Acquisitions Anonymous - #1 for business buying, selling and operating - How ATM Route Businesses Make Money

Episode Date: June 9, 2026

In this episode, the hosts evaluate a highly unusual ATM portfolio generating $1M in EBITDA from 642 ATMs located in gentlemen’s clubs nationwide, exploring the hidden complexities, cash logistics, and risks behind what appears to be an ultra-passive business.Business Listing – https://www.bizbuysell.com/business-opportunity/over-1m-ebitda-atm-route-gentlemen-s-clubs-642-atms-5-000-000/2500718/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.Looking to build a professional website in minutes? Try Wix: https://wix.pxf.io/c/6898629/3115214/25616?trafcat=templateHubSpot is the backbone for how businesses scale without chaos. Try them out here: https://go.try-hubspot.com/OeG9VrSubscribe for more episodes: https://www.youtube.com/@AcquisitionsAnonymousPodcast?sub_confirmation=1Subscribe to our Newsletter: https://www.acquanon.com/newsletter💰 Sponsored by:Acquisition Lab – Your fast-track to business ownership. Get hands-on support, world-class resources, and join a top-tier community of acquisition entrepreneurs. Schedule your free consultation at https://www.acquisitionlab.com and mention Acquisitions Anonymous!CapitalPad is a private equity co-investment group for lower middle market deals. Accredited investors invest in searcher and independent sponsor transactions on a deal-by-deal basis, with minimums starting at $25K. Acquisition entrepreneurs with a deal under LOI can raise equity through CapitalPad's single-SPV structure, closing with one partner and one wire. Raise capital or invest at https://capitalpad.comThis week on Acquisitions Anonymous, the hosts examine one of the most unusual listings the show has ever covered: a nationwide ATM network focused exclusively on gentlemen’s clubs. The business claims $6.6 million in annual revenue, approximately $1 million in EBITDA, and includes 642 ATMs spread across the country. Of those, 103 machines are owned directly while 539 are managed on behalf of third parties. The seller is asking $5 million and positioning the business as a highly passive cash-flow machine.Key Highlights:- 642 ATM locations nationwide generating approximately $6.6M revenue and $1M EBITDA.- Focused entirely on gentlemen’s clubs, a niche with unusually high ATM transaction volumes and surcharge fees.- Only one part-time employee, with vaulting, maintenance, and servicing outsourced to third-party providers.- Massive working capital requirements due to the cash needed to fund ATM operations nationwide.- Discussion of SBA lending limitations, adult entertainment exposure, customer retention, and transition risk.Subscribe to  weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking hereDo 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]

Hello, everyone. Welcome back to Acquisitions Anonymous. This is the internet's number one podcast on buying, selling, and operating small businesses. I am one of your hosts, Bill Dallessandro, and this week I'm with Heather Anderson and Ms. Mills-Snell, and we have a very interesting, unique deal. It is an ATM network with 642 ATMs, some of which they own, some of which they manage for other people, million bucks of EBITDA, apparently a very passive. business, but there is a twist. All 642 ATMs are in gentlemen's clubs nationwide. So there are definitely some unique wrinkles that come with that end market. So we talk about those. Mills actually has some very relevant experience looking at ATM network deals. So he gives us a little bit of inside baseball on that. This was a really fun episode to record. I hope you enjoyed this episode of Acquisitions and Oneness. We'll set Acquisition Anonymous. Hello, another episode of Acquisitions Anonymous.

We don't have 100% beers anymore. And thumbs downing on just the plus inventory line. 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, an 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 or 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. this is going to be a great episode of Acquisitions Anonymous. Just the pre-show banter alone, I can already tell.

We just have to get right into the deal. There is no lead-in that I can do justice to this deal. You could say it's going to be a banger. It is going to be a banger. Certified banger, even before recording. So shout out to Michael's Openclaw, even though Michael's not here in this episode, which is finding us deals. I don't know if I found this one.

I think this might have been from a friend, but we are now crawling the internet with open cloth for deals. But our favorite deal are sent to us by our listeners, which I think is this one. This is, let me put it on the screen, hold your breaths. This is a $1 million EBITDA ATM route, but there's a wrinkle. They're all at gentlemen's clubs. So this is a 642 ATM business. Five, it says they're asking $5 million.

