with Purity · Purity
LenderHawk analysis. Not affiliated with or endorsed by Acquisitions Anonymous.
A water-compliance business can look software-like on paper while still being fundamentally a labor-and-field-services operation underneath.
Recurring municipal contracts can create stickiness when the service is mandated by law and tied to compliance schedules.
A proprietary software layer is most valuable when it deepens customer retention or expands into adjacent municipalities, not when it is merely a small add-on.
A business with 88 employees and $11 million of revenue is unlikely to have true SaaS-like margins, even if the listing uses software language.
Professional intermediaries can de-risk a process by screening buyers, using blind CIMs, and protecting seller confidentiality.
A high-quality asset with recurring revenue and sticky public-sector customers can justify pricing well above typical SBA-bound transactions.
A business that is small for a platform but too expensive for SBA can still work for PE or a strategic buyer with committed equity.
A useful lens for evaluating businesses that market themselves as software but may actually be service businesses with a small tech component. The key question is whether software is the core profit engine or just an adjunct to a labor-intensive operation.
When to use: Use this when a listing claims SaaS-like characteristics but the headcount, margin structure, or delivery model suggests otherwise.
The business was presented as having $11 million of projected 2022 revenue and $2.2 million of projected EBITDA.
Mills introduces the listing economics from the teaser.
About 65% of revenue was described as scheduled monthly or annual billings.
The hosts discuss the recurring nature of the revenue base.
The company had 88 employees.
Bill uses the headcount to question whether the business is truly software-like.
The company invested $1 million in a proprietary software platform.
Mills cites the software investment as part of the growth story.
The business had averaged 12.4% annual top-line growth over the previous five years.
Mills reads the historical growth figure from the listing.
The sellers were in their mid-to-late 60s, with one owner already semi-retired and the other open to a two- to three-year transition.
The hosts discuss succession and transition risk.
The hosts estimated the business could trade around 7.5x to 8x cash flow and possibly fetch $15 million to $16 million.
They discuss how a PE buyer might underwrite the opportunity.
Separate the software story from the operating model before underwriting the deal.
Why: If most of the value is delivered by people and field work, SaaS-style valuation assumptions will overstate the margin profile.
Treat a blind CIM and buyer vetting as a signal of process quality.
Why: It usually means the advisor is protecting confidentiality and filtering for serious buyers rather than blasting the deal to everyone.
Underwrite public-sector recurring revenue with a platform-expansion lens.
Why: Municipal references and compliance credentials can transfer to adjacent geographies faster than a brand-new entrant can replicate them.
Expect premium-priced assets like this to require committed equity or PE-style leverage.
Why: SBA leverage likely caps out too low for a valuation in the mid-teens millions.
The hosts describe the advisor as using blind CIMs and calling buyers before releasing the full materials. They view the process as a deliberate filter that protects seller confidentiality and keeps unserious buyers out.
Lesson: High-quality intermediaries often reduce transaction friction by controlling access rather than maximizing volume.
The hosts argue that proving the model in one city or county can make it easier to expand into nearby municipalities, because public buyers prefer the lowest-risk incumbent-like option. They compare that dynamic to how buyers avoid risk by defaulting to familiar vendors.
Lesson: In risk-averse public-sector markets, reputation in one locality can become a launchpad for regional expansion.