Welcome!
I’ve looked at thousands of businesses for sale, and learned to read between the lines. Every issue, we'll take a deeper look at a listing, learn something, and I'll rate the deal at the end!
This week’s listing: This local services business down in the Sunshine State is all over the place — doing pest control, lawn care, and well drilling services. How is this a single company? Check out the listing here.
The numbers: We don’t get a price in this listing, but they’re working with $2 - 2.5M EBITDA, plus $1M in real estate. Plus that well drilling equipment has to be worth an arm and a leg.
![](https://cdn.prod.website-files.com/653efa19f29fc491d2b211be/667b25b1590b63f287253552_AD_4nXcotVMIqaVAmIROmef0uLPzTNHzKmopx8383WjXm_jSx42DEzezrX2msf77H7m578SR0_jlIUpNJCyMnpYJ14N9g6dX5dvA3VulkHyOqqiqPpxb5gUuknCcx_dh3Xs6lt8dR9ieXL5xFax8CNWS5JczmmIr.png)
Green flags
Let’s look at the upside here: With this business, you get pest control, lawn care, and well-drilling services. Diversifying is great, because you’re never too dependent on any one market.
Then there’s the track record. Any business that’s been running for 51 years probably has some runway left (that’s the Lindy Effect for you). And the fact that it looks like they’re based in a relatively small town means they likely have a niche market advantage.
I like seeing steady financial growth, too. Of course, you’d want to look at the numbers more closely, but it looks like things are trending in the right direction.
And lastly, that $1 million in real estate can be potentially financed through the SBA 504 program, giving you additional financing flexibility.
Red flags
The grab-bag of services is also a downside, for a couple of reasons:
First, it complicates your focus. With all those revenue streams, you’ll constantly have competing priorities. Decisions like “Where should I deploy this capital?” suddenly get a lot harder.
Then there’s all the licensing. You need to have the paperwork for all these different verticals. Then there’s all the training and equipment.
On another note, the funding could be tricky too. They don’t give a purchase price, but based on the $1M real estate and the $2.4M EBITDA, this is too big for SBA and too small for everything else.
What I’d ask
I’d definitely want to know the breakdown of each service line. Is this 80% well-drilling, 10% pesticide, 10% lawn care? Or am I basically buying a landscaping company? I want to know what game I’m getting into.
I’d also want to look into whether I could split these businesses up. Is there a lot of centralization? Are these even feasible businesses if they’re broken up? Or are some of these services just to keep the guys busy in the slow season?
And of course, there’s the question I always ask: am I buying myself a job? How involved is the current owner in the day to day operations? Am I out there digging wells myself?
My rating
I think somebody's going to look at this and think it's pretty attractive. Because at first glance this seems like a mess, but it’s actually a pretty good countercyclical approach to a services business.
But funding is complicated. It’s going to need some creative structure or a whole lot of equity to get under that SBA cap. (You’d definitely want to call in Heather on this one.)
Still, I think it’s a pretty good deal, if you’re ready to get in there and get your hands dirty.
Four rigs out of five!
If you want to go deeper on this deal, check out the whole episode of Acquisitions Anonymous!
What do you think? Hit reply and let me know!
Thanks for reading, and have a great week.
Michael