It has $6.6 million of gross revenue and almost exactly a million bucks of EBITDA. It has been around since 2001. Who wants to learn more about how this business works? I love that it says transform your investment portfolio because nothing in your current investment portfolio is quite like this. That is true. You will be diversifying your portfolio. All right. Let me tell you more.

Transform your investment portfolio with a premium ATM route delivering over a million bucks. of annual EBITDA. Step into ownership of a turnkey cash generation machine that has dominated the gentleman's club ATM market for over 25 years. This exceptional opportunity delivers immediate cash flow through 642 strategically positioned ATMs across prime locations nationwide, generating $6.6.6 million bucks of annual revenue and proven EBITDA exceeding $1 million. Your investment will deliver immediate high yield returns, generate substantial monthly cash flow from 103 owned terminals, which average 191 transactions each,

plus processing income from 539 managed locations. So, Mills, I'm going to ask you to break that down for me once I get to that bottom of this. A recession-resistant revenue stream at the gentleman's clubs, cash-based entertainment venues, create consistent demand regardless of economic conditions.

Man, that is one of the most euphemistic sentences I ever read. Cash-based entertainment venues. Hands-off operations, which, as you may know, is a rule. Third-party contractors hire all-vault cash, loading, maintenance, allowing you to collect profits day-to-day or without day-to-day operational burdens. Inherit the premier reputation as the go-to ATM operator in this specialized niche, with 99% contract renewal rates demonstrating unmatched loyalty.

leverage, established relationships and proven systems to expand your ATM network and multiply your returns. Minimal management requirements, streamlined operations means you can maintain current income levels levels while pursuing other ventures or ensuring your lifestyle freedom. Gentlemen's clubs represent the holy grail of ATM placement, notoriously difficult to penetrate, but incredibly lucrative once established. You can't use the word penetrate. Yeah. In a general of ATM.

This business solves the investor's challenge of finding truly passive income with exceptional returns. Your acquisition includes immediate access to premium locations, established vendor relationships, and a proven operational framework that has generated consistent profits for over two decades. The seller's 25-year track record as an independent operator and deployer demonstrates the sustainability and growth potential of this unique opportunity, position you to capitalize on a specialized market with significant barriers to entry for competitors. So again, there's one part-time employee, it says. So remember they said earlier in the listing, there's a whole bunch of third-party contractors

that do, quote, unquote, everything. 103 high-performing ATM terminals that they own principally located various gentlemen clubs throughout the United States. So this is not regional. This puts you in the power seat, dominate this market that has limited competitions. The relationships that come with this portfolio growth

will be easier than expected. you can expand into other products and services to the same clients. Cellar financing is available. It says the vault cash loading and servicing of the seller's ATM route is handled by various third-party load and service contractors. Servicing customers. The route has been in place for 25 years. This is demonstrated by the company's renewal over 99%. Cellar will provide buyer with all training and post-sale support.

It says this guy is retiring. The business is based in Newark, New Jersey, but again, it says that the ATMs are everywhere. So, ATM network with a twist. What do you guys think? Well, he's got a specialization here. That's what it sounds like to me. Normally, I think of these as route-based and geographically based. And this one, because it's spread out all over, I'm a little curious how they manage the network of contractors that service the actual ATMs. That seems like it might get a little complicated, but it seems like this owner, this seller has just been. built a niche within serving strip clubs with their ATMs, 642 of them.

That's a lot. Yeah. Not that many in Newark, New Jersey. No. Yeah. So, I mean, ATMs are just such a fascinating business. It's almost like the roll-off business that we, you know, talk about being the white whale, because you're spending an ATM might cost somewhere between like $2,000 and $5,000.

And there's two ways that you get paid. There are surcharges. You go to the ATM, you swipe your debit card. If you want $20 or if you want $200, it charges you a surcharge. And it might be $2 or $5. Or you may have a relationship with your bank where they say you can use any ATM and they'll reimburse you for it or whatever. But the surcharge is charged at the machine.

