How Much Is a Portable Toilet Business Worth?

0:00Welcome to Acquisitions Anonymous. Michael here. Today's episode was myself, Bill, and Heather going through a really interesting deal that actually AI found for us. So I'll tell the story of how that worked, and maybe you'll learn something from that and what we thought about the deal when we broke it apart slash tore it apart, decide if we liked it. Here's the episode.

0:32One of the biggest risks in entrepreneurship through acquisition is buying a business with fragile systems. Unclear demand or a single owner who holds all the knowledge. Franchising approaches that problem differently. You are buying into an established brand with documented systems, unit level data and repeatable operating playbooks. The hard part is knowing which franchises are actually worth evaluating. That's why Alex Merezniak, former CEO of 2U Laundry, built Fransy. Fransy is a free platform that helps acquisition-minded entrepreneurs explore franchise ownership without broker bias. You answer a few questions, and Fransy shows you franchise opportunities that align with your capital, lifestyle, and long-term goals.

1:05You also get free coaching from people who have actually built and scaled franchise businesses. If you are exploring ETA and want to understand whether franchising fits your acquisition strategy, visit fransy.com. That's F-R-A-N-Z-Y dot com. And thanks to them for sponsoring today's episode. Three seconds and Michael goes, Bill, I've got a deal for you. I'm clicking record. Well, I'm coming in cold or super hot. I don't know. Maybe you'll like it or maybe you won't. I recall there's certain types of business you like and I found one. And mostly because I have programmed my open claw, Heather, which sits in my home office to go out and find us great deals to talk about on the podcast.

1:43So every night it wakes up at 3 a.m. and it goes out to find me three great deals and it puts them in a spreadsheet. And in fact, this is the first one I found. Yeah. It has no mercy. It doesn't quit. It doesn't complain and it just opens up and finds great deals. Wow. I love it. So you're telling me that spreadsheet is just going to fill up with awesome deals for us to learn about? OpenClaw is the best thing ever. It's so cool. I'm in the process of setting up another instance of it on my home server.

2:14Michael just put something on the screen that I love. it showed me this. I was like, do you know, Bill? Good bot. So let me pitch you on this deal. By the way, this one, Heather has a video. So we'll get to the video. Oh, a video of potties. I don't know about this. No, Heather, a video of a turnkey cash machine. Oh, okay. Sounding better. I'll give it to this broker. She knows how to sell. I'm impressed. So I'll play the video in a second because i was watching before the episode uh turnkey cash machine a 48 cash flow recession proof port-a-potty business in wisconsin the broker actually says wisconsin like wisconsin people do it has some photos of just random port-a-potties in the snow so it's wisconsin it's wisconsin port-a-potty honestly honestly if i'm gonna be schlepping port-a-potties around i I would much rather do it in the snow than in 100-degree heat in Texas.

3:15I guess you got to deal with frozen poop. Good point. Frozen poop is better than hot poop. Interesting enough. Gerds, didn't we have a rule we weren't going to make poop jokes on this pod that we've already veered? It's been like a minute, and we're just comparing the heat of poop and the relative palatability. So asking price is$1.6 million. SDE is$325 ,000. and gross revenue is$744 ,000. They've been hauling around Port-A-Potty since 1996, so 30 years. Description is a 30-year-old legacy business with no marketing money spent, immediate ROI of profitable portable unit enterprise with no competition, over$570 ,000 in equipment and supplies included.

4:00You can step into ownership of a highly successful portable business with 48 % cashflow, a rare opportunity, a thriving industry with zero direct competition and unlimited growth potential. Revenue is generated from the following... I'm laughing, Heather, because I'm watching Bill's face as I read this, and it's just like, it's the dubious face of like, what? So there's no competition. These guys have invented the port-a-potty.

4:28Exactly. It's them or the bushes, basically. That's what it's like. That's right. That's right. revenue is generated from the following loyal client base with the highest percentage on top construction and government community events farmers and the amish

4:50i feel like the venn diagram of the amish and farmers might overlap a little bit this reminds me of like Michael Scott going and giving a talk about the types of economies out there. And it's like airlines, events, Amish. Anyway. So it has exceptional profitability, enjoy strong financial performance with approximately 48 % cashflow, ensuring impressive returns. It's a turnkey operation. They have an exclusive market position. Okay. So I'm going to read this part because I think it's important. No direct competitors giving you full control of a profitable niche in fact they're getting requests to go into markets that the competition is failing out it is high demand and scalability and so strong market need with room for expansion into new territories there are two communities to expand into for growth it is eco-friendly and sustainable yada yada yada um then they kind of say everything again high profitability no competition this year moment don't let this opportunity pass you by as an entrepreneur acquiring an established business with a proven tracker are significantly reduced the risk associated with starting a new venture from scratch.

