Buying a Carnival Rental Business with $1.3M Profit
29:32 Share

- They do have a good name. It looks like they have over 300 Google reviews. Very favorable, five star, 4.8 stars. That really means something. - I kinda like it. It's not gonna get huge overnight. It's not gonna get five axed, but it's probably pretty stable. - That to me sounds like a business I would wanna be in where I'm telling you these schools and events and churches and stuff like that, not where I'm competing for little Jimmy's birthday party. - I have seen all the time when buyers are more sophisticated than the seller, you always have a big problem.

And thumbs down on just the plus inventory alone.

Welcome to Acquisitions Anonymous, the internet's number one podcast about buying, selling, and investing in small businesses. Today, myself, Michael Gridley, Bill, and Mills got together and talked about a fascinating deal, which is in a space that is classically like a terrible business to be in, which is the bouncy house rental business. But we think these guys have carved out a niche that's just totally fascinating. We dug into it in this episode. See what you think, and then let us know on social media or comments or send me an email.

Otherwise, here's the episode. Have fun. We did too. Okay, so everyone knows that one of the first levers you want to pull in an acquisition is updating their technology, updating their systems that might still be running on a spreadsheet or even on pen and paper. But tech is complicated. There's a lot of solutions out there. So choosing the right cloud platform, the right CRM, the right telephony, compliance, cybersecurity, not to mention implementing all that stuff, that's a job in itself.

And I want to tell you about this week's sponsor, which is Nick Akers and Enzo Technologies. So Nick actually knows about all this firsthand. He is a former searcher himself and bought Enzo Technologies, which is an IT firm for small businesses.

So Nick has seen the tech challenges that searchers face when acquiring businesses. He's seen them up close firsthand because he is a searcher. Now his team at Enzo regularly works with searchers on acquisitions, offers a complimentary IT audit of your target so you can make a plan for what you're going to do on day one. Nick takes a personal interest in all of their searcher clients and draws on his own experience in the search phase.

And his business, Enzo, actually dates back to 1989, even before he acquired it. So the company has deep expertise for managing the tech for hundreds and hundreds of small businesses over decades. So if this sounds like something that would be helpful to you, check out EnzoTechnologies.com, I-N-Z-O Technologies.com. Or you can just email Nick directly, Nick at EnzoTechnologies.com.

All right. How's everybody doing? Are we excited to talk about a deal? I'm excited to talk about a deal. Nothing makes me happier than when I log into our Riverside app and you have a deal already up. Just whetting my appetite, Michael.

I just picture Michael just like salivating over this deal for like 30 minutes before we get here. I can't wait to talk about this. There is some foreshadowing in this deal of something I'm working on personally, but I'm not going to tell you what it is until it happens. So it's going to get announced in the next 10 days or so. Oh, I'm excited. There's some foreshadowing here. We'll see if you can figure it out. So I wonder what will come out, that announcement or this episode first. I don't know. I don't know. I don't know.

This is the thing I've been working on. I am so desperate to talk about because it is so fascinating. And anyway, I will be able to do it soon. They've told me I can't talk about it for a while, but soon I'll be able to. Can't wait. All right. Well, foreshadow us, Michael. Will you read us the deal? What do you got? So this is a hot listing.

From BizQuest. And I say it's a hot listing because it says hot listing on it. And it's incredible business opportunity from Lawrenceville, Georgia. The asking price is $7 million. And they have a picture here of what this business does, which is inflatable and carnival ride rentals. And basically, it's a warehouse.

Which, Mills, this looks like, how many inflatables does that look like they have there? I mean, 50 at least. There's a lot. And then there's some sort of bill that looks like it's a little tiny merry-go-round for kids. Yeah. Like a Ferris wheel type thing. All kinds of stuff. So carnival rides. It looks like just a huge carnival ride type thing. So they're rentals. So the description is...

This is a fully established business for more than 17 years that has over $3 million in assets and an extensive inventory of over 500 inflatables and 24 carnival rides, including gigantic fun slides. And these are all capitalized. I guess these are proper nouns.