You also, as an ATM owner, get what's called interchange where you're getting like paid on the back in by the bank or credit card processing, like Visa, MasterCard, or, you know, these different networks. What's fascinating about the business is you, the money leaves your ATM, like if I go to the ATM and take 40 bucks out, money leaves the vault in the ATM and I get it back overnight into my bank account. The difficulty with these businesses is, one, the logistics of moving a bunch of cash around and all the issues that come with that. Two, the working capital needs are insane and they're perpetual. Like, it is your inventory.

I looked at a much smaller portfolio than this, and you actually run into issues with sourcing physical cash. So local branches don't hold enough cash for your vaulting, and they do not say this in here. But, like, what you have to figure out is how much money is actually in circulation because, let's say you're doing it yourself, which is how most people start. start. They buy a couple ATMs or they have 10 or something like that. They maybe own their own convenience store chain and they put ATMs in them. You're running around filling the machines. You have to have the physical cash to go put it in the machine. If you have $10,000 in the machine and it runs out, obviously, that's a big problem. But you don't want $100,000 in the machine because it's an inefficient use of your working capital. So I ran into an issue with

the one that I looked at. It was only about 100 owned, which is, I guess, is kind of similar in that he's managing, you know, over 500 for other folks. But you have to actually place orders with the Federal Reserve branches to get cash to your local branches or your regional branches to actually have enough money in circulation. Like it becomes a real logistical problem. So there's, you're telling me they're like, there's literally like an upstream supply chain management issue. So it's not like, you know, a typical business just orders from their supplier and it comes in. And in this case, your supplier is the bank, is your local bank branch. But you've got to manage the upstream supply chain

from your local bank branch all the way to the regional Federal Reserve. Yes, yes. Because, like, Heather, you came out of the banking world, but like banks just don't hold that much cash. There's literally no incentive and there's no benefit for them to have. It's a liability to have that much physical cash. It encourages bank robberies. That's one of the first reasons that they stopped holding so much. They used to have big vaults and they stopped all of that. So yes, they want to, I guess, just in time their cash inventory, basically. And so if they've got clients, basically what you'll find is in the bank branch network, maybe they'll have one or two regional branches that are sort of the cash branch that will manage cash.

So you have to make sure you know where that one is. And then you've got to work with their management to tell them when you're going to be meeting certain amounts so that they will have it and they don't want to hold onto it. They want to get it and get it to you probably same day is what I would imagine. So what a lot of people do and they reference this is they use third party vaulting services, which is expensive and it eats into your margin, but it is deferring that risk to like, I don't know that Garda does this, but like you see armored truck companies, right? They're the ones who are obviously helping with this.

I don't know, and I think there's some different service providers. Garter like, we'll go pick up cash from, you know, Walgreens and help get it, you know, the flowing the right way or Walmart or wherever. Garta and Brinks, they're like a reverse cash logistics. Like they're sucking cash out and bring it back into the banking system. This is forward cash. It's taking cash out of the banking system and putting it in ATMs. And you're, you know, you're basically just saying, okay, I have out of my, you know, out of my surcharge of $2 or whatever, I'm just, going to start decreasing incrementally for how hands off I want to be. The other big part of this

is the best locations, it's all negotiated. So if you go to a convenience store owner and say, hey, I want to put an ATM here, they're going to say, how much of the surcharge do I get? And I think the rule of thumb, from what I remember, is around 50-50. So the convenience store owner is going to get a benefit from having an ATM on site because people come in, they spend money, things like that, but to park it in their facility, which I think you have to connect the power and maybe a phone line. There may also be. I bet they're cellular now. Yeah, I think now, now, but, you know, they're like, look, it's floor space for me. And so I need to make money based off of this. So you're constantly negotiating those deals at these individual locations.

