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cover of episode Anchorage’s Best Kept Secret: A Snow Biz with 40% Margins

Anchorage’s Best Kept Secret: A Snow Biz with 40% Margins

2025/5/27
logo of podcast Acquisitions Anonymous - #1 for business buying, selling and operating

Acquisitions Anonymous - #1 for business buying, selling and operating

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B
Bill
H
Heather
M
Michael
帮助医生和高收入专业人士管理财务的金融教育者和播客主持人。
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Michael: 我认为这家位于阿拉斯加中南部的景观美化和除雪公司,要价183万美元,现金流为70.5万美元,是一个不错的投资机会。该公司已经营17年,拥有稳定的客户群。虽然阿拉斯加的降雪量很大,竞争激烈,但该公司仍然能够保持40%的EBITDA利润率,这表明它具有一定的竞争优势。此外,安克雷奇作为重要的航空枢纽,其地理位置也为该地区带来了潜在的增长机会。 Heather: 我认为这家公司的护城河在于其与当地社区的紧密联系。在阿拉斯加这样的小地方,人际关系非常重要,外来者很难建立信任。因此,如果买家不是当地人,可能会面临一定的挑战。此外,这家公司的财务状况可能比较复杂,需要进行详细的尽职调查。尽管存在一些风险,但如果买家能够融入当地社区,并获得SBA贷款,这家公司仍然具有很大的潜力。 Bill: 我认为这家公司最大的吸引力在于其稳定的现金流和高利润率。在阿拉斯加安克雷奇赚70万美元,生活会很棒。然而,买家需要注意,这家公司的增长潜力有限,而且可能需要搬到阿拉斯加才能经营。此外,买家还需要考虑Key West效应,即那些不断旅行,直到无法再旅行,然后就停留在那个地方的人。总的来说,这家公司适合那些喜欢雪,并且愿意在阿拉斯加生活的人。

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The podcast discusses a snow removal and landscaping business in Southcentral Alaska with $705,000 in SDE. The business has a 17-year history, five employees, and serves both residential and commercial clients. The hosts discuss the business's potential and challenges.
  • $705,000 SDE
  • Located in Southcentral Alaska
  • 17 years in operation
  • Five employees
  • High margins
  • Challenges for outsiders entering a tightly knit community
  • Potential for SBA financing

Shownotes Transcript

Translations:
中文

Maybe that's part of the moat is that this owner is part of the fabric of the community and it might be hard for someone who is not that to buy it. There's a lot to think is going to be very geographically positive for this area, even though the population is going down a bit. If you can affect this transaction, take over without pissing people off and appearing like an outsider, probably a great life. I mean, you're making 700 grand in Anchorage, Alaska. You are rolling. We'll start acquisitions in the office.

Welcome to Acquisitions Anonymous, internet's number one podcast about buying and selling small businesses. Today, myself, Michael, and Heather went through a deal up in Alaska where we took a look at a snow removal business. So very excited about it. And I think you'll be surprised how we felt about this one. So stick around and enjoy the episode.

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. I would just be quiet to see if anybody else was going first. Wait, are we recording a podcast?

Well, I mean, so I have a big personality with these things. So I just usually am the one that starts talking without asking anybody. And I was like, well, you don't know what to do. I'm just going to shut up and see who talks. And then we didn't know what to do. We were scared. So I currently start talking again. Michael, you got, you got to like see the conversation and then walk away. Like you usually do.

drop a bomb and step back so one a fascinating thing that's happening to me right now is youtube is convinced that i think that skiing season snow skiing season ended too soon because it's still showing me like a ton of videos from snow and skiing so i picked a deal that's kind of related to snow but we'll come back to that after the chit chat part of the podcast

I – OK. Well, I am currently planning several ski trips right now, so I am fired up for this. All right. What are we doing? Yeah, hook brother up. I'm desperate. I have unfortunately, Michael, missed your ski trip for like two years in a row now. I'm afraid my invite has expired. No, no. We'll get you hooked up. Yeah. So no, what I just need though –

is when I get invited to stuff, if you do want me to come, I just need like a good excuse. Like it's gotta be like a once in a lifetime trip or it's gotta be like, hey, you know, so-and-so just is changing their life. So I really should do this a special time. They're turning 50.

