Hi all,

I have a unique update this week.

I want you to hear from my friend, Greg Thomas.

Greg reads this newsletter, but he could write it.

He just closed on a really interesting business that I think has home run potential, and I want him to tell you about it.

I told him I’m a little envious, but I’m also thankful.

I’m envious because what he bought is eerily similar to the profile of businesses I’m targeting. Crazy-good deal (on EBITDA multiple terms), very sleepy digital presence, tired owner who’s ready to retire, etc.

I’m thankful, because I’ve made him swear to keep me updated as he goes. This will be fun to watch — and root for from the sidelines.

So, I asked Greg a bunch of questions about his search, the business, and his plan to grow it.

If you like what I write about weekly, you’ll really love this. No more theory! Greg is doing the real thing.

Beware, this is a long one. But I didn’t find anything unimportant I could cut, so I left it as it is.

You’re free to skim the headlines if you want to see what he says about specific topics.

Let’s jump in.

Greg, tell us about yourself

I’ll turn 52 later this year and have been married for 23 of those years. We have 3 children,1 Blue Heeler dog, and 6 backyard hens.

Our kids are 13, 17, and 19. One is highly creative and artistic, one is a creative engineer/product development type, and the other is a hard worker and a people person—the core of a good team.  

The first 14 years post college, I was involved in vocational Christian ministry with Junior High through college age students.  My last stint was managing a student residence hall.

When we left, we had 2 kids and my wife and I knew it was time to leave the dorm world.  In the process of searching for something new, I received a call out of the blue asking me if I had any interest in selling dorm furniture for a manufacturer in Michigan.  I ended up taking the position.

2+ years ago, at about the same time as starting to look at business acquisitions, I decided to  venture out on my own and sell/consult as an independent contractor.  I continue to represent that same manufacturer but have also added a couple other manufacturers to the mix.  I get compensated at the end of a project when the manufacturer finally gets paid from the client.  

[Mike’s note: Greg is planning to run this business as a project with his kids. Cool!]

Why did you start looking for an acquisition?

My ability to provide for my family is directly tied to the health and growth of student housing.  When campuses shut down housing operations for over a year I had to embrace the reality of student housing spending on improvements dropping to zero almost overnight.  Not only that, the long-term implications for campuses that had lost a massive revenue stream were that budgets would be impacted for many years to come.  California also happened to be a state that maintained more strict regulations for a longer period of time.

In this same timeframe, I got back onto Twitter and started to learn about ETA.  This path of business acquisition seemed to offer a straightforward path to making a pretty dramatic shift, if necessary.

My income provides for the day to day living of our family. My wife works full-time educating our kids and managing our home.  Though the pay is potentially fantastic, it is all in deferred compensation that we hope to see realized down the road. 

How long have you been searching?

2+ years

[Mike’s note: Most people can’t stick with something for two years before you get a result.]

What did the last 2 years look like?

I have submitted in the ballpark of 10 LOI’s. Largest offer was about $1.75mm for a custom art business in AZ doing approximately $700k in SDE.  Offer was accepted but after a site visit and re-evaluation by my wife and I we decided we were not going to move for a business.  

Let’s talk about the business you bought. What is it?

Rover Roamer ( www.roverroamer.com ) 

We make custom, built-to-order, cable (and rope) dog runs.  Think zip-lines for dogs–though the dogs are not flying through the air.  

Where did you find the business?

Biz-Buy-Sell.  It was for sale by owner.  No broker involved.

I came across it because it triggered one of my filters for niche products/manufacturing/pet products

The seller lives about 2.5 hours away from me so it made the logistics of diligence much more simple. 

The seller was asking essentially about 1x SDE from his lowest year—which was also the most recent year.  

[Mike’s note: It pains me to say it, but there are evidently deals on Biz Buy Sell. It’s not always about looking off market.]

What attracted you to the business?

Though I would have preferred a product/s that had a more recurring need, this was a pet product and specifically for dogs, which was attractive to me.   The market size and continued growth is pretty remarkable.  And there seems to be no end in sight.   