The surcharge at a gas station, you know, or in, you know, a convenience store or in a pharmacy or a local, whatever, is pretty minimal. It's, you know, two to five dollars. Yeah. The reason that this is such a premium portfolio is that I, from what I've heard, the surcharge at places like this at, um, adult, you know, entertainment places is like $20 plus. And they are high volume machines. Like, people at these establishments aren't getting a $20 out. They're getting, you know, $500 cash out. So it's high. And everybody has the establishment is paying. in cash. Like, it's a cash establishment. Like, there's, yes, right? Yes. Well, and that's, that's important because cash usage is going down everywhere else. And so is ATM usage for cash,

but probably going to stay pretty stable in the, in the surplus for many reasons. Yes. Yeah, casino is same way, right? The search, if you're at a casino, the surcharge is 20 bucks or whatever, just crazy. But to your point, Mills, how much of the surcharge is the operator actually keeping, you know, in the scenario? That's where it comes down. down to, like, he mentions here in the listing, he owns machines and he also manages machines for other locations. So I think if you looked at a similar portfolio, a commiserate portfolio that was 100% owned, the unit economics would be very different because it would be like owning and operating your own real estate, managing your own real estate versus just

being a property manager for somebody else. Now, there may be some layers to the management of this, why these strip club owners are not, you know, going direct to a vaulting service. There may be some other kind of element to it that I'm not aware of. But it seems fairly durable, right, in terms of the demand and, like, where they are and ATMs are not going to go away in those places.

What I would be worried about is, you know, is their customer concentration in these 539 managed locations? The ATM world is like kind of wild west and like a little bit, you know, obviously any industry we're dealing with a ton of cash just opens up a whole can of worms. I know people who own ATMs. I actually know somebody who owns ATMs in some strip clubs. And every few years, they have a problem. They don't use a vaulting service. Every few years, they have a problem where the guy that they use and they trust and have like sent around.

with $100,000 cash for years and he's been fine, takes off and runs and they're like chasing him down. And it's not really, they're not like using law enforcement for this kind of thing. Like it's a, it's a murky business at best. Yeah. So you mean they're using like a PI? Like they're not calling the police. This guy. Or yeah, like a gangster basically is like hunting this person down and they're going to like break his legs.

The dog the bounty hunter is going to find him. But not a not a TV PG type version of it. Yeah. Do they usually find the guy? The impression I get is that they always find the guy. They always find the guy. So let it be known. They always find the guy.

If you steal, if you're stealing $100,000 cash from somebody, it's usually a person that you don't want to steal from. Right. The people who have this much liquidity in like physical cash are used to, you know, dealing with the dynamics of it. And like, you just have to like carry a big stick in this instance. Yeah. So, Melz, let's dig in.

on kind of this owned versus operated model here. So he says, or the listing says, he's got 103 owned terminals and then 539 managed locations. Is your assumption that the managed locations are owned by the strip clubs themselves? Yeah. Yeah. Or some other third party, you know, who is like, hey, I don't want to mess with it.

And like, I can just go to you and you turn Kia and I'll give you some of my margin. Well, that's what was interesting because I was imagining if there's a third party involved, there's literally three. there's the location, the strip club, there's this guy, the manager, and then there's the owner of the ATM also. So now there's three hands in the pot for a kind of thing. And a vaulting service.

So there's a fourth, like a service provider that he's procuring for these other people. I think that if you're an owner of an ATM and you're not managing it, you have a management service, you're not just using a vaulting provider, using a management service who is using a vaulting provider, and you're splitting with the owner,

how much Vig can be left for the guy who's passively owning an ATM in this scenario. Yeah, I think it does get pretty thin. Now, because of the industry that we're in, or the segment that they're in, I think that there's a lot more margin to go around. I mean, this guy, Jeff, the broker on this, Jeff Sozville, Sosville, ATSB, ATM brokerage.

Like, I think he is the go-to guy. I recognized his name. If you go to his website, he's got tons of routes for sale and has routes that have already sold. And they range in size from, you know, $100,000 to, you know, several million. Bill, there's a Charlotte, North Carolina ATM portfolio for $3.5 million. It has 604 ATMs in Charlotte and in the surrounding area. And maybe this is more common than I thought, but like it says the seller owns 139 and the remaining ATMs are owned and vaulted by 10 to 15 operators and 50 merchants. And that's another 465.