So and then actually one of my buddies figured out this trip and has been telling our wives that I've turned 50 for three years in a row. And it's worked out terrifically because he's just the type of guy that you would think can't count. And so it comes into a good excuse to allow us to leave our family and go skiing as guys. All right. Tell me about this deal, Michael. I want to hear about it.

It's the worst intro ever. You told me this is a deal that sells ice to Eskimos? Yeah. Is that what you said it was? I brought this. It is a landscaping and snow removal company for sale in South Central Alaska. ASCII price is $1.83 million. Cash flow is $705,000. And that is SDE, seller's discretionary earnings. They don't disclose any other stuff in terms of gross revenue, inventory, and stuff like that.

The 2024 numbers just completed boasting a $705,000 earnings in SDE for the owner of the snow removal company.

You can take advantage of this opportunity to own a well-established landscaping and snow removal company with a loyal customer base and a strong reputation in the community. This business has been serving residential and commercial clients for over 17 years, combining quality service with dependable operations. Please fill and send attached NDA, Alaska Real Estate Commission, consumer disclosure to teams at DenaliBusiness.com. The company has five employees.

several opportunities for growth, expanding into other service areas. They lease their land and real estate. The owner is retiring and the seller is willing to stay on to provide smooth transition to a new owner, help with estimating, et cetera. And that's about it. They have a listing here of the NDA and stuff like that they want you to fill out. And it's listed by Caden Van... How do you pronounce that, Heather? Sendak? Sendak? Yeah. Yeah.

who's located, I guess, in Anchorage in Denali Business Advisors. Yeah, he's got a bunch of other Alaska businesses for sale. Yeah, talk about a moat. Like, what do you do? I'm the only business broker in Alaska. Right. Wow. Okay, so this is literally a snow removal business in Alaska. It's been around for 17 years, and every 10 minutes, you're needed again in Alaska. I mean, is this a great business or what?

There's actually a famous, a pretty famous ski resort called Alyoska, which is located 40 miles outside of Anchorage, basically at sea level. But they routinely get like four and 500 inches of snow. To put that in perspective, like a Midwest ski resort, like a Michigan or something like that would be happy to get high double digits. And these guys will get four or 500 inches, just absolutely. How about like a, you know, Vail or Breckenridge, like Colorado resort?

I've heard numbers like in the couple of hundreds and then the Utah like Cottonwood Valley does really good like Ulta Snowbird, that kind of stuff. They'll push 300s and that sort of thing. Okay. So that's 300. So 500 in Alaska. So suffice to say it snows a lot. It snows a lot.

And it does look like, Heather, they have a picture of one of their trucks. This actually looks like one of their trucks operating, being like an F-250 with a snowplow on the front. And I know you have one of those in Southern California. Oh, yeah. We can't even drive when it rains. We all stay inside. Standing water removal company in Southern Florida. So sorry.

So this is snow plow in 11 months of year, mow the grass one month a year. Is that what this business is? Landscaping and snow removal company? That's what I would think. Not much landscaping, mostly snow removal. Obviously, it would be very interesting to see their 12-month monthly financial statements spread out. How much of the revenue comes in four or five months of the year when it's snowing? And then probably not much the rest of the time is my guess. Yeah.

I mean, maybe like you've ever lived in a place where it snows. You need a lot of landscaping when the snow clears away. Right. Because all the water, you know, all the melt and the water and the runoff. And, you know, sometimes you've even got to like regrade stuff. So if you're doing snow removal, that especially if it's commercial contracts, which it says they have commercial contracts and residential contracts.

You know, commercial snow removal contracts like come plow my parking lot every other day or every day in 10 months a year in Alaska, that's a good contract. Steady work, yeah. And then maybe you just get to take two weeks off or two months off or whatever in the summer, and then you have great work 10 months a year. But what I noticed is it's five employees and $1.8 million in revenue. So I guess then we're talking about...