I liked that all of his revenue was tied to organic Google search.  He ranks really well for the main keywords.  Though not always perfect, and Google changes their mind regularly on search intent, I felt this was relatively stable.  And my earlier deep dive into content sites gave me comfort with what he was doing and how he was acquiring customers.

I figured it would allow me a patient process with developing ads and adding that to the mix over time. 

What was your conversation(s) with the seller like?

We are similar in age (just over 50) and got along well from the first call. He liked that I was relatively local and that this would make the transition easier. We had a trust for each other pretty quickly and I got the sense he would want to work with me on this.

How long did it take from initial outreach to closing?

Just over 2 months. It was a cash deal so the main delay was spinning up an entity and getting a number of details in order.

Can you share business details - traffic, revenue, margins?

Approximately 2k visitors per month to the site. He was not using Google analytics/search console/ etc. I just got this all set up in the past week since I have owned it.

It’s a very small/micro business. Last year revenue was about $100k. His best year was a little over $300k. He started the business in 2018 after making up his own kit for a camping trip. And then decided to try to sell them.

[Mike’s note. It’s crazy that a business that runs on a digital presence doesn’t have basics like Google Analytics in place. It’s like a doctor operating without a stethoscope.]

Can you share transaction details? Cost, how you financed, etc.? 

We paid 1x EBITDA. Cash purchase. And we are buying inventory over time based on a % of monthly revenue.

I produced an Asset Purchase Agreement. Uploaded to Docusign. He had just given me $25k in inventory a week prior to close (with a $3k earnest deposit on that). On top of that, he had already given me full access to his store back-end, his payment processor, his Amazon storefront. He had put a lot of trust in me and I was doing everything I could to reciprocate and continue to maintain his trust.

Once we signed off on the APA, I wired him the funds. He came to my house with all of the tools for the business (he was fulfilling orders right up to that point) the next day. And we were off and running.

Even though it’s a “small” business, 1x EBITDA is a really good deal. How did you get that deal?

The seller was tired and, with some life circumstance changes, he was ready to pass the business along. I am not sure how long he had it listed, but he was originally asking more like 3x.

It is unique in that the operations take a bit of work. It is not the simple dropship e-commerce model that many people might be looking for. But this is what will also keep many people away. And it is along the lines of what we were looking for. In part, we wanted something that our kids could get involved in–and our youngest is the main one building/fulfilling orders (with my oversight).

[Mike’s note: Every owner is motivated by something different. It’s not always top-dollar.]

What are your goals for the business?

Continue to improve the 2 main products (the dog run kits).  

The customer experience on the website is a bit difficult. There are barriers to buying a product that we need to remove.  We will be moving over to the Shopify platform to help with this.

We need to build awareness for the products.  This is where ads and social media will come in.  But I am grateful this can come at our own pace.  I can already see too much growth too quickly will create some real headaches for operations (fulfillment of orders and inventory management (there are a bunch of small components that go into a kit–many of which he has had custom developed for the kits)

Product development is needed.  We will likely target additional niche products, not trying to compete with major players on core dog products.  

Focus on profitability of products, not top line revenue.

What are you most nervous about?

Fortunately, with how we bought this one, there is relatively low downside risk and significant upside potential. I have had several people tell me, including the seller, that too fast of growth would be the biggest challenge. Who really knows. My main focus is to operate with unquestioned integrity, doing things the right way and treating customers the way I like to be treated, and let the results follow as they may.

[Mike’s note: Low downside, significant upside 🤌]

Will you come back and give us an update once you 10x it? :)

For sure. Would be fun to re-visit after some time.

Mike’s thoughts

If you’ve been reading my newsletter for awhile, you have to see why I’m excited about this.

It feels a lot like some of the businesses I’ve been looking at.

I think this will be a great move for Greg, and I think he said it best at the end: low downside risk with significant upside potential.

That’s really what this type of search is all about.

Way to go, Greg! Go so sell some dog run cables.

Mike