So I think there is some precedent for there to be a multi-layered thing going on here. Interesting. So what's also interesting to me is this 99% contract retention. renewal rate. Because my understanding of the ATM business is on one hand, like it's great. Like you get your ATM in and you kind of walk into a convenience store or a strip club in this case. And you go, hey, you don't have an ATM. Unlikely Striploid doesn't have an ATM. But you're trying to often displace an existing ATM. And you go, oh, how much is the other guy giving you? He's giving you 50% of the fee. I'll give you 60% of the fee. Right. So you're kind of always getting cannibalized. And the ATM route, industry is one of those where there's just a ton of bottom feeders, you know, a ton of like small networks. It's kind of like the vending machine industry too. We're like, you can get into this for not very much money. Like, you know, people have 10 and they try to get an 11th. So what's fascinating to me is that this guy has a decently sized network, 642, and he's not getting cannibalized at all.

It does seem to say there's something special about running an ATM for a gentleman's club, and I'm guessing, it's that it's the turnover of cash is probably very high. That's my guess. And so if I'm a gentleman's club and I want to make sure I never run out, the ATM never runs out of cash, I bet they've all got experiences where it did run out of cash. And this guy has learned how to make sure that doesn't happen, but that does make this probably a more difficult ATM business to manage. And it also sort of says this is a more heavily working capital intensive ATM business than the average. That's my guess.

Probably. Yeah. But what's interesting, though, Heather, is I would think, like, as you described, this guy would have developed custom operations, et cetera, if this profile was so different. But he's using third-party management services. He has one part-time employee.

So that seems to me like any other ATM operator, also using the same third-party service providers, could, because these same third-party service providers are also doing, other non-Gentlemen's club ATMs on their same route for other operators. So, like, what is the moat here? He clearly has one. Like, we just, we see one. We don't know what it is.

Yeah. I don't know what it is. Yeah. And I'm a little bit wondering if it's something maybe even unseemly where it's like, it's cash back under the table. It's, he knows how to bribe the right people. You know, like I wonder, because like, why would you, why would this guy like, consistently be able to lock it up. I mean, there's some brand value. Like, hey, we're the ones

that do gentlemen clubs and you go to your gentlemen's club conventions and everybody is using us and obviously it's us. But like, still, there's got to be something more to. There's more to. Hey, everyone, it's Bill. And I want to tell you about maybe the most exciting sponsor we've had in a 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.

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One other element of this industry that's kind of interesting is there's these regulatory waves that come. Like I think in the early 2000s, like around 2010, it was ADA compliance. and every old ATM had to go away and you had to have an ADA compliant ATM. And then like in 2015, EMV chips, all the old ATMs had to go away. And like people have people and granted, these are not $100,000 machines, right? They're $5,000 or something.

But the, I mean, ATMs break, like the cash dispenser gets jammed. Like there's all kinds of like little annoying maintenance things. But then there's these larger CAPEX cycles that come. and you can't just be like, I'm not going to put a credit card reader on my vending machine. I'll just do cash. It's like, no, you actually are mandated. You have to do this.

And so I don't know what the next thing is, and I don't know where we are in that cycle. Like maybe the next thing already happened. I just haven't looked at it recently. Or maybe the next thing is coming. But as an outsider, you would never know that. But when you start to look into this industry,

depending on when it is in the cycle, they'll say things like 75% of the, the ATM portfolio has already been EMB, you know, upgraded. And you kind of know, okay, I have some deferred CAPEX that's going to have to happen or the other shoe's going to drop. So how do you, because of the aforementioned inventory issue bills, I mean, this guy, he wants $5 million for the business, which is 5x EBITDA, which I don't know where these things trade.

It wouldn't surprise me if these traded a little higher than kind of your standard small business. Dending, yeah, or something. Yeah. especially this one with good retention and it's a little differentiated. But like you're going to pay $5 million for this business. What happens all the cash in the machines? How does that work?

That's the thing. Like it's the perennial working capital question where the seller is like, that's my cash. And you're like, yeah, but I need it. And I can't, I can't buy it empty. You know, I have to buy it funded. But it's more emotional in this case and tangible because it's literally cash. Basically cash.

you know. And couldn't you get scammed a little bit? Like you have, normally when we're buying inventory, we're going to be able to go to one location or two and do a hard count before close. How are you going to count the cash? I will say the data on this business is impeccable. And, and again, like, you're getting repaid overnight. The thing that would be difficult to know that you could probably get historical data on, because there's some like, you know, vendor management tools and software and things like that that these pieces of equipment have. But you could look back and say, you know, I want to make sure that the seller isn't, you know, arbitrarily like reducing the day's cash on hand in these machines for, you know, six months leading up to a sale or a month leading up to a sale. And then all of a sudden you think I need half a million bucks to stay in circulation, but I actually need a million.