Four of them in a truck most of the winter driving, you know, plowing the snow, right? I mean, that's a lot of revenue for five people. Yeah, but like their EBITDA margins are 40%. They're making 700K on 1.8 million in sales because they have no cogs. I mean, it's gasoline. Like that's it. And labor. Yeah.

And probably no competition or very little. You know, they probably sort of own their service territory and that's it. So that's the thing that I question, though, because in Alaska, not only does everybody have an F-250, everybody has a snowplow attachment in the front. So like, you know, how do you what is the moat? I mean, it's been around for 17 years. Right. So clearly there is one. Right. Like I really would want to understand why they get calls.

So you think everybody has a snowplow? And you're just exaggerating a bit. I'm exaggerating. I mean, metaphorically, right? I mean, like snowplows per capita, Alaska's got to be pretty high up there, right? That's like cowboy hats per capita in Texas. Yeah. So you're worried that somebody like this, they are getting undercut from the bottom by Jimmy with some flyers and a truck who –

I would be. I would be if this thing weren't 17 years old. The fact that it's 17 years old tells me there is some sort of dynamic that creates a need for this business and that Jimmy with a snowplow can't do it or won't do it or is entrusted to do it or whatever. And that would be a major diligence point for me to understand how they can carve out margins this good over 17 years in a place where it's got to be the highest snowplows per capita in the world.

Yeah, I would, when I've been in Colorado, I've watched these snowplow guys and it'll snow and they'll come in and it's a truck that is like this one we see on the screen, an F-250 or 2500 Ram, something like that.

And they'll come in and they'll go from our neighborhood where we're staying to the next one over, to the next one over, to the next one over. So I think there's economies of whatever, I mean, the equivalent of the economies of scale they get by doing five jobs at once that give you a huge cost advantage versus, you know, Jimmy with his truck who has two, you know, two customers that are spread way out. So it wouldn't surprise me if something like this gets kind of

Basically, that kind of network effect of having a bunch of clients all in a row together and they go knock them all out.

And then I think the second thing that's really important about this is reliability. Because if it snows a foot, you need to, you want to make sure that whoever shows up, whoever's supposed to show up, they show up and help you get out of your house. I mean, you're right, Michael, in that like these guys might have density economies of scale. But the one thing that I know about, you know, Jimmy with a truck across any industry, right, is that Jimmy usually doesn't understand his margins and thinks his truck is free to operate.

And that's why Jimmy with a truck always undercuts you. And you would think that Jimmy with a truck doesn't understand that he doesn't have density and he's got to drive 20 minutes each way and he's burning gas and all this stuff. He doesn't usually. And that's why he still undercuts you. But still, like they're continually beating out Jimmy with a truck who doesn't understand his own margins and capturing 40 percent margins. There's got to be a reason.

I mean, maybe it is the reliability. Like you said, maybe it's reliability. Maybe it's long-term contracts. I don't know. Maybe they have some specialized equipment that Jimmy doesn't have. Heather, do I have to move to Alaska to own this business?

I think you do. I think you need to be part of the local community. That's maybe the scary part about this business. It has been there a long time, and you can imagine a place like Alaska. Everybody knows everybody. I also think it would be a little bit of a risk to be an outsider buying this. Someone who buys it from within the community can probably maintain the relationships, and you feel pretty good about that. But if you're going to move from San Antonio to Alaska...

which I know you're thinking about doing, to own this business. I think that that could be a little scary in that you're an outsider in a place like this. And this is a relationship business, most likely. That maybe is the moat. We don't know. Maybe that's part of the moat is that this owner is part of the fabric of the community. And it might be hard for someone who is not that to buy it.

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I think that would be very tough. I think you're right, Heather. I think last time I looked, Anchorage is 250,000 people and there's less, there's 750,000 people or something like that in Alaska. Yeah. So this business is listed as South Central Alaska, which is Anchorage. I had to look at a map, but Anchorage is in South Central Alaska, but it's not listed as Anchorage.

And I have to point out the irony of the picture of the snow, and it says hot listing. I just have to.