Swing rides, a zip line, rock walls, bungee trampolines, water game trailers, electric trackless trains, mechanical bulls, bumper cars, and et cetera. We also have tents, tables, chairs, generators, box trucks, trailers, manufacturing equipment, and a whole lot more exclamation point.

The warehouse, which can be leased or added to the purchase, is in an amazing location in Lawrenceville, Georgia, visible from Highway 316, which generates increased business year after year from all the drive-by traffic.

The business has an extremely strong established repeat customer base because we always show up on time, have clean inflatables and great prices. Therefore, our customers know that if they stick with us, they don't have to worry about their event because everything is going to go smoothly. And because of this, we also get a tremendous amount of referral business as well.

Not only has the business increased in revenue year after year, but with the amount of inventory included, there is a potential of substantially increasing profits without increasing operating expenses in the future. The growth potential is endless. Our operation is extremely efficient and organized, which will make the transition to a new owner seamless. Many people, Mills, this sentence is for you. Many people have called us a well-oiled machine or compared us to Chick-fil-A in service and quality. Ha ha ha.

Also an Atlanta reference. Yeah, the Chick-fil-A of carnivals. Yeah. Our gross sales have grown consistently year after year and will continue to do so. We net over $1.3 million. This is an extremely profitable business, and we're just looking to go in a different direction because we own 40 acres of commercial property to do self-storage and truck parking. We are comfortable with where the business is now, but we are constantly reinvesting into it.

I'm going to put an asterisk there because I know Mills, you're going to talk about that. We bought a brand new 50 foot gondola Ferris wheel that cost us approximately $500,000 that we just received in March 2025. It is a great business with great customers and great workers. We would love to talk to you about continuing our legacy, which we give God all the glory for. So if you're up for an extremely profitable and well-established business, give us a call.

And it is listed by James Fowler, who I think is listing it himself. 100% for sale by owner. This reads so hard for sale by owner. They just one quirky thing. They misspelled Chick-fil-A. So I'm out.

So, Bill, what do these guys do? So they, it's a carnival in a box, right? So, you know, you want to throw a carnival. These guys show up and bring everything. The inflatables, the Ferris wheels, you know, whatever you want. Boom, you have a town carnival. It's a rental business. I'm sure they have. It sounds like they've got tents and probably porta potties and like all kinds of stuff. Yeah. Why do they need so many inflatables? Like, do they all get rented on the same weekend or is there just like a big...

Variety of them. I mean, I'm sure you are doing multiple events on one weekend, especially in the nice weather months.

But there's also big ones, small ones. You know, people want variety. And they're also probably so I bet they pay back in like one or two rent outs. Yeah. Right. So it's easy to justify buying more and more. So around you guys, do the schools have like a fall carnival and like a spring carnival and they go and rent this stuff? Oh, yeah. So my high school does this thing called Big Saturday, which is coming up in a couple of weeks. And it's exactly this. Like they sell tickets, a big fundraiser for the school. Yeah.

They put on, you know, there's food, there's bobbing for apples, there's all the stuff. And they, I'm sure, use a company like this. Fascinating. Very, very Google-able, very able to find the business. Especially because the owner listed it under his own name. Yeah, yeah. And like specific location off Highway 316. Is this a good business though? I would imagine it probably is, right? Yeah, yeah. I don't, so it's interesting that the, I'm kind of perplexed by,

We want to get into private storage and truck parking, which is arguably a lot more passive business than this. This is very hands-on. It's nights and weekends. It's probably...

a core team, but then a lot of like worker bees, you know, who are cleaning these things and packing them and storing them and taking them out and setting them up. That's a very labor intensive part of this. I'm so perplexed by the, you know, we just bought a $500,000 piece of equipment. I mean, they're wanting a six and a half times multiple give or take, right? I think they're asking $7 million in the business nets 1.1. So I think there is a little bit of like

the kind of sunk cost of assets lumped into this, that is driving the purchase price of 1.3 million. Um,

