Alabama NEMT Company for Sale: $3M Revenue, $376K SDE Breakdown

0:00Welcome to Acquisitions Anonymous. Today's deal is one that came through us through platform Dealonomy. It is a business broker site that does only good deals. So we dug into one. It was fascinating. It was in Alabama, and it was a medical transportation business for non-emergency situations. And it turns out it was one of those deals where we had no argument whatsoever about how we felt about it. So stick around for the whole episode to see how we thought. Here's the episode. We'll start Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore.

0:32And thumbs down on just the plus inventory. Hi, Heather here. When I'm not breaking down deals with these guys, I'm helping people get the right SBA loans for their business acquisitions. Because when you're buying a business, the best financing isn't one size fits all. There's the best rate, fastest to close, the specific loan structure that you need, or a little of all of those things. That's why my company, Viso Business Capital, works with over 30 different lenders to find you the best funding in less time and with less friction. So you can focus on the deal. Sign up for a free live Q &A session on SBA loans at visocap.net.

1:07Then click Zoom Sign Up in the top right corner. That's V-I-S-O-C-A-P.net and click Zoom Sign Up. Oh, Heather, can we get a weather report from Southern California? It's depressed the rest of the world. It is sunny and beautiful. It is shorts and flip-flops weather again. And it's the beginning of March. So we've had a very warm winter, although we did get a lot of rain. but every time the rain clears out, it gets warm again. It's been really nice. So you've got to know me a bit. If I had to pick like HQ2 for the Girdley family, would you recommend San Diego, OC, or kind of LA Core? What do you think?

1:49What feels like a better vibe for me? And then same question for Mills. I feel like San Diego would be your best vibe. It's pretty laid back, beautiful, kind of chic as well. I like Orange County better. That's where I live. But that's because it's in between the two. And you can get to both relatively easy. I mean, our traffic is terrible, but you can get to both relatively easy from Orange County. But I think you're more of a San Diego guy. La Jolla. Yeah, do I have$10 million to drop on a house? I'll work on it. I feel like you do. So you need to go. I mean, yeah, yeah. That's exactly what I was thinking.

2:24You just put off those, you know, dating or vibes, Michael. And I'll visit you. Where should the Girdley HQ2 be? I've never said that about my family. Yeah. Okay. Same question for Mills. You can't say Gardenia. Okay. You're more like a long beach kind of guy. It's Gardenia.

2:44I really enjoy my time in Costa Mesa. Oh, OC. Yep. Smart man. All right. On that note, I'm going to tell you the closest thing to Costa Mesa. an Alabama-based non-emergency medical transportation business. So it looks like this is our second deal on a deal in a row. Ladies and germ, it looks like another AI-generated photo. I would agree with that. It looks like they're generating AI photos. And we're not being sponsored, right? Correct. Right, so we can say whatever we want. We can say whatever we want. Everyone is a future sponsor. But we have a price. There is a price. where our criticism may be dialed back a little bit.

3:27Everything's for sale. No, that's not criticism. We're commenting on their efficiency. Sponsorships are available. Contact your local sales room. All right. Alabama-based non-emergency medical transportation business priced$1 million to$1.4 million, located in Alabama. It is in the healthcare, medical, social, and social services industries. It does$3 million in revenue, and there's an SDE of$376 ,000. And unlike the last dealonomy deal, I didn't just stop at the teaser. I actually clicked on the link. So yay us. We're getting better. Good job. Thanks. This Alabama-based non-emergency medical transportation company offers multi-county operations, long-term healthcare, and federal contracts and a fully remote 24-7 operating model.

4:14It is anchored by a high-volume federal agreement and supported by additional institutional and broker-based contracts. The business generates consistent contract-driven revenue while maintaining lean staffing and efficient vehicle deployment. An experienced operation team manages dispatch routing and hiring, enabling the owner to oversee finances and key relationships with minimal daily involvement. The company has significant growth through potential through new healthcare partnerships, additional federal opportunities, and deeper penetration into southern markets. It is SBA loan eligible and they will seller finance.

4:47So financial snapshots include income of$2.7 million,$3 million, and$2.9 million in the trailing 12 months. Gross profit... Wait a second. Oh, yeah. Okay. So anyway, I'm just going to skip to the net income because whoever's putting this in is... Well, this has got to be... Gross profit cannot be higher than total revenue. Yeah, it is currently sitting higher. So anyway, these people are selling drugs. All right. So in 2023, they lost$43 ,000. In 2024, they made$173 ,000. And in the trailing 12 months, they profited$254 ,000. Each year they have ad backs. And the main ad back is$120 ,000 in owner's pay.