6:00With this business, you have the opportunity to step into a thriving industry with a strong foundation already in place. Lots of potential to grow and so on. Request an NDA to view all financials. If you do not hear back from us within 24 hours of weekdays, please contact us. Submit your request to this offering today. And Catherine took a selfie video of herself, which I will click play on. Okay, today I want to talk to you about a 30-year-old porta-potty business that I have for sale. It's located in Wisconsin. The cash flow is 48%. This is a recession-proof business. If you're looking into a legacy business that can carry your family for generation to generation, this is the business to look at.

6:47They don't do any marketing. They grow organically 10 % every year. Again, if you're looking to invest in a business that will pay off an immediate ROI, as soon as you close, this is the business to take a look at. It comes with all the equipment. They are willing to lease their land. They have, I think everything's on about three acres. There's a garage office. It's warm. It's cool in the summer and warm in the winter. And then they also have two other garages to store the trucks and to work on them. It does come with employees. It is full turnkey. All you need to do is step in. That is it. Step in.

7:32Now, there is a caveat to this business. You do need a master's operator license. Now, don't let that discourage you because the owners are willing to carry their master's operator license until you can get yours. So that is one caveat that is outlined in the offering summary. You will see the details about that and all the links on what to do to get your master's operator license. Again, this is an incredible recession-proof business. It's 30 years old. It's actually older than that because they bought it from someone else, and I don't think she knows how old that business was with them. And again, 48 % cash flow.

8:14I believe it's roughly around$350 ,000 in cash flow. So if you're interested in this business, check it out. Reach out to me, DM me, or go to 10xbusinessbrokered.com. And I look forward to hearing back from you. Again, this is Kat Ramirez, CEO and founder of 10X Business Broker, helping business owners buy and sell their businesses. Full turnkey. Reach out. You got this. Doing a three-minute impromptu video about your listing, pretty good. Like, I'm impressed. I do love that. I love that the broker's willing to get on camera, and she even did, like, the TikTok captions for all of her audio. I like it.

8:57I have some issues with the content, but I really like the marketing strategy. It did very much sound like she was about to give the tour of a luxury townhome. But I mean, she sold it. I appreciate it. But I guess it does lead to an interesting fact we haven't really talked about. They've operated this port-a-potty business out of their owner's property. And you can either lease the property from him or from them or not. And she did say that the owner is a she, which is awesome. So we can not refer to the owner as a he like we kind of default to in the future. Sorry, Heather, we suck. Yeah. So.

9:37Agreed. Agreed. Hey. Okay. So hang on. They just glossed over a huge detail. The business run of the owner's property. You can lease a space from them or run the business from your home or property. let's not gloss over that because that means store a bunch of port-a-potties at your house okay that's a big deal i'm not i don't want to run a port-a-potty business out of my house and keep all the port-a-potties on on prem as bad as that sounds also being a tenant at your seller's house doesn't sound like a great idea long term either yeah now i mean this is not a deal breaker right i mean what you need like a patch of grass i would assume so like you don't need with like a fence so i'm sure you can find a place to to do this you know assume but you just got to make sure the pnl is burdened for whatever it's going to cost you to not not operate it out of this woman's home yeah so now master operator's license that kind of surprised me given the type of business that it is what what is the world coming to that you need something called a master's operator license to haul off poop.

10:47Like, what are we doing? I know. This is crazy. Let's hope it's pretty easy to get. Oh, so this is interesting. So a couple more facts. One, retirement is the reason for selling. And they're willing to train you. But the thing that's very interesting, it says it's in Dane County, Wisconsin, which you're like, okay, where's Dane County? It turns out Dane County is Madison, Wisconsin, which is not a bad place to live. Like, I don't know if you guys have ever been to Madison. There's a lake and state capital and it's a university town. So pretty fun. I know some people that are from there. Okay. Yeah, I'm sure it's a nice place to be.

11:31The other thing about this business is, okay, you know, there's got to be other port-a-potty businesses in Madison, Wisconsin, but maybe it's in rural nowhere. And in a port-a-potty business, you got to be kind of close because you're going to be there, you know, every couple days to haul it off and clean it out and replace it. So if you're driving 60 miles each way, that's not going to be very efficient. You know, this is to some degree a route-based business and density matters. So maybe there's a geographic mode here. Yeah. And I think you want to know how many units this business has. How many porta-potties do they have?