And where does that money come from? It's just you get, the benefit is you get repaid overnight. So, like, the cash conversion cycle is very quick back to you once the month. leaves your machine, but then you've got to turn around and simultaneously like dump it back. Yeah. Yeah. It's a fascinating business. Mills, what is market though? Like, it, this guy, and it probably is his cash in those machines, right? Like, he's built this up over time. Although I guess it's only his cash in about a hundred of these machines. It's somebody else's cash in 539 of these machines. Yeah. And I mean, maybe Bill, maybe that's part of like the

staying power that he has and the customer retention. Maybe he is like providing some level of float or something that we don't really know. So the Charlotte portfolio had a little bit more info. They're asking $3.5 million. The income over the last 12 months, in terms of profitability, it looks like was somewhere between $800,000 and a million. And they say the additional rotating vault cash

to load the machines weekly on the Charlotte portfolio is $1.5 million. So it's trading for less. And, like, to put it into perspective, that's a million and a half dollars weekly in circulation on about the same size portfolio, but a more commoditized portfolio. So I would not be surprised if this portfolio, the one we're talking about in the gentlemen's clubs, is significantly higher. It could be double that. Yeah, easily, easily. Yeah.

Because I think, like, Heather, you had said, like, cash, you know, uses going down. I remember, this has probably been 10 years ago when I looked at this portfolio. I thought the same thing. And for certain segments of the socioeconomic ladder, cash use has almost completely gone away and others. It has not diminished at all. So there's an element of it where it's like, yeah, cash is on the decline,

but there's another facet of that, like it'll never go away. And in some areas of the socioeconomic ladder, like it hasn't diminished at all. Yeah, I think that's why on average ATM portfolios will sell for about three times earnings or less if they're smaller. It probably depends on where they are, to your point. You know, are they in the segment that is probably going to continue declining, which is still an okay thing to buy if you buy it at the right multiple, or are they in the area that it's not declining? Obviously, this is unique because it's not geographically located. It's this specialization in these strip clubs.

it's not going to be declining. But I do think a five multiple is probably the highest you'll ever see anybody ask for an ATM route. Yeah, I think so. Yeah. And it's got to include like $2 million or more of working capital, I guess more than that even. That would be the fascinating thing to ask Jeff Sosville, the broker here of ATMbrokerage.com. There is absolutely like a market way this is handled. Right. ATM routes trade. This isn't the first one that's trading. There's, there's a way that this is handled. I don't know what it is. To me, this business is like so polarizing. You are either buying a very small portfolio and you're the Patsy who is buying it. Nobody else will. Or you're an insider. And like this is like, you know, our friend Brent B. Shore would say like, you know, if I'm looking at an oil,

in Texas. Like, there's people there who have passed on it twice kind of thing. Like, there's no reason a good oil deal should make it to me in South Carolina. The guys who invest in oil, like, they, they pick them over. I think that this is probably one of those things where, like, if these deals are worth doing, especially in such a niche industry where, like, the physical infrastructure of dealing with these problems is everything, like, these businesses just they change hands without hitting the market. I'd be curious, like, if you could get the candid insiders perspective on this portfolio or the Charlotte one or, like, any of these small ones, I think that it's, like, very insider-driven.

So what's interesting, too, I just, I wondered, how big is this Tam? Yeah. Right? Like, is this guy, to your point, Mills, like, is this guy the behemoth? And if he is the behemoth, it's unlikely the behemoth comes to market without all the industry insiders known it's coming to market. So I wondered how many gentlemen's clubs are there in the United States? According to Google, the size of the industry is about 4,000 strip club businesses in the United States.