5:39And in the other years, it is some interest expense. So that means they're - What do you think that is, Heather? Net interest expense? Like they have. That's a lot. That's a lot. It was zero. They didn't have it in the prior years and then all of a sudden they've got$146 ,000. It could be that they financed some new vehicles for growth. I mean, they're not showing the growth yet, but maybe they. But if it's, I mean, it may be$146 ,000 on$3 million in revenue. Yeah. Let's just call it$3 million in revenue. $146 ,000 just in interest expense. That's not principle. on interest. No. That's not equipment purchases.

6:17That's interest. Let's just do some math on that. That's a million eight in debt if it was at 8%. Yeah. That doesn't make sense. Do you think it's possible that this business got bought recently? Oh. And now it's being resold? Could be. I've seen certain, I've definitely seen people who got an SBA loan, bought a business and they still have the SBA loan outstanding and they want to sell it. But I mean, that would have been just in the trailing 12. That would have just, because there was no interest prior. So could it be that someone bought it in 25 and already wants to sell it? Maybe. But still doesn't equate to enough of a principle.

6:58You know, this is, oh yeah, it would. 1.8 would mean they overpaid for it though. Because they're asking 1 to 1.4. So that is an interesting question. When you see that much interest, you kind of back into how much principle that would be. If the purchase price is less than what they owe, some creditor, guess what? They can't sell because they will not be able to pay off the creditor with the proceeds. Just like buying a house that's underwater, if the lender doesn't want to let it go for less than they're owed, you won't be able to close the deal. So that's a big question right there. How much do you owe?

7:31What's it for? Just to see if the deal could go forward. Could be a typo too. Yeah, there definitely is a accuracy gap here with these listings. which that's kind of important to do if you're a broker. I feel like sometimes these are, and I'm not saying this about dealonomy, but I've seen a lot of deal listing platforms that primarily scale through self-reporting. You know, somebody wants to sell their business, they plug in a bunch of the information into kind of preset fields. This description doesn't really read that way. It doesn't read like a kind of for sale by owner, but it makes me wonder if maybe some of this was self-reported or just kind of, you know, keystroke error.

8:20I like the fact, I mean, I think this is a, it's a durable space, right? Non-emergency medical transport. People are living longer. They're aging in their home or in assisted living facilities. They need to be moved back and forth to doctor's appointments and ambulances are not the most efficient way to do that. And so just like this photo, this we think AI generated photo shows at the top, there's, you know, a transit van with a lift gate on the back that picks you up from your house or your nursing home in a wheelchair or however you may need to get around. Takes you to the doctor's office for a couple hours and brings you back.

9:02They don't say anything in here. I mean, they say anchored by high volume federal agreement. The whole key to this space is who is paying, right? And if there is a Medicare Medicaid component to this, then you probably have a lot of hoops to jump through from a paperwork, licensure, credentialing. Most likely, if there's a multi-year contract, which I haven't dealt with this directly, but probably going to lead to a stock purchase so that you can keep all those things in place. there's just a lot to wrap your arms around with something like this. And it's only doing 3 million in revenue. Right.

9:47And then, you know, lenders are going to look at something they call pay or risk, which is kind of going back to, okay, if it's Medicaid related, you know, whoever, however you're getting paid, is there any political risk to that program? Which Medicaid these days, yes, there is. You know, there's, there's a lot of talk of cutting all kinds of that type of aid. So you've got that on top of the fact that you may sort of have a concentration with the government. So that's tricky, tricky to navigate. If you don't have prior experience in health care and health care billing, this could be tough. The thing about this business that it ultimately comes down to is like asset efficiency and capacity utilization.

10:32You know, you could have a fleet of 50 of these. And if only two of them are on the road at any given time, you're hosed. but it's also a balancing act because you're on call, you know, and, and you've got to, they even mentioned 24 seven operating model. You probably have some visibility in the coming weeks of like, okay, you know, Fred goes to the doctor every other Tuesday for, you know, dialysis or something like that. So it's kind of scheduled out as long as you know that you're getting paid by the people who are actually footing the bill. But it's really, really difficult to right-size your fleet to demand because demand fluctuates and you can't just add and subtract these highly specialized vehicles up and down each month.