Yeah. If you do the math mills, 1.3 times a 3X gives you 4 million. And then they say they got 3 million of assets. And then there's your 7 million purchase price. This is, I think, a really tricky dilemma because it's like, do you buy it or build it? You know, you don't get brownie points for, you get negative points for old inflatables, you know, things that look tired and dated and stuff like that. So you're really then relying on the more recent

assets that they have and the name, which, you know, Googling it around like they do have a good name. It looks like they have, you know, over 300 Google reviews. So, you know, very favorable five star four point eight stars. That really means something. So there is some value there, I would say. They are the Chick-fil-A of carnivals after all. So people love them.

And you got to think if you're the PTO and you've been doing, you know, the spring carnival or the fall carnival for 20 years, you know, the phone's going to continue to ring from a lot of repeat business. Yeah, they know how to do it. The PTO, the PTA goes, yeah, the same stuff as last year. You know, the price goes up 5%. You know, just do it again. Ring the register. So who is the customer here?

Do we have an idea of who that is? It's the event planner. It's the event. Yeah, it's mixed. I mean, like schools, municipalities, business. I'm sure there are private businesses that will hire these guys, you know, and and market up and sell tickets and all that stuff. May, you know, May Carnival or something in a in a town.

I it's all B2B, though, I would think like they're not putting on their own carnivals. No, no. But I do think that they probably they probably do like birthday parties, you know, and it's just one inflatable those types of things. So that would be interesting, Mills, because I would think that is not as good business.

No, but I imagine it's a really good filler. The total average order value is a lot lower and the margins are probably slightly better, but it's a pain. You have the same box truck that's going to take – maybe you can take a van, a cargo van to deliver one, but if you're delivering five, you're taking the box truck. Yeah.

I don't think it would, I think it's probably still accretive in some way, but more as a filler because you might have a Thursday night birthday party and then you have a weekend long, you know, mini carnival. Yeah. And that's what you want to see. You'd want to see it be mostly B2B business and the B2C business as a filler, I would think. Yeah. What do you think, Michael? Which is better? I'm with you, Bill. I think, I don't know if it happens around you guys, but when you drive around the electrical poles here in

in San Antonio, they'll be like bouncy house rental, like and there's a phone number on there.

I hope these guys don't compete with those guys because that sounds like a horrible business because you're like, it's a red ocean for sure. Where I hope these guys are competing is, we're talking about these school events where they want to have somebody come out, they're professional, they pay a premium, somebody shows up the night before, sets up all these things, inflates them, and then stays there to make sure nobody gets hurt and all that kind of stuff the next day.

Like that to me sounds like a business I would want to be in where I'm telling you these schools and events and churches and stuff like that. Not where I'm like competing for little Jimmy's birthday party. Yeah. As filler business is fine, but otherwise it's brutal. All right, Michael, since you have the screen share up, Google the big bounce America really quick. Cause this is, I think the modern iteration of what this business is and it's on steroids. I don't know if this is an opportunity or a threat, but yeah,

these things are traveling pop-ups that are like a hundred times larger than, you know, the biggest bounce house you've ever seen. It's a bounce house city. It looks like a bounce house city. And they like, look, they've got, they're coming to Columbia. That's how I know about it. And, you know, they've only got, you know, a handful of events, but it looks like, you know, a couple of weekends a month, they're, they're doing these simultaneously in different areas and,

That to me tells me that there is probably some demand, you know, for this type of like big kind of PR kind of extreme event to,

It makes me wonder, could the business be pulled in this direction? It's a totally different business model, but could you be pulled in this bigger direction versus just the one inflatable, one water slide at one person's house at a time? Yeah. So this brings you more into the large scale B2C, right? Where you're going to set up every inflatable you have, tell everybody it's coming three months in advance and sell tickets. Yeah. And these things are very expensive. Like,

