you hit their website and ask for the form. So it's not as sticky as a subscription would be.

You know, they've got to come back to you and fill out that renewal form. And only half of them do. So that would maybe, you know, the revenue maybe not be, would not be as consistent as, you know, a subscription model. But it sounds like it's pretty solid. And, wow, on the margins, great. Yeah. Well, I mean, it's digital service, right? It's just paperwork.

So there's no cogs. They've got seven and a half percent of revenue in overseas team members. And I'm not sure what the rest is, but then you're pretty much at profit. But then the sales process is also a mystery to me because they use the word foreign agents. And this made me. That really was a weird to me. Yes. I was like, okay, is this a spy show or what is this?

You know, so where are these customers? What does the sales process look like? That's a mystery to me. this moment. So I have a hypothesis, Heather. So I was reading this whole thing, like, not knowing what this might be until I got to that phrase that you keyed on for an agent. And this made me wonder if this is a service for international entrepreneurs. So like if, let's say you are not from the United States, you want to sell, say, on US Amazon, you have some FDA compliance and you probably need like a local United States registered agent. Or like point of contract. Or like point of

contract or responsible party or, you know, you guys have all filled out enough government forms to understand the concept that, you know, you need an American citizen that they can go choke. And I wonder if the service that this business provides is sort of like a registered agent service. We will be the American point of contact. We'll give you our address. We'll give you our name. We'll sign on the dotted line and be your point of contact for the FDA. Interesting, probably.

That sounds right. That sounds like that. It's interesting because, I, Googled, you know, help with FDA compliance. And there's a lot of, I mean, there's a lot of sponsored posts at the top of the heading, you know, FDA compliance attorney, former FDA agent, then another one that says, we will act as your FDA agent, FDA compliance consulting. There's a bunch of different kind of people, right, who are targeting that. And I don't know how much those keywords cost, but I can't imagine that it's super competitive, but I'm

I don't know. There's three already just from help with FDA compliance, which is pretty much. Anytime I see lawyers bidding on Google terms, I freak out. Because those are big clicks, man. Yeah. I imagine that there's a couple different kind of like revenue channels for them. One, you know, what Bill, did you ever have FDA products? I can't remember. So all the stuff that we did in the human space are what is called monograph. So like sunscreen, for example, So there's just two ways to do it. You have generally recognized as safe grass products where you can just sell them. But then there are some categories which are called monographs.

So sunscreen is an example. So anything that's monograph is going to require a drug fax label. Okay. So you kind of think of like if it has a drugs, facts label, think FDA. If it doesn't have a drug fax label, you are basically not making any claims, like this product cures cancer or whatever. you're not making any structure or function claims, which means it is not a drug, which means you kind of don't fall under FDA pre-approval.

You don't need to be pre-approved. So if you don't make any structure or function claims, you don't need pre-approval. Don't step into FDA world. There are certain categories of product that are called monographed products. Now, monograph products are, FDA says, this is a drug.

There are structure and function claims here, but we don't want to do pre-market approval, meaning clinical studies submitted to us and all that stuff before you go on market for this type of stuff. So we will publish what's called a monograph, which means that if your product conforms to all these testing requirements and we use these active ingredients and you only market it in this way, you can brand to market. And if you label it and if you label it, but you got to put a drug fax label on it. And if we find out that you are doing things outside the monograph, we're going to come after you. And then the third category, which no one gets into is pre-market approval or required drug. And those are drugs.

I mean, that's, you know, Pfizer's domain, right? So the monograph ones are the stuff that we had with sunscreen. So we had to, you know, you do the retains, all those testing, like it's all the compliance, and you put a drug fax on the back. But our contract manufacturer took on most of that compliance and typically does because a lot of it is batch records, testing, keeping retains, things like that that go on in their facility. Hey, everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a lot of

long time on the pod. It's called CapitalPad, and it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad is a marketplace for acquisition entrepreneurs that is people who want to buy a business and need capital to list their deals and solicit capital from other people who want to invest in acquisition deals. So if you want to back somebody buying a small business, CapitalPad is a place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing, too, from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance,

standardized distributions all up front in black and white. Basically, CapitalPad professionalized investing in small businesses. And the returns can be really, really good. I'm so stoked that they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right. So if this sounds like something that is appealing to you, if you want to buy a small business and need capital,

or if you want to invest in small businesses, go check out Capitalpad.com and tell them that Acquisitions Anonymous sent you. So I'm a dummy, and I didn't know anything about what you were talking about. But you learn that, right? Kind of the hard way, probably sometimes of like, oh, we got a nasty letter on this thing. We have to respond to. So if a dummy like me is like, hey, I want to create a supplement brand or something like that. And I'm Googling, like I'm probably going to end up finding either this company or somebody like them to say all of what you just said and not just the scary amount of information, but we will hold your hand and help you through the process.