Holy crap, Anchorage is shrinking. I would not have imagined that. That is interesting. 286,000 people. I mean, Alaska is sort of like Canada. I mean, what's the total population of Alaska? I bet 98% of the population is in Anchorage. I think it's 740,000. What I told you before was right. I just looked it up. Okay, so probably 30% to 40% of the population is in Anchorage.

The MSA for Anchorage is 340,000 people. So 40%. Yeah. The whole state is in Anchorage. Okay. Yeah. I mean, I think this business, I mean, it's probably not going to grow, right? Alaska is as snowy as it's ever going to be. And it's probably, you know, as populated as it's ever going to be. I mean, I don't know another hundred years of global warning, but none of us will be around for that. So I...

This is a stable – you're not going to triple this business, I don't think. You can't even do the standard we'll expand to adjacent geographies because there aren't any because you're super rural here. So like this business is the business is the business, and if you can affect this transaction, take over without pissing people off and appearing like an outsider –

It's probably a great life. I mean, you're making 700 grand in Anchorage, Alaska. You are rolling, I think. Well, I think there's a hidden cost to this business we should talk about. And a senior person I knew used to refer to it as the Key West effect. And the Key West effect, as he described it, is there are a certain group of people who just keep traveling around.

And then they can't travel any further. And then they just stop at that place. And so Key West is a place where somebody just kept going south. And eventually they got to Key West. There was water and they're like, OK, cool. I'm going to live here. And that's how you end up with places like Key West, Orange County. It's kind of like the ends of the earth syndrome. It's like, you know, who are you going to find at the end of the earth? Like just to be out there, you got to be a little different.

Yeah, I've worked on loans that were in Alaska. Not very often. It's pretty rare. But even getting a hold of the lawyer, like, you know, what we're used to tapping away at our keyboard and lawyers getting right back to us. No, it might be three days. You know, they were out, you know, on some track or they were doing something outside and it was three days. And then you hear from them. And that was kind of the regular cadence of things. It all just everything's a little different there. Life is different there. They were out hunting polar bears. Probably. I don't know.

Man, what a fascinating business. How much revenue do we think they're actually doing? The $700,000 in cash flow, are they doing a million and a half in revenue? I mean, it can't be much more. I mean, there's no cog. It's cogs and labor, right? So you got five people. I mean, how much are these guys going to make to drive a truck? I have a thought. I have a thought about why nothing else is disclosed besides the cash flow.

A lot of times these businesses are the same person owns three or four different services in the same area. And they might be all wrapped up under one set of financials or tax return. And it's like a carve out. You may not have separate services.

that are clean just for this business. It may be part of, you know, I've seen that in places like this where they own this and they've got some other business that's going more in the summer and it's all in the same tax return and it's very hard to figure out what you're actually getting. So that being said, carve outs now SBA financeable, right? Under the new SOP. Yes.

Under the new SOP, that is the one piece of good news that we got in that whole thing is that you could, the lender, the bank is now allowed to look at CPA prepared or reviewed financial statements in lieu of a tax return in a case like a carve out for some other reason that there's not a standalone business tax return. So that is...

You could do an SBA loan potentially on this, but even when you do carve outs and SBA allows it, it's really hard to know whether the expense side is right. A lot of times you can validate the income side a lot easier than you can the actual expense side. So they're still kind of risky to buy. Have you guys ever been to Marfa in Texas? Are you familiar with this? This is like the weirdest part of Texas, right? Yeah, it's this out in the middle of nowhere. And it's this like 2,000 person town.

that once a year, like all of Hollywood empties out into Marfa. So you would find like Matthew McConaughey and folks like that, just kind of like walking around and hanging out for a couple of weeks a year when they'd have a film festival and stuff like that. But it's this like super weird place that became hip because it's

this famous artist from New York back in the 60s wanted to get away from everything so he could just create. So he just picked the furthest away from everything place he could find. And it was this place out in Big Bend called Marfa. Anyway, the reason I bring it up is...

you know, this, what you're talking about where one person has like six different small businesses and a little tiny town is exactly the way Marfa shakes out. And they call it the Marfa hustle, where whether you're an employee or you're a business owner, like you're the guy that owns the sandwich shop, the insurance brokerage, and like the snow plowing thing. It's Texas and I have a snow

You see what I'm saying? It's kind of like evolution. You evolve to fill all these niches and sometimes it's just one guy has to fill every single niche and you look up and it's like, oh, that's Jib's business. And the same happens for employees. And you'll see people that are like a yoga teacher, the reporter, and like an EMT.