11:18And so while there is some stability and durability, I think you could really get behind or you could get over, you know, over kind of staff from an asset standpoint, too much capacity really quickly. And then it's like really, really hard to undo. You got to wonder how much customer concentration they have with these deals. That's where my head goes. Wouldn't surprise me if this whole thing is just tied together with two federal contracts. And it also wouldn't surprise me if one of those is like, one or both is like, you know, female or minority on business driven. And you're just like, okay.

11:58and next thing you know somebody's cousin gets the contract after yours expires this government contracting world is just and I don't want to use the C word but it's just so corrupt it's just like so much cronyism I work with companies that are selling to the government right now and doing stuff and the new regime came in and they're like okay all of our friends are getting the contracts now thanks for being here and it's just like a different that's the game you're wading into I wonder if somebody who bought this business did it with an SBA loan and then they've had a conversation with the local procurement office for Medicare or whatever and they're like, okay, congratulations unlikely you're going to win this bid when it comes up again next year

12:57from Quiet Light. And in my opinion, they are extremely high quality people, very, very rigorous, and they're really straight shooters. One of the things that differentiates Quiet Light is every single broker at Quiet Light has been an operator. They have been an operator of an active business and they have sold it. Many of them have also bought businesses. So they really understand what it means to be in the seller's seat and how important that is to you. And they also really understand what it means to be in the buyer's seat. So they don't BS you, but they really do know how buyers think. All of the transactions I did with Quiet Light, in fact, one of them, they took over a sale process that another broker had not been able to get done.

13:35And they got it done for me inside of 90 days. So I've had very positive personal experiences with Quiet Light. And I do recommend them wholeheartedly to a lot of people. And now they're a sponsor of the podcast. So one thing you can get for free is if you head over to quietlight.com, they will do a valuation clarity call with you, which is not a sales call. They're not pushy people. They'll just kind of tell you, hey, here's what your business is probably worth. And here are a few things you could do to make it worth more. And hey, maybe don't sell it right now. Do these things. Come back to us in six months and you'll get a much better multiple.

14:06So if you're thinking about selling your business or you're thinking about buying a business, especially in the e-commerce space where they're very, very strong and been doing this for over a decade, go check out Quiet Light Brokerage over at quietlight.com. Or if they're serving nursing homes that are Medicaid you know, patients mainly, this is what I imagine because it's non-emergency medical. I think a lot of it is that type of, that's the kind of facilities that they tend to serve. That is getting cut. That kind of Medicaid is getting cut. So it couldn't even, it couldn't just be simply that it's getting cut out of the budget or there's a good likelihood of it, a risk of it, that this owner is concerned about, maybe.

14:48So what do we like about this? I mean the demand the AI picture was nice the demand is always going to be there it's just a matter of who's actually going to service that demand who's going to pay them and you know how consistent is that it seems like you could be left holding a fleet full of vehicles and no demand in many many conceivable scenarios and the contracts have just whisked away you would rather be an emergency transport right That's where the money gets made here. I don't talk to you, but it's better than this. Yeah, I've never looked at ambulance businesses, but then you have a different staffing dilemma, and you've got to hire EMTs, which I think are more difficult to staff.

15:35This isn't somebody who needs a Class A CDL license or something like that to drive one of these vans. Okay, somebody talked me into buying this. Yeah, maybe the bull case is you sign the NDA and you find out that this is a set-aside contract. There is some female-owned, minority-owned, service-disabled veteran-owned component to this that maybe they've just scratched the surface or is untapped. I just think about how do you navigate these contracts in Alabama where it is probably very obscure and opaque and you don't really know the other side of this, your total outsider. I think you would have to have somebody who's already familiar with this market, understands the contract dynamics, knows the payer risk.

16:25This is like a tuck-in. That's what this screams to me is a tuck-in. Yeah. I mean, if you believed that the TTM SDE of$370 to$400 was sustainable, which I'm not sure I would, but if you could get behind it and you believe that, it could qualify for an SBA loan that's consistent with what they're asking for this business. So, I mean, it could be financeable, but you'd have to really do your diligence on the pro forma. This is more of like a revenue visibility, not a historical. And I think a lot of people get caught up in the historical, even though that's not great here either. I was going to say, not that long ago, this business was making$20 ,000 a year net.

17:08Yeah. Right. So it doesn't even have a good look back. But what you really care about is the look forward. And if you could get behind that, then it's probably a fair valuation. But I think you've got a lot of diligence to do to get behind that. Yeah, maybe best case scenario, this is like value add real estate where somebody bought it. There was like a very short duration on the contracts, just like a vacant building. And then they renew the contracts, essentially signing a really long term, amazing lease. And then they're just flipping out of it because there's a lot of there's a lot of residual value there now.