The the tickets for these things, let's see, in Columbia for adults, you're talking about twenty two dollars, you know, for a toddler, thirty five dollars for a junior. Adults are forty five dollars, you know, and this is not the kind of thing where you can't do this all day. Like you're going to have a lot of a lot of volume and people in and out. These are I mean, what's cool about these is they're the evolution of like the old carnivals that used to go around right in the big top.

but they're a lot less Kearney. That's the best way to describe it. Have I ever pitched you guys and told you about the outstanding in the field business? Have we ever talked about this? No. All right. So it's a, it's a similar kind of thing. And this business pattern that I think is pretty cool where you basically go have a traveling like thing, like a carnival, but it's like not a carnival. It's like some take on that. So what outstanding in the field does is,

And it's a portmanteau or whatever, like it's a joke about because you actually go stand in a field to have dinner. So what they do is they they bought some box trucks and they go they hired some hippie kids. And what they do is, is they go to travel around the country all the time. And the basic of the product is they invite a bunch of rich people out and they serve them dinner on a farm.

I pulled up the picture of it. There is a giant table. It's like a huge long table. You eat out on this farm.

And they will get all the ingredients from the farm. And then they will partner with a local chef to come in and basically cater the whole thing using local ingredients. So it's very bougie. Like they're like, oh, this is local whiskey from wherever. And like this Wagyu beef is from here. And as a bougie person who likes finer things, I've gotten to it like six or seven times when it's come to San Antonio. So I'm target marketing. Before you talk crap about it, let me just go ahead and tip my hand. That's very cool.

Yeah. So and they give you like a talk like and it's supposed to be, you know, it's all the bougie stuff that you want. And people wear these like fancy hats and like. Did you wear that hat, Michael? I need to know. I need a picture. I have a picture of me with a cowboy hat. Yo, I mean, these settings look iconic. I mean, it's unbelievable. Yeah, it's really cool. So the economics of this are incredible. Right. So the tickets are like four or five hundred dollars a person for dinner.

And, like, I did the math once, like, they're clearing, like, $20,000 or $30,000 a night for each one of these after they pay the local chef, after they pay the farm, like, and then they pay the hippies, basically, in weed and patchouli. And then they just go on to the next thing. And they are just, they have two crews traveling around doing this all the time.

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 Capital Pad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So Capital Pad 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

in acquisition deals. So if you want to back somebody buying a small business, Capital Pad is the place to do it. And if you want to buy a business and need capital, you can go on Capital Pad to be introduced to investors. So the really great thing too from the investor side is that Capital Pad takes care of all of the details that can get hairy with small business acquisitions.

They handle standardized terms, standardized governance, standardized distributions, all upfront in black and white. Basically, Capital Pad professionalizes investing in small businesses, and the returns can be really, really good. I'm so stoked they exist. It's founded by my friend Travis, who is a phenomenal entrepreneur in his own right.

So if this sounds like something that's appealing to you, if you want to buy a small business and need capital, or if you want to invest in small businesses, go check out CapitalPad.com and tell them that Acquisitions Anonymous sent you. It's kind of like a...

Like a tale of two cities, right? You've got these like traditional mainstay businesses that are geographically constrained like this one. They're in Lawrenceville. If I said, hey, can you bring me an inflatable to Columbia? They probably are just going to say, call Bob. Like there's a guy there for that. You know, they're not going very far versus this business, which is...

you know, destination only. I mean, the destination makes the whole thing. Yeah. And it's, it's kind of, it's kind of two different sides of the same coin, which is, you know, the big bounce America and this Lawrenceville business there, I think hitting the same kind of target audience. They're just doing it in two different ways. Somehow. I'm not sure Michael would go to the, to the bouncer Rama. Hey,

I don't need to tear my Achilles. But this is also what we wanted to do. Remember we did the episode with all of the Star Trek and Star Wars memorabilia from the Crazy Museum in Santa Monica. We wanted to make it a traveling exhibition. But that is not – that is a great business model, but that's not what this business is. That is for sale, right? This is a rent – Thank you, Bill, for bringing us back. This is a rent inflatables and other cool stuff. I mean –

By the way, this is way more inflatables, more than inflatables. Mechanical bulls, bumper cars. They have this Zipline thing on the website where it's like basically a tower that they drive out on a trailer and stand it up and they make a Zipline like in the middle of a field. Yeah, this is a carnival. This is way beyond inflatable. So here – so it's in Lawrenceville, Georgia. Is this Atlanta? Yeah.

