From $1.5M Profit to Fire Sale: What Happened?
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They said it's on the path to being turned around, which means to me it has not fully stabilized. It's a good multiple, but if the trend is truly still going down, it's hard to value a company while that's happening. It's a huge amount of money to bet on something like this where the whole moat is equipment. I mean, that's your only defense. We'll set Acquisitions Anonymous. Oh, another episode of Acquisitions Anonymous. We don't have 100% gear anymore.

Welcome back to Acquisitions Anonymous, the internet's number one podcast about buying and selling small businesses today.

myself, Michael Gridley, and Heather Anderson went through the most interesting listing I have seen for a small business for sale in a long time. So it is straight out of soap opera days of our lives. And I think you'll find it fascinating. And then I think you'll find it really interesting what we thought of the deal. So stick around for the whole episode to hear that as Heather and I rated it at the end. So that's it. Thanks for being here. Enjoy the episode.

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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. Heather, I'm back from Las Vegas. Oh, no. Are you okay? I actually had a really nice time. Okay, good.

Yeah. How do you feel about Vegas? You know, it's good for two nights maximum and only like if there's others, like there's a business thing to do and you do a little bit of the fun stuff, but that's it. Otherwise it's too much for me. I went to the Grateful Dead concerts. They were very good. It's dead and company at the Sphere. Okay.

Oh, the sphere is pretty cool. Yeah. Yeah. Have you seen any shows there or anything? I only just saw like the sphere experience. So not an actual concert just to kind of see what it was like right after it opened. And I would love to see a concert there. What did you think? I mean, it's kind of different, right? I really like the grateful dead music. Like I, you know, amongst lots of other people, it turns out 17,000.

I mean, I don't have any t-shirts or anything. I think that's kind of the level of joining that I haven't made yet. You know, I just wear my normal clothes. So, but I love the music so much and the artistry of what they're doing is just so impressive to watch that because of that, it was just amazing. And the two best shows I've ever been to in my whole life were

This Grateful Dead, you know, show at the Sphere. And the second one was probably 15 years ago. I flew out there and I went with my buddies, actually. It was kind of strange. I invited a bunch of other dads to go with me to see the Elton John show where he had like a multimedia experience that was custom made for his residency. I think it's Caesars. And it was just amazing. So much so that I came back and insisted my wife name our son Daniel, which is an Elton John.

Yes. I know the song. I know the song. And I got, I got part of the way. Our son's middle name is Daniel. All right. That is some concert. My gosh. Wow. Yeah. But the sphere is, I definitely say if you go to Vegas, you do definitely have to go check out the inside of the sphere. It is really, really cool place. It is a one of a kind place to see a concert. Absolutely. Yeah. Absolutely. Wow. And yeah,

to show the true trailblazers they are. The Madison Square Garden Corporation that's running it, they are losing money on the Sphere. That's the thing that's crazy. Because it costs so much to build and the ticket prices aren't high enough? Yeah, major cost overruns due to COVID and just trailblazing. It was supposed to cost $1.3 billion and it cost $2.3 billion. The second thing is a bit more subtle, which is the acts that can play the Sphere are pretty limited.

So it is dark many, many nights of the year. And so basically you need acts that can fill a 17,000 person theater can hold a residency and,

Las Vegas for more than like, say a couple dozen nights, because the third part is to have a show there. You have to build so much custom audio visual stuff to fill the screens inside the sphere. And if you haven't been there, you should check it out. If you're a listener, basically there's a 16 K immersive screen on the outside of a, on the inside of a giant dome that as you sit in it, like it is an immersive screen, like sitting inside of virtual reality with no head gear on.

So anyway, that's the problem. They're only active maybe a dozen nights a month if they're lucky, which is very different than say a Norge County or a San Antonio amphitheater, which can be lit four or five nights a week. So basically the thing just sits vacant and loses money because there's so few acts. And because there's so few acts, they have pricing power where it's just like, okay, here are the acts that work, right? You too. Yeah.

