Hello Freedom Seekers!
On the docket for today:
Platforms Don’t Care Who You Are
Live Deal: Compliance-Centric EdTech
Ruh, Roh
Apologies if I am beating a dead horse, but I find these examples to be great reminders for myself on why my criteria are what they are. For those of you that are Chris Koerner fans, you are probably already aware of this, but if you aren’t, here is the beginning of his newsletter this past week:
I had a rough week.
I posted a YouTube video that exploded. It’s on exactly how I make ~$35k/month on Facebook. Very tactical.
A few hours later, Meta banned my Facebook page.
Copyright infringement. Which is false.
That page was a big chunk of my income and a huge data source for my ads. Gone overnight.
Chris Koerner is a wildly smart, scrappy & successful entrepreneur with meaningful presence on all platforms…said differently, this guy knows what he’s doing and he STILL got the boot on Facebook. This is a great reminder that you need to be conscious of the platform concentration that you have for your existing business or a potential target. If your entire business is on Amazon, all of your leads come from Instagram or Google, etc. you first and foremost just need to recognize that and then begin to plan for how you can i) diversify out that concentration and ii) more directly own your leads / channel (e.g., email newsletter, SMS list).
Deal Teardown:
Contrary to what I said last week, I am now making it a goal to find 1 high quality deal every single week for this audience. I think there is too much noise in the space about folks complaining about low quality deal flow, not enough good deals, etc. The real problem? You either don’t know where to look, you’re not getting creative enough, and/or you’re not willing to put in the work. Nobody that is executing on each of those three is complaining. So today, I present to you a Construction Safety & Compliance Services Business
💰 Asking Price: N/A - Testing Market
💼 EBITDA: $326,371
📊 Revenue: $1,219,052
📅 Established: N/A
📍Location: New York
📌 TL;DR: Construction safety training and engineering services in the NYC metro area…think OSHA certification courses, on-site safety supervision, engineering plans, regulatory filings, and compliance consulting. They run both in-person and online, creating a hybrid revenue model that most pure training businesses don't have.
What I Like:
Compliance-Centric Ed Tech is very attractive to me, because it’s high margin, always needed and heavily insulated from competition given the difficult to acquire specialized knowledge required to become accredited. Further, I strongly believe that you can truly leverage AI in this space vs getting displaced by the technology. Non-Compliance Ed Tech (such as course / standardized test prep) is getting crushed by AI as LLMs are fantastic at essentially creating a full course for you to prepare for the test. When you essentially are the stamp of accreditation, AI can’t directly provide that certification (at least for now). AI to your advantage in this space.
Competitive Moat the accreditations here are no joke between i) NYC Department of Buildings and ii) IACET and create a substantial barrier to entry. Further, the in-person component gives strengthens the notion of AI having a tough time displacing.
Client Base is broad and sticky: contractors, site supervisors, property developers, building owners. These aren't one-time buyers browsing the internet. These are professionals with recurring compliance needs baked into every project they touch.
Revenue comes from three buckets: transactional course sales, project/contract-based engineering fees, and consulting retainers for licensing and compliance support.
Seller's Reason for Sale is growth, not exit. They want to expand the client base but likely don't have the bandwidth or capital to do it themselves. They're willing to stay on for one to two years to make the transition work, which feels like it would be perfect for a financial buyer.
How I Would Diligence:
Revenue Splits. How much revenue is in-person / fully self-serve online / hands-on consulting?
Key Person Risk is always inherent to the in-person component of a training service business. I would want to understand exactly who does what in the org and what happens if they get hit by a bus day 1 post-close.
Replaceability of existing staff. Piggybacking off above, what kind of specialized knowledge is required here? How does this business scale from a hiring perspective? If someone gets hit by a bus, how quickly can I backfill their role?
Utilization Metrics. Understand how much revenue I can generate per “trainer”…what is the staff’s current utilization? What is the margin on the in-person business?
Automation Potential. How much of the business can be shifted to self-serve course training vs in-person? Any opportunities for lower cost labor?
Customer & Sub-Vertical Concentration. What happens if one sub-vertical gets crushed by macro-economic factors?
Sales & Pipeline. What does sales motion look like? Any outbound or all inbound?
Competition. If someone isn’t using these guys, what are they doing?
Scalability. How does this scale by further penetration in existing market? How does it scale to other geos? Have they tried expanding into other geos?
Small team, real accreditations, nice competitive moat, and recurring compliance demand. Didn’t request an NDA here, but based on my research, I think ABC Safety Group is the business. If someone goes for this, I’d recommend reaching out to the owner directly versus going through the Rejigg Platform, framing as if you are just looking to see if they are interested in a sale. Ultimately, this could also not be the business and you just got 2 nice leads :)
The Quick n Dirty
Other Deals I have been poking at this week:
Fast-growing finance newsletter covering personal finance, money psychology, macro trends, and investing
Strong non-financial metrics: ~100k email subscribers, 30% open rate, 1% CTR, low churn, strong organic funnel, seemingly strong presence on Substack with good engagement
Only $1,000 monthly revenue feels incredibly low for a list of this size…would need to truly vet whether or not this is because the list is actually garbage or the owner just doesn’t know how to monetize (which would then be a great opportunity)
Not worth anything near $120k, would be incredibly aggressive on 1st bid
13-year-old education resource platform serves homeschool parents and classroom teachers with printable activities, curricula, and a paid membership library focused on content for preschool through second grade
I like the diversified revenue sources here and the macro backdrop of homeschooling seeming to really be on the rise. Further, this feels like a business that could be near fully automated with contractors + VAs (reducing existing owner workload to from 5-7 hrs / week to <1 hr / week)
Would want to dig deeper into the ad funnel & scalability potential, upsell potential into the existing membership base, quality of the 90k email subscriber list and historical attempts at converting the list into paying customers
From last week and still can’t stop thinking about it. Sent this to a few folks directly in my network. Blows my mind no one is going for this.
If you're actively looking at a deal right now and want a second set of eyes or want to talk about the anything wrt the deal above reply to this email.
Have any thoughts or questions?
Want me to focus on something specific in an upcoming issue?
Let me know! Reply to this email, shoot me a direct note at [email protected] or connect & DM me on LinkedIn. I’d love to connect with each and every one of you to help in your journey.
~Mitch