Wow. A little under 4,000. So he's got, what, 15% of it, roughly? Decent market share. Decent market share. Now, like, it's not 40 or 60%, which is good because it means you might actually have a chance to grow. row here. I wonder if, like, is there a roll-up here? Like, could you buy another, is there another operator at 10 or 15 percent? You put them together and there's real economies of

scale? Maybe. And I mean, also, like, I think, I mean, it seems like gentlemen's clubs are, like, always going to be there, but it seems like they're less and less of a thing. Like, don't you think there's less today than there were 15 years ago? You think the world is getting less degenerate than it was 15 years ago? No, I think that people's like, I think the go-to-market strategy is different. Like, I mean, there are other ways to get that service now. Yeah, we've talked about like the only fans management. Yeah, it's on digital.

It's gone digital. Yeah, so I think the spend is probably still going up, but it's that people are like, like, there's a stigma. I don't want to go there. I'm going to do it more behind closed doors. I mean, that's my impression at least is that this is less and less. less publicly acceptable. We said before, you know, we hit record, like some improprieties that happen in places that we, you know, have seen or heard. And I just feel like it's got to be

less and less. I mean, I know, like, in the roofing industry, it used to be like the sales funnel was fueled by like suppliers taking you to strip clubs and stuff. Like, I've never been to a strip club. I don't have any interest in going to one. I think that is not just like a personal preference. I think it's also a generational kind of shift. So I hear that. But at the same time, if you open up any kind of discourse around what will the future be like in an age of AI. Everybody says in-person experiences is the whole wave of the future. Yeah, yeah. I mean, right, like, that's, I'm not making that up.

I agree. Yeah, yeah. Broad consensus that, you know, in-person sports, in-person, you know, social clubs, et cetera, are going to be hugely in demand in the future. So are general ones clubs riding that wave? So I think the flip side of this from a, like, they're in a really, really, nice segment of the market in terms of like margin profile and like complexity and like demand from the actual like installed base. The flip side of it though is that most route based businesses

you care about density. And the portfolio that I had looked at, one of the issues with it was like over 100 machines, but like from one edge of the portfolio geographically to the other was like a couple hours. And so the other thing that comes into play with these type of portfolios changing hands is how dense is the route and how quickly can me or a third party service it? Because that really plays into the value because it's a driver of your cost. Well, that's why this is so interesting because this is a nationwide portfolio with functionally compared to most. I mean, we just looked at Mills, that Charlotte one that you happen to pull up, had run. roughly the same number of own locations in one city.

Yeah. Right? So this is not even, I mean, dense, it's the opposite of dense, right? Which has got to make it pretty unique in this industry, but they're using, and this is probably why, they're using all third party providers. And they probably have some purchasing power with them to say, hey, look, you know, and maybe it's Garda, maybe it's Brinks. Maybe it's like the inverse of that, like you said.

Hey, we're going to give you a huge footprint. And yeah, you may do a couple of random ATMs in Des Moines. but like we have we have one that is not going to add that much incremental cost for you but you've got to give us better pricing across the board in the same reason same way that the charlotte guy probably has amazing pricing power because he could have his own armored trucks if he's just in one market and self-perform yeah so i wonder if the margins on this portfolio are structurally lower because you don't have any density but then i wonder if that's offset by being structurally higher because of the location type Yeah. Right. It also makes me wonder, so what this guy has built, which is probably a little bit unique in the ATM industry, is a way to make money without route density. I mean, that's what this business has. It's making money without route density, which is an anomaly.

It also makes me wonder what other types of ATM placements casinos come to mind, although I imagine those places already have cash logistics infrastructure, so maybe they don't need you. But I wonder if there are other types of industry. where you can leverage the learning this business has of running ATMs with no route density and make it work and expand this business outside of gentlemen's clubs. But like, you know, the flip side of that is the not quite the pinstroke risk, like, from a government standpoint, but like our football stadium a couple years ago converted to completely cashless. It's all hard.

And you could have like an amazing infrastructure and you're like in every SEC stadium. and then all of a sudden they're all like, this makes no sense. Like, we're just going to go all cashless. We didn't talk about this because I think it's a little bit of a moot point. But before we leave, Heather, logistically from a lending perspective, is there a lender who touches this? I don't think the SBA would, but you could clarify that. But is there a leader who done it?