Grateful Dead, Kenny Chesney. The Eagles. The Eagles are going to be there soon. Yeah. And so because there's so few acts that can do a residency and fill it and their customer base wants to come and pay, the tickets were $300 face. I paid $600 for mine. Because there's so few acts, they have pricing power over MSG, right? Over the corporation that owns it. So it's just kind of a...

a perfect storm of things that if it had been so expensive and they hadn't searched for the product market fit that they went for, it probably would have worked, but they're losing money. That makes sense. Cause yeah, to put a show on there is a completely one of a kind thing, but it is cool. If you can go, if you see something that you would want, you know, to, to watch that, that concert, definitely see it there. So I've only seen the experience, which is just like a movie basically within it. But it, like you said, it's like a virtual reality. I felt like I was

flying, you know, in different parts of it, even though I'm just sitting there. So it was really cool. Well, speaking of losing money, I have a deal to show you. Yeah. So this deal, you may have seen it came through social media the other day because it has perhaps the most interesting and real description in history. So let me read it to you and then let's see what we think.

So it's a quiet light deal and it is a blue collar print on demand business with a predictable 50 to 100% growth opportunity and has a USA supply chain, which I guess they're putting that because of the tariffs. Revenue last year was $3.8 million and it made $434,000 in income and it has a 2.76 multiple. The asking price is $1.2 million. So 2.76, not bad. Mm-hmm.

Launched in 2015, this blue collar t-shirt and sticker business was sold by Quiet Light in August 2024. The buyer was operating a mortgage company and decided to buy this business to try his hand at running a second company. Shortly after acquiring the business, he started to see a lower return on an ad spend, often called ROAS for meta ads. So that's Facebook and Instagram.

He first thought it might be election related, but after the election, the problems were worse, not better. He started plugging every hole he could find in the business. And over time, he found steady footing. However, this business has caused a serious rift in the buyer's marriage, social life, and overall well-being. Trying to operate both businesses has pushed him to the edge. At the point, he is prepared to lose a few million dollars if it means getting some normalcy back in his life.

With this business, a buyer is presented with the opportunity to acquire a business that is fully optimized for the next owner and already on the path to turning around.

Less than a year ago, this business was earning $1.5 million in trailing 12 months profit. The seller believes it is ready for $60,000 to $80,000 in profit each month with the current strategy. This business requires a small production facility producing the apparel and stickers. The seller currently operates out of a 4,000 square foot facility, but he says it could be easily done in a 2,000 foot one with higher ceilings.

A new owner could take over the facility in Arizona or move it into their own. He employs two full people full-time and adds part-time help when they are busy. The sale is important because the seller cannot look at this business any longer. It's like he was in a car crash with it and he cannot stand the thought of going back to the scene of the accident. However, a new owner would not have his debt burden and would benefit from all of the positive changes he has made with the business.

We are looking for cash buyers who want to close quickly. Listed by your advisor at Quietlight, Brad Wayland. Yeah, what do you think? Oh, boy. You know, this is, I think, what some of us talk about sometimes online is,

People try to buy small businesses. Now, first of all, this is someone who thought they're running another business and they thought they could kind of do this on the side. So it sounds almost like somebody who thought it was going to be a little more passive and it really isn't. And they ran into trouble and had to really jump in there and kind of rebuild whatever was not working.

They said it's on the path to being turned around, which means to me it has not fully stabilized. But this buyer who just recently bought it, not even a year ago, wants out. And they want to, you know, they're implying that they're selling at a discount. Now, it's a good multiple, but if the trend is truly still going down,

It's hard to value a company while that's happening. So, you know, that's the income at that moment in time, but is it still shrinking? You know, a lot is going on here. And obviously a seller is at least being honest about why they're selling. Yeah, this is super duper honest. And I think that's why this got thrown around as an example in social media of how things can go horribly wrong in business. And they could go, there's a lot of ways they can go wrong.

So I'm thinking back over the 400 deals we've done. I'm almost wondering if we looked at this deal. Because I remember seeing something like this. It was a sticker business. Yeah. I do remember a sticker business. And it does strike me that it was kind of blue collar. There was something about it. Yeah. Maybe. It was some stuff for safety stuff. That's right. Hard hats, right?

Yeah. Kind of like people would decorate. Yeah. This could be it. Absolutely. It might be our fault that this guy bought it. What's a USA supply chain. So it indicates there's, it's not a lot of your common stuff that is, you know, being imported. So it's me, it's probably not, you know, generic t-shirts and stuff like that. So stepping back to what these, what this does, it's a t-shirt and sticker business.