Okay, so this is Atlanta. So your demographics are awesome. This is a growing area of the country, right? Plenty of money.

This reminds me again of Brent Beshore's thing, why he loves owning pool construction companies. Until people stop dipping their bodies in water for fun, we'll have a business. It's sort of the same thing here. Until people get tired of riding on Ferris wheels and going down slides, we'll have a business. And you've got a well-known brand in a growing market.

You've got kind of all the assets in place. There is an asset moat here. I mean, as they said, they just bought a half million dollar large Ferris wheel thing. I mean, how many of those can there be? I kind of like it. Right. I mean, it's like it's not going to get huge overnight. It's not going to get five axed.

But it's probably pretty stable. I mean, maybe it hurts you in a recession. Maybe you go down in a recession because this is kind of frivolous fun. Or maybe this is trade down fun. You don't go to travel. You don't go to Six Flags or Carowinds. You do this.

Yeah, maybe. So I'd want to understand how it's obviously been around for a while. I want to understand how it did in 2008, 2009, 2010. I think I kind of like it. All right. At what price, though, Bill? Can I interrupt before we go there? Yeah. Is this a typical seller who's making a mistake by self-representing? 100%.

Why? Because you can't take you can't take this listing seriously at a seven million dollar asking price. And so you're going to have probably, you know, 40 percent of the total buyers and 80 percent of the serious buyers are just going to pass it off face value.

Just because they priced it wrong. Yeah. Well, I also would say this is the type of deal that's going to need a bit of creative financing and structure on it. And I've seen all the time when buyers are more sophisticated than the seller, you always have a big problem. Because buyers come in with what would be kind of like a market risk sharing agreement or seller financing or whatever, and seller throws up all over it.

I've never heard of this before. And it's like, well, it's because you're unsophisticated. You know, you haven't done 50 of these. That's often a hard bridge to cross. Yeah.

especially in an asset heavy business like this one. So you've got, I mean, for this business, we tried to break down the $7 million asking price. We think, you know, a fair price for this business is probably three times 1.3 of cashflow. So it's 4 million bucks, but you can't earn that without the $3 million of assets either. Yeah. It's not bad though. Like you've got $3 million of assets and your yield is 1.3 million bucks a year. It's not terrible. I mean, you can finance that.

I almost think you've got to look at it at valuing this more like that. Like I'm buying $3 million of assets that yield 30%, right? I'm buying a 33% coupon bond here, and I've got to discount a little bit more because there's volatility and it's an actual operating business, not a bond. And you've got to value it more like that, don't you guys think? Well, the funny thing is the seller in this line down here acknowledges that this is a

capital heavy, CapEx heavy business. He says it right here. We're sick of dumping money. We are still constantly reinvesting into this business. Like somebody, like some broker needed to sit down with this guy and be like, okay, let me talk to you about how buyers look at rapidly depreciating assets that if the wind blows the wrong way is going to rip in half during an event and potentially be worth zero.

But he's like, yeah, this stuff I paid $3 million for, it's worth $3 million. But he doesn't tie two and two together of the fact he's writing checks to keep that stuff operating all the time and replacing it. Well, OK, let me defend him for a minute, though. I don't think he has a 50-foot gondola Ferris wheel already that is going in the garbage and he's replacing it. This seems to be like they're expanding into a new market. I think that's growth. I think that's growth. I think that's growth, CapEx.