And like, those are their jobs. And they do each of them for 12 hours a week. And that guy who owns the six different businesses also is often the mayor. You know, he's like the king of the town, which in some ways is pretty romantic, isn't it? Like, doesn't that sound kind of great? Capturing 40% of the GDP of your hometown and just, you know, your tentacles are in everything. Yeah, pretty much. And you know what? I will point out one other thing. It says cash flow is $705,000.

It's entirely possible that could just be revenue. That is true. That is a good point. That is not, you know, because we have nothing else to go by. We only have five employees. And I was mistaking that asking price for revenue earlier. Sorry about that. But yeah, seven hundred five thousand cash flow. That's the only financial metric they're giving us. That might just be gross revenue.

That happens a ton. I'm hopeful that's not what's going on here because the first sentence does say 2024 numbers just completed in end of April, boasting 705 of SDE. So Caden from Denali Business Brokers seems to know what SDE is, which is good. Okay. I didn't catch that sentence, so it could be. But I am remembering a post by Clint Fiore this week where he pointed out that a lot of times –

The number that you get on BizBuySell and the cash flow item could be anything. It could be SDE, it could be EBITDA, it could be adjusted EBITDA, or it could be random. Well, it's all made up until you do the QOE, right? That's true. That's true. Is this business SBA financeable, Heather? Let's assume it's not a carve-out. I mean, let's assume this is a real snowplowing business in Alaska. It probably owns a couple trucks.

five employees, 17 years old, 700K of SDE. Can I buy this with an SBA loan? Yeah, you could. And I mean, the SDE could probably get shrunk a few ways. And one of them might be maintenance capex on those trucks. The lender's going to hit you for that. But yeah, there's enough cash flow here if it's the right buyer. I think this is one where the lenders would get really worried about the right buyer. Again, moving from San Antonio to Alaska, probably not the

the right buyer in the lender's mind, but if you're already local or you have some other tie into the community already, um, you know, that's the kind of thing that the lenders would, would scrutinize here. That's not really in the numbers, more of a, you know, soft analysis. I like it. If you feel like you can plausibly live in Alaska and credibly be part of this community. I mean, this is like a bond, like you can pay the right price and keep clearing snow for another 17 years and do great.

It's not going to stop being cold in Alaska. I like it. I mean, this is as stable as it gets, I think. Yeah, I think there's a lot of tailwinds potentially too with Alaska and specifically Anchorage where it's located. Like, you know, Anchorage, I don't know if you guys know this, but Anchorage was actually one of the busiest airports in the world for a period of time.

Because prior to jets being able to make the trip nonstop from the United States and North America to Asia, they had to stop. And they were all stopping in Anchorage. And then a lot of them were also stopping during the time of the Soviet Union. They would stop in Anchorage because you couldn't make the trip because the Soviets wouldn't let you fly over from Europe.

to say Hong Kong. So you had to stop in Anchorage. And so I think potentially Anchorage and Alaska, like there's a lot to think is going to be very geographically positive for this area, even though the population is going down a bit. I'm into it. If you want to live in Alaska, I'm into it. I'm cool. Except for the part where you got to live in Alaska. Some people really like snow and are also searchers. So if you're from Alaska and you're a searcher, here you go on a silver platter.

I had a searcher that was looking at specifically at deals in Alaska. So that was a couple of years ago. I'm not sure if he ended up there or not, but he was, he was intent on it. Well, maybe he's ready for another one. Maybe he's ready for an add on. Maybe. I love this one. Cool. That's a cool one. All right. We'll put the link to the deal in the notes below. And if you do take a look at this one, let us know. We'd be curious or let us know.

All right, dad, we're done. Put the mic down, dad. You're done. We'll see you guys next week on the next episode of Acquisitions Anonymous.