So basically, what do we at its core? Our best guess is it's probably those things, but it's got custom designs on it that they generate and then they sell those through Facebook and Instagram ads. Is that kind of the whole business here? Right, right. And obviously appeals to a particular audience and that audience they're reaching through meta. It sounds like primarily and somehow the way the meta ads had been working for the prior owner was.

stopped working so well for this buyer once they stepped in. Now what they did to plug the holes, they said they jumped in and plugged the holes and started to stabilize things. But it sounds like it's an e-commerce business with a particular audience that you've got to be able to reach through Facebook and Instagram. And maybe it became pretty challenging to do that.

And one of the things they said here was that it started to deteriorate the guy's life and like his marriage and stuff like that. So it sounds like it's less of a financial burden on him and more of some like another burden. Like what do you think is going on? Emotional burden. Yeah. I mean, buying a small business or running a small business without debt has already got –

It's a weight to carry, basically. You're responsible for everything. It never stops. But when you buy a business with debt, it does add a whole nother level of pressure to people. It's a business you've got to learn and

And you've got to keep the earnings above a certain level. They cannot dip below that or you will not be able to afford to make your payment and you're in default on a personally guaranteed loan. So I think it sounds like, you know, the stress of that has really gotten to this person, which is terrible.

You hate to hear things like this, you know, that they're just affected their marriage and their social life and just their wellbeing. That's a lot of stress. Somebody's, somebody's experiencing and not afraid to share that, that that's what it is. That's the reason they'd like to find somebody else to take over for whatever it is they've been doing. So when I buy this business, what am I buying? Like, what is, what is the moat here? I guess there's some equipment, um,

Probably a customer list. And then it sounds like I have to keep dumping money into meta ads to keep getting new customers. Is that what I'm buying here?

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.

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Probably. And you probably need some creative to introduce new designs, right? Stickers and t-shirts aren't usually a stable design. Like here, we just put the same design out there forever and we're done. You've got to keep developing new designs. And so there's creative involved there too, which might be part of the problem. Sometimes when businesses...

have that element to them. They're not as transferable as they might appear. You know, if the prior owner was the creative one, you know, who developed the new designs and kept them in front of the eyes of the potential customers, it may not be a transferable skill, you know, if the new buyer is not that type of person. So I don't know what you're really getting here. I'm surprised that they need 4,000 square feet of

And production, I guess they're doing the screen printing on the t-shirts themselves or printing the stickers. Yeah. That seems like more space than I would think for a business like this. I mean, my friend owns one of those sign franchise like franchises and it could be sign aroma or fast signs or one of those.

And so he's got a couple of locations and they have a similar type workshop where they are printing signs for people across there, you know, but it's like a 4,000 square foot thing, but they're also doing banners and, you know, etching, etching.

Also, he's pretty awesome. He loves to nerd out about this stuff. So he prints all these custom stickers. So his cars always look like they've got racing stripes on them and stuff. You can always tell when he drives by. So it's pretty cool. So it sounds like the story was this guy bought this business. It was making a million and a half before. He took out a loan. He put up some of his savings from his mortgage business.

And frankly, being in a mortgage business is better than this business. I would have told him to go buy a second mortgage business if he'd come on the pod and asked us, but nobody asked our opinion, or my opinion at least. So then he bought this sticker business and then basically discovered that he was not nearly as good as the previous people at return on ad spend from Meta.

And he's stuck at that point. Like he can't hire somebody to go fix this. He's having to basically run his core business, which is funding probably the debt that he's paying on this business. And he is stuck there. He can't, he can't, he's not generating enough money to go hire somebody to do this and it's ruining his life.

Yeah. And we don't, he didn't say whether he has a loan, but let's, let's presume he got a loan, an SBA loan potentially when he bought it. Yeah. He would be making those loan payments out of his mortgage business, partly, you know, just a little bit out of this business and he would have to be bringing in cashflow from somewhere else to stay current on the payment.

What he's also saying is he's willing to lose a few million, did he say, to sell this? So he obviously bought it for, you know, a lot more than he's asking here, the million two. You know, a million five, he probably paid about three times for that. So that would have been what, four and a half million? And he's selling for 1.2. If he has debt, the debt is probably more than 1.2 right now.