So why do that right before you sell the business? Yes, agree. You probably shouldn't have done that right before you sell the business because you're probably not going to get paid. Well, maybe, but maybe you are going to get paid for it. If you can show that it's starting to return the same 30% return on invested capital that all your other assets are and you're going to get a multiple on that, maybe you are going to get paid for it. I don't know. Yeah, this is one of those businesses that is –

Is fundamentally not that it's not that hard, not that expensive to have the the inflatable, to have the slide, to have like the the thing. Right. But all the stuff that comes along with it prohibits people from doing it themselves. Right.

And then there's this critical mass effect where they can say, we can show up with 15 or 20 events, inflatables, games, water tables, zip line, like put all that together and –

There is probably some competition, but I think it's more like alternatives. Like you said, Bill, it's going to Six Flags. It's going to Carowinds. It's going to indoor trampoline parks that we've talked about. But I think that there's something about this that is a little bit unique. Yeah, I agree. So I also learned the other day, by the way, there is specialized bounce house insurance.

Like there is a specific type of policy you can get. You are the operator of a bounce house and you need to insure yourself against a kid breaking their arm or whatever and you get sued. So this is a type of business where you definitely need the right insurance. And I would be diligent saying to make sure that they were insured. I'd also be really wanting to understand the tail risk of events that we had already put on. What if someone comes forward and says they got hurt? And just look at their claim history. You know, what are their loss runs?

on insurance. You know, if they have, you know, one catastrophic event every 10 years, you know, that ends up in expensive litigation, I would say it sounds like a construction business. All right, let's wrap this one up. I am with you, Bill. Well, I guess I'm reading between the lines on where you're going with this.

I like this business. I think it has some moats to it. I think it is one where the customers are good customers. You're selling to schools and churches for events and stuff like that. I think you're creating happiness in life for people. I think you have inventory that is not going bad on you. I think they have an established customer base that has used them for years and will continue to use them. I like all those aspects of it. I'm a little red flaggy about the seller, but

The rest of it, like, I like this business. I think if you were like, yeah, I own this business, it's a great geographically moated business. I don't know. Is this the most enthusiastic I've been about anything since the Worm Farm? Yeah, I think it might be, which might be foreshadowing as well. Maybe you're talking your book. We'll see in a couple days.

But I do think I like this, right? You're not – this is a good place, I think, to compound capital for a long time, assuming there's not like huge depreciation. And you can't just trust EBITDA here. You do need to look at EBITDA less capex, replacement capex, and bucket replacement or growth capex. So you do need to understand that. But this seems relatively stable. It's not going to grow a lot, but it's probably not going to go away, I don't think.

I don't hate it. You could put probably a moderate amount of debt on it. The thing that you got to make sure that you have is an operator because otherwise you're doing carnivals on the weekends.

And there's a lot of people, there's a lot of labor in this. There are not insignificant operations to this. And I would really want to understand if I was buying a job or whether I was buying a company. Yeah, I agree. I like it a lot at a reasonable price. And I think the reasonable price is found with some risk sharing and some structure. I don't

I don't think three times free cash flow, maybe four times free cash flow with some structure is unreasonable, but you got to overcome the sunk cost around the assets that the seller feels.

Yeah. And I, Bill, I think you said it. I really liked the geography suburbs of Atlanta. Great, great, great. Yeah. All right. Super cool. So, so Mills and I are going to bid. Michael's not going to, cause it sounds like he already owns one. He just hasn't told us yet. Yeah.

No comment. No comment. Michael is killing Michael to say nothing and just let us put words in his mouth and he can't confirm or deny. Partners won't let me talk about it, but I assume we will. Whenever you pull back the veil and you tell me that you own Big Bounce America or whatever that one was called, I'm going to lose my mind. I want free tickets, Michael, to Big Bounce. That would be amazing. All right, everybody. Thanks for being here this week. Man, this is a great episode.

You guys did a great job. So if you enjoyed this one, and if you know somebody should buy this bouncy house thing, like send it to them and then have them call us because we're curious what they learn. Maybe this other was crazy or maybe they're awesome. I don't know. It looks pretty cool. All right. See y'all next week.