Yes. So there are companies, which we have worked with in my past, that are basically lawyers, and that's probably what you found at the top of the Google results, that will review your label and make sure you're not saying anything that would cause it to be a pre-market approval drug, that then if you take it to market without pre-approval, the FDA drops the hammer on you. So there's like a compliance, there's a whole compliance legal function. Well, and I think there's a few levels, right? So you have like the initial, you know, submission of, hey, I want to, you know, introduce a new product or I need to make sure I'm in compliance with the FDA.

One is like the initial. Then there's ongoing compliance, like regular filings, internal audits, all those kind of things that the FDA would make you do and have the paper trail of documentation. But then the FDA also, like if you're if you're manufacturing, like you said, your contract manufacturer was handling, you get like FDA inspections of facilities. and things that have to occur on a regular basis. This company maybe presumably could be helping, you know, probably not with on-site inspections because they're so remote. The other things that came up in terms of FDA compliance was like, like you said, labeling, but ingredient review, facility registration,

things related to import export. If it's a medical device, it's a whole other category. Like, there's so many different facets to this. it just makes me a little bit worried that they basically are subbing out the entire workload and it only costs them 7.5% of their revenue. That's what they said their cost structure is for their overseas. It does seem a little weird. Like the service they are providing is so SOPable that you can contract it out to overseas folks at 7.5%

and functionally mark up their labor by 12 times. And you have 1,000 customers that can't figure it out enough on their own to Mills' point. that they're paying, I think, about $7,000 on average, I think. I feel like this is a case for deregulation in a nutshell. There you go. This process is so convoluted that it is in practice simple enough that overseas people can follow an SOP and do it. But it's so complicated and convoluted in the way that it is presented that people are paying huge amounts just because they don't understand the process. Yeah.

Yeah. There you have it. In a nutshell, there's government. I mean, I deal with the SBA. and maybe it's not quite this bad, but yes, there are forms where there's even parts of the SOP that if you just read it cold, you would not understand what it meant. That's right. I only understand what it means in practice because the words don't make any sense.

I mean, have you guys ever looked at your tax, your own taxes? Yeah. Oh my gosh. Yeah. It doesn't make any sense at all. No, who writes that sense? I mean, you need tax software. Yeah, right.

Is this a business? I think this is a great business. Is it? Yeah, I do too. I think it's a hustle. right in a way but it this is almost like not passive income right because these people I think have understood like hey this thing probably grew into something we didn't ever anticipate it to be and we're kind of and I've had clients before when I was doing M&A advisory work and consulting work

where they go I didn't even mean to build this business the way that it is it's gotten bigger than I feel comfortable with and yeah the cash flow is great but if somebody's going to pay me a multiple of cash flow I would rather just get out of the way and let somebody else run with it. I would just be very, with no FDA knowledge, no FDA experience, not knowing the ends and the outs of it, I don't know that I would feel comfortable really underwriting it sufficiently because all the nuance of the compliance and the regulation, could those things change dramatically like with an administration change? Yes, but I think we're an increasingly regulated environment and compliance-driven environment. And so I don't think the FDA is not going to go away.

It doesn't seem like. No. It's just going to get more obnoxious. They did say you don't have to have industry experience to buy this. And I disagree with that. Yes, that's like Stan. To train those people overseas, the contractors and know what they're doing. E-commerce experience, you know, to buy an e-commerce company. But when Bill and I look at an e-commerce company, I think it looks amazing. And Bill's like, this is a steaming pile of poop. Like it's, you know, don't like don't. And here's all the reasons why.

I just would be worried about with as broad of kind of help as FDA compliance is and we're just scratching the surface, I don't know enough to know what's the valuable part of that segment to be in and what's the more commoditized part of that segment to be in. And I don't know where this company would fit. You know, even if I signed the NDA and got a SIM. You just got to know more. I mean, there's, this is also one of those businesses where you can tell. the broker has been really careful to be kind of generic here because they don't want to give it away because a little bit of this is the obscurity of the hustle is the moat. Yeah, right?