To be clear, you could use an SBA loan for a regular ATM route. We've done them before. We've helped clients with those. the lenders will want somebody with a background in it because it's so specialized. They're not going to want just anybody to get a loan for that. This one, because it's in strip clubs, the SBA has rules against, you know, funding things that are related to adult entertainment. It's not directly adult entertainment, so I could see somebody trying to argue that this is okay,

but I think most banks would still kind of say no, even just on reputational risk. They don't want to get involved. So, yeah, seller financing is probably the only way here. And then you lose that third part. You lose the benefit of having, you know, your financing partner asks some questions that you might have missed or whatever. Because it's just going to be you and the seller negotiating the deal, which I think, you know, sometimes having the financing partner does help a little bit. Yeah, because the seller's like, look over here. I'll make it really easy.

It's fine. It's fine. Due diligence is very quick. Mm-hmm. Yeah. Well, I imagine that's why Jeff Sossville has a lot of value here. Yeah. Right, a specialized ATM broker.

Yeah. I love specialized business brokers. I agree. Yeah. Yeah, like we tend to sometimes bag on business brokers on the pod. Like in any profession, you know, realtors come to mind. There are great realtors, and there are realtors who add no value and make things worse. Yeah.

The same is totally true in business brokerage. And, you know, some business, like you have a great business, you know, you probably can sell it without a broker. in a lot of industries. Jeff Sotsville is probably adding a ton of value to transactions in this space. And can map the market for you. Like, it's such a small market of, you know, buyers and operators that like, if there's a conference, he's there. You know, the same is not true of like sign businesses or something. Like, yeah, there's brokers who probably specialize in that, but the sign industry and the number of players is like many magnitudes larger. On the flip side, if you're buy an ATM business from anyone who is not Jeff Sossville is probably going to go real bad.

They're like, what do you mean? What is interchanged? I don't even know what that is. Yeah. Or you're about to get a great deal. Right? Like one like either. Yeah. One of the, like huge levels of inefficiency if you're not using Jeff. I think Jeff did not pay us to say this obviously. Never met Jeff. But you can, Jeff. You can pay us to say this. You can. You can, Jeff. You can sponsor podcasts and we will we will teach. I mean, I don't always think this, but wouldn't have been killer to have Jeff on the episode today? Yeah. Yeah.

He would have taught us a lot. He would have, he would have taught us a ton. Jeff, if you're out there, we would love to have you on to do another ATM route. You can teach them about ATMs. That's, this is why I love this pot. I mean, there's so many nichey things out there. And there's people like Jeff who think about them all day, every day. We get to be tourists and dip our toes in.

Yeah. All right. So I got to ask, thumbs up or thumbs down. Mills, thumbs up, thumbs down. Thumbs up on ATMs. I don't personally want to own a portfolio in adult entertainment. Probably comes with a whole bunch of things that a portfolio in convenience stores does not come with. Yeah.

Yeah. Heather, what about you? Ditto to that. Are you making the loan? Ditto to that. No, don't want to do the loan. I don't want to be involved because of the, there's something going on with the, with the strict clubs that I probably don't want to know. Yeah.

I have to pass because, like, ATM's cool, but, like, there's just probably so much going on under the table. and, you know, there's a whole bunch of who you know, what you know, who you grease, who you don't, like in this that I just don't want any part of. Like, the transition risk in this business is really high because people are coming for these locations all day, every day, and he's not losing them. And there's a reason for that. And if you start losing them, this business will be gone in two years. Yeah. Right. If you stop doing whatever juju the owner is doing, this business will be gone in two years.

So for that reason, I'm out. All right. Well, this was a good one. Thank you to friend of Gurdley who sent this to us, whoever it was. I hope you enjoyed the episode. And if you enjoyed this episode, we have 500 or so more just like it on acqueu anon.com. I don't know if we, I think we did ATMs one time. We've done Bitcoin ATMs before.

But we've also done construction and signs and e-commerce and software and almost everything you can think of, you can learn about it on the website, acqueu-unan.com. You can also hop on our email list if you're not an audio person or you can't listen to so much audio every week. We will email you little summaries of the businesses we review so you can learn about it in your inbox, not just on audio. So thank you for listening to Acquisitions Anonymous. We'll see you on the next episode.