17:42I think that's the best case scenario. Other than that, there's no case scenario. Is that where we're at? Yeah, I think so. I think you'd hope for it, but man, this is just a tough business. I got to say too, in the first 60 seconds of looking at a teaser, and I'm sorry, I'm just piling on now, but when there's substantial egregious errors in the reported financials where gross profit is higher than total income, it makes it hard to justify spending more time on it. because you kind of look at it and go, I could get really excited about something I see and it could be totally irrelevant. Yeah.

18:25I mean, it does tie into just a good leadership lesson and business operating lesson for me. It's one of the first things I'll do when I go visit a business is just look at the level of cleanliness and tidiness in the place and level of attention to detail. and people don't think about how the lack of it really sends a message to your employees and to your customers about what you tolerate in your culture and when there's dirt everywhere and the vehicles have trash in them. I used to drive my drivers crazy when I was a CEO being like, get your trash out of our truck and it needs to be cleaned.

19:06And if it's not clean, you need to tell me so we can make time for it. Because it was just that important. How was I going to know they were changing the oil on time if they couldn't pick up the Filet-O-Fish wrapper from the footwell. So I think that's, in your marketing, that's important too. Now, I'm also the guy who writes tweets with spelling errors in them. And also yesterday I recorded an entire YouTube video with a booger hanging out of my nose. So that's what's going on here. So do as I say, not how I do. I think this is interesting. And if you're trying to get reps and look at things, You need to go down the rabbit hole in this and explore things like this to figure out why it's probably not something that you want to own long term.

19:51If you're doing a thesis-driven approach, are you looking at non-emergency medical transportation as a category if you're not already in it? I don't think so. Yeah. I don't know anybody that drives a Ferrari that does non-emergency medical transportation. That's kind of a bad sign. That's how you decide. It is the girdly rule of if I have to pick one thing to know, I look at what kind of car the seller owns. And if they're driving a 2017 Subaru Outback, I run the other way. But anyway, just kidding. Well, it's kind of like... Isn't that what you drive? It is what I drive. Thanks for the show. But it's also a huge tell.

20:27Like we have one of the things people get wrong is there's this like idea that I think people want to be in recurring revenue services businesses, low capex, all this kind of stuff. So they think naturally that being in the pool maintenance business is better than being in the pool construction business. And it turns out that's one of the businesses where being in maintenance is actually much worse than being in the construction. And you can tell. The people that own the pool construction companies, they drive up to the country club and fancy Lexuses and Maybacks, right? And the people that own, the guy that cleans our pool, I'm surprised that his truck gets here sometimes, right?

21:01That's the difference of the two. And so you can't tell a lot by what the owners are driving. like it tells you how the business is doing. Yeah, on site visits, I would always ask, you know, about like just trying to get to know a seller, but like even just little things like, you know, what types of vacations do they take? Do they take vacations? Can you be away from the business for two weeks? But if they're like, you know, yeah, we go to our beach house. Okay, ding, ding, ding, they have a beach house like that, you know, or we go, you know, we take month-long trips to Europe, you know, and a place that we have fractional ownership in.

21:36Like, you know, it just tells you a lot versus we, I had this business we looked at one time that was reportedly doing$6 million a year in EBITDA, but they had a tax lien for$3 million. And it's like, did you actually do$6 million in EBITDA for multiple years? Why would you have a multi-year lien accumulating on the business if you actually were distributing free cash flow, you know? there are clues more clues yeah alright on that note would you would you guys like to rate this meeting Heather or this not to me rate the I thought this was an EOS meeting for a second this is an EOS level this meeting is terrible I thought this was an L10 yeah one out of ten thank you how would you rate this deal I'm a thumbs down on the deal I don't like the customer concentration and I'm worried that the that the cash flow is not stable enough.

22:30Yeah, this business sucks. Bill's over to you. Yeah, I'm also thumbs down. As much as I want to be contrarian in this moment and be like, I'm doing it. Usually this is where I'm like, okay, here's what we're going to do. We're going to do a reality TV show called Alabama Medical Transpo and then we'll get all these customers. But I don't even know how that would fix this deal. Like I think it's just such a crappy business to be in. On that note, if you enjoyed this episode don't tell anybody about it we don't want them to know please tell a friend about it open up your phone right now find a friend in your address book you think would enjoy this episode the most and send a link to him and say please listen to this and then tell him to take you to Chili's for dinner alright thank you very much we'll catch you next time

23:24Thank you.