Happy New Year! In today’s newsletter I am going to go over the following…

• Three interesting deals for you from our December search:

  • Window Manufacturer (Canada)

  • CBD Company

  • Hearing Aid eCom

• Buyout shops use Trump rally to cut borrowing costs and fund dividends

…and more.

Are you looking to buy a business?

We help SMB investors build up their own databases of proprietary deals. If you’d like to learn how, see here.

Actionable Tip

Double Down on Failed Processes:

If you’ve been doing this for enough time you know how often deals can fall apart, and for a million different reasons. But when a deal falls apart, your effort should not go to waste. The best investors keep in touch with their contacts, and will revive old deals (dependent on why it did not close the first time). It seems simple, but I’ve seen countless investors leave tons of deal value on the line by simply not following up.

1) Keep a list of companies that ran processes but didn't sell.

2) Track why deals fell apart.

3) Set follow-up reminders for 18-24 months out.

These “failed processes” can convert to deals once the owners are ready to try again.

PE Firms Capitalize on Refi Window

FT: Buyout shops use Trump rally to cut borrowing costs and fund dividends

The recent market conditions have created a compelling opportunity for private equity firms to refinance their 2022 vintage loans at significantly lower rates. Major players like Blackstone and Elliott are not just refinancing - they're also pulling out extra cash through dividend payments, showing how drastically conditions have improved from when they originally had to scramble to finance these deals.

These moves highlight a key aspect of the PE business model: firms benefit from both owning companies and managing their debt levels. When credit markets improve, firms can capture value by refinancing, much like homeowners rushing to refinance mortgages when rates drop. What makes this particularly interesting is how quickly this opportunity emerged after the 2022 credit crunch, with some loans dropping from 11% interest to around 7%.

The current wave of refinancing activity reveals the cyclical nature of credit markets and private equity's ability to capitalize on technical shifts. While Pimco and others flag potential market excess, private equity's need for continued market access creates natural constraints on behavior. JPMorgan's analysis showing $3.1 billion in realized interest savings demonstrates the magnitude of this opportunity, even as firms balance near-term optimization against future market relationships.

This will have ripple effects through the lower middle market. We’re about to see a boom in M&A. We’re here at the right time.

Deal List

1) Window Manufacturer (Ontario)

• Revenue: $2,700,000

• EBITDA: Not shared

• Asking Price: $4,200,000

• Overview: This is a successful window manufacturer with a 25% EBITA/SDE margin and a track record of consistent profitability.

• My Thoughts: This window manufacturing business is an interesting opportunity for those looking at Canadian companies. With strong financial performance, advanced production capabilities, and an experienced management team, the company is well-positioned for continued success. At the $4.2 million asking price, the valuation appears reasonable given the 25% EBITA/SDE margin.

• See Listing

2) SBA Pre-Qualified - CBD Manufacturer - Wholesale and Retail

• Revenue: $547,468

• EBITDA: $120,172

• Asking Price: $750,000

• Overview: Established in 2017, this business is a CBD manufacturer, distributor, wholesaler, and retailer. It operates through Shopify and WordPress, offering certified organic CBD products manufactured in an FDA-registered facility with patented, GMP-certified processes. The products are also third-party lab tested. The seller is willing to stay on with new ownership.

• My Thoughts: The business's comprehensive involvement in the CBD supply chain—from manufacturing to retail—provides multiple revenue streams and control over product quality. Operating in the rapidly growing CBD market, it benefits from increasing consumer acceptance and demand. The SBA pre-qualification is a plus and may facilitate financing for potential buyers. The seller's willingness to remain involved could ensure a smooth transition and continuity of operations.

• See Listing

3) Established Hearing Aid eCom Company | Shopify

• Revenue: $14,193,214

• EBITDA: $625,858

• Asking Price: $2,500,000

• Overview: This is a trademarked online direct-to-consumer hearing aid company operating on Shopify. Established in 2022, it specializes in over-the-counter (OTC) hearing aids and related consumable products, requiring minimal owner administration.

• My Thoughts: The company's rapid growth since inception indicates a strong market demand and effective business model. Operating in the global hearing aids market, which is valued at $14.2 million annually, positions it favorably for more growth. The minimal seasonality suggests consistent revenue streams throughout the year. Additionally, the low owner involvement required makes it an attractive option for investors seeking a relatively hands-off opportunity. However, potential buyers should assess the sustainability of growth and the competitive landscape in the OTC hearing aid sector.

• Link to Listing

How I Can Help You

If you invest in SMBs and want my team to set up your proprietary deal sourcing strategy including:

• Scraping and enriching lists of your ideal company targets

• Creating a deal database of up to 100,000 deals

• Setting up a cold email infrastructure

• Writing and managing all outreach including your cold email, LinkedIn, and cold calling

Learn more here

Book a call here

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