So this is like something I tell people when you're trying to buy a distress situation, you've got to ask how much debt is actually outstanding. You might even want to do a lien search with your attorney to just confirm it. I have definitely seen people waste time on deals and find out that the price they're willing to pay is not going to net the seller enough to pay off the debt. And if it's not, then the bank has to, you're negotiating with the bank. You're not negotiating with the seller and you don't even know it.

And so you may not even be able to close once you figure that out. So that's maybe the first question I would ask this seller is how much debt do you have? And if it's way more than a million to how are you going to pay that off? And if they don't have the money to pay the rest of it off, you're actually negotiating with you're going to end up negotiating with the bank. So I mean, it's an interesting question how this guy got into this mess, right?

Usually, if people are going to own one business that is consuming them and then they're going to try to buy a second business, they're self-aware enough to realize, oh, I don't want two full-time jobs. And this appears to be somebody who didn't understand their limits in all of this. So it's kind of an interesting –

I don't want to pick on somebody who's down, but it's also like, well, what were you thinking? If it's going to be running two businesses is going to ruin your life, then maybe you didn't know that when you signed up for this risk. It sounds off. And the mortgage business is very cyclical. So what could have happened, and it can turn on a dime too, depending on where interest rates are.

So perhaps I don't know where the mortgage business was in August of 24, but it could have been down when he went into this. He might, he might've been thinking, well, mortgage is slow. I'll, I have the time. And then it, he didn't have the time, you know, the, the mortgage business could have gone into an up cycle and, uh, and, and then he took his eye off of this business and, and here's where we are. It could be something like that as well. Yeah. Everything I know is mortgage is doing poorly. Yeah.

But yeah, this is a lot of money to bet on. Is Meta going to keep playing nicely? And is somebody not going to come in and outbid you on some of these search terms that you're trying to get, which is there. So are you paying $1.2 million for this business? No, no. I call this trying to catch a falling knife.

You don't want to do that. You're going to get cut. So no, I don't like the idea of buying anything that is still declining and has had problems. There are a few people who have proven themselves as turnaround people, but even they usually like to see some flat sales for a while before they step in.

perhaps the right person that really understands the ad spend here, or this is an add-on and they can, you know, they can sort of turn it around with adding it into their other product mix maybe. But I don't like the idea of buying in a situation like this. Yeah. It's a huge amount of money to bet on something like this, where the whole moat is some equipment. I mean, that's your only defense. You know, you're producing your own stuff rather than third party producing it.

It makes me wonder if somebody that's a hustler could go to this person and say, "Hey, this is ruining your life. You're not going to get $1.2 million for it. Keep trying if you want. Here's what I'll do. I will come in and let me take this business over. I'll work for three months without a salary.

And then if I'm able to, you know, I'll try to fix it for you. And if I'm able to fix it, like, here's what I'll end up paying for it. And if I can't fix it, well, it's better than your current situation, which is your life sucks. And, you know, basically, you know, have that sort of structure work here, right?

but in the end i think you have to ask like life is pretty short is that the way you know would you be better off going to start a mortgage business just say yeah right just doubling down on whatever it is they're already good at and they're already doing yeah i think this is probably one of those situations where they truly thought they were buying something more passive it just isn't this is uh this is a tough business like everything uh my youtube video the other day was about uh

the benefits of playing hard games and easy games and this definitely feels like signing up for a hard game which is tough hard games are tough so yeah all right well anyway this is the most transparent therapy session business listing i've ever seen so i wanted to go through with you just because it was just some good drama yeah i feel for this person it's tough oh man this stuff is hard i mean this this is why businesses trade for

three to five times earnings for good businesses and why good buildings and real estate trades for 10 to 15 times earnings like this is exactly why like yep there are just so many ways for businesses to go wrong and there's a relatively few ways for them to go right and it's different than real estate for sure so all right thumbs down on this one for me yeah yeah me too

All right. Well, good job today, Heather. We'll catch you next time. Thanks for listening to my Grateful Dead stories. Yeah, that was awesome. You get co-host of the day. I think that's your award. You get the award for that. All right. We'll catch everybody next week. If you enjoyed this, tell a friend about the podcast and we'll see you next time. Bye.