Because it's so easily, it's either 12x markuping overseas labor. If everybody understood this hustle, sorry for this episode, you know, more competition would come in. Right. And I think it does point to, I think the environment points to the fact that it does live in obscurity. If this were a medical device, then the medical device company has already figured out all the compliance. It's not, like, they don't have a hard time navigating this. If it's a major pharmaceutical company, they have, you know, hundreds of attorneys on staff to help figure this out. I think it's something very quirky and obscure, like, you know, you want to

launch your own supplements brand and we help you navigate it or something like that. Yeah, the target for this has got to be small to midsides companies. This is not, Pfizer is not a client here. Yeah. Yeah. And it's a thousand small clients, and maybe that's a little bit of the moat, too, is once you've signed up with them, you're probably not Google searching for another service when you have to do your renewals or whatever else. But they do have to capture all the new, the newbies that when I launch a new brand, and so there's probably a little bit of marketing to that. Yeah. All right. So thumbs up, thumbs down. Mills? I want to sign the NDA. I'm thumbs up on that. I mean, I'm dying to know. Like, it's something probably even more.

obscure than we could imagine, you know? Yeah, I bet I bet so. Your thumbs up. How about the price? Mills, what do you think? I think it's probably, it's probably like a make my day and pay me this price, like most listings start out as. But if you get the, if you get the SIM and this is incredibly durable and stable demand,

and, you know, profits attract competition. So that's the only thing in the back of my mind that says, somebody's going to come for this moat at some point. And I need to price in the fact that my margins might get compressed. I don't think the business goes to zero, but just that my margins might get compressed. So I don't want to pay four times, you know, with that amount of risk out there. Yeah, great situation for an earn out. Yes.

Yeah, yeah. Yeah. Yeah. Good point. And, I mean, you got, we haven't talked about it. You have kind of other owners rolling some equity. That could be really good or that could be really messy and complicated. It's hard to tell just based on what we see here.

But why aren't they buying out the existing owner? is kind of the skeptic at me. Well, I couldn't, that's, I know that sentence. It seems like there's one 50% owner and two 25% owners. I think it said the 50% owner will be like deeply involved in the transition while the 25% owners will hang around during the transition and then everyone will go away. Oh, okay, okay, okay, that might make more sense. Maybe it's like a husband, wife and a brother or something like that. You know what I mean?

A family kind of, hey, we figured this out and we figured out how to get somebody in Indonesia to respond to, you know, these prompts and, interesting. Interesting. All right. So Mills' thumbs up and thanks, you know, maybe a little risk sharing. Heather, what about you? Thumbs up, thumbs up. I'm thumbs up for the right person.

I'm even going to make the SBA loan. Really? Yeah. The other rule of finance it. Wow. It's pre-approved. It's pre-approved. And Heather, I mean, at this, at this multiple, at this valuation, it works.

Totally works. It's basically a turn of equity. Yeah, when you're under a four multiple, assuming it's a four multiple of EBITDA, not SDE. I don't do STE. But assuming that, yeah, you can finance 90% of that easily between a seller note and an SBA loan and it will work from a debt service coverage perspective. So yeah, I like the size of it and for the right person. And I feel like I talk to so many business buyers.

There's some that have the right background for this. And this could be a nice business and maybe they have some, you know, once they understood it better, they could grow it. it could maybe build a little more of a moat around it. So I like it. Yeah. Wow. Heather likes it and agreed to finance it live on the episode. It is crazy today.

That's a first. That has never happened in 400 plus episodes of acquisitions and honest. That's true. So before we hit publish, Heather, on this episode, go get the NDA and front run it. And then you can retrain. You can flip it to somebody. Yeah. You can hold it to somebody else.

Yeah. That's right. I love it. All right. two and thumbs up on this one. I'm, I am going to go sign the NDA after we hit stuff. Did somebody send you this bill? No, I just pulled it off a quiet light's website. Yeah, yeah. Yeah, it's a couple months old, so it might already be on a contract, but we'll see. The ones we like always are. Yeah. Yeah. Yeah. Oh, it's sold for three times more than we would pay for it.

Yeah, a lot of times that happens. Yeah. Yeah. All right. This is a good one. Well, I hope you guys like this. If you like this one, as I alluded to earlier, there are 400 more. even better than this one on ACQU and on.com. All kinds of businesses, construction, roofing, asset purchases, distressed, growing, shrinking, all kinds of businesses in every industry you can imagine. We recently did an Estonian dairy farm or Ukrainian dairy farm that Mills brought us. So all kinds of things, whatever peaks your interest, ACQU andon.com. Check it out or wherever podcasts are downloaded. Thanks for listening to this week's episode of Acquisitions Anonymous.