12:01Are they using them at full capacity? You know, it doesn't sound like based on where it is, there's a lot of growth opportunity. Although they did say there were two neighboring communities you might be able to go into. But I think you sort of judge port-a-potty businesses by how many units they have in operation. And then there's a little bit of capex to replacing and maintaining. It is fascinating that they are not branding these port-a-potties. That's like the number one thing I see every port-a-potty company do is actually put their name on the port-a-potty. These guys just have them as generics.

12:37It's fascinating. Do you think these are just AI pictures though? They could be Heather. I thought maybe the first one was a stock picture, but like the one of the trailer and all the, like that one is definitely a stock picture. But like, is that one a stock? I don't know. It says the company has three drivers and one truck, I think, Michael, at the bottom. Yeah. Which this is, this is not three drivers and one office assistant. I don't know how many trucks they have. So this is not a huge operation, right? They got about$570 ,000 of FF &E, which I got to assume that's port-a-potties. I don't know what else it would be.

13:14And they got three people driving them around. I don't know how much a port-a-potty costs, but maybe they got 100 potties-ish. I don't know. And you're kind of building a route every day, dropping off, picking up. And your cash flow is how much here? 300 grand or something? It was like half of the revenue. The revenue was only$760 ,000, was it? Yeah, 744 ,000 revenue, SDE 325. Margins are pretty good. I mean, I like a 48 % margin. Yeah. Now, that is SDE, and I always say you've got to take off a salary to figure out how much cash flow is going to be left for the debt. Maybe in Madison or maybe wherever this is in Wisconsin, the salary doesn't have to be very big, but you're talking maybe$250 ,000.

14:09of EBITDA that a lender would look at. Yeah. I mean, highest case, right? So let's talk about kind of the math in this deal. So they've got, to your point, Heather, 250K of EBITDA, 325 of SDE. They're asking 1.6 million for it, which is five times roughly. It's six, isn't it? Six times? Not quite six times. Six would be like 1.8 million. so it's like five times and i don't like yeah i think this is kind of the classic hey i've got half a million dollars of potties in it so they feel like you got to buy the potties and then you got to buy the business which is the thing that always just kills me you know with brokers like i can't we just sell me the business without the potties no and vice versa no like this is like the classic kind of working capital type question.

15:05Like you can't run a business without the equipment you need to do the business. So I have a feeling that's what's going on with the asking. Yeah, right. They probably grossed it up for what they think they should get for just the equipment and it doesn't work. You're right. So I did look at it and a typical port-a-potty is a thousand dollars. Wow. So you're telling me that you think they have 500 potties? well i guess the trucks okay let's say they got a hundred thousand dollars two hundred thousand dollars of trucks you think they have 300 potties that's a lot that's just the basic kind of plastic ones are a thousand bucks on average new um some of these fancier models like this one's like an ada one that they have here on the screen these can be like 1200 1500 bucks um but yeah and then i think these they have some pictures of these like fancy trailer things with the air conditioning I call these the wedding quarter potties.

16:02Yeah. So these I'm sure are 10 to 15 ,000 a piece, if not more. Yeah. But even still, I mean, there's probably a hundred things you've got in the field at any one time. So it's, it's not a simple logistical operation because there's placing them and then servicing them and then picking them up. This is another business that I think, how many call outs am I from driving a truck? Except in this case, you're not just driving a truck. There are probably some not fun parts of picking up and dropping off port-a-potties. Well, I mean, the pick up and drop off is one thing, but if you're like, let's say you're paying 300 bucks a month to have this at a job site where you make your money is the 50 to 60 bucks a couple of days a week that you go out to run a pump truck to suck all the poop out of it and replenish the fluids in it.

17:03And that's why this is a local business because you got to have, you know, those are happening a couple times a week. And they have a picture of one of the pump trucks, which is this one. This is the poop pumper truck. Oh, so it holds one port-a-potty on the back just in case you need one because if you can't pump it out, you got to drop the fresh one. And then you fill that tank. What do you do with the tank uh i assume you put it into the sewer like on the side of the road like do you like do you go to the water treatment plant like is there like the toilet like how does this actually work uh i assume there's an the the fluid you're using i assume is one where you can put it down the put it down the like the city sewer and it goes to the waste treatment plant so i will ask i will ask the internet when you pump just to be clear you think this woman drives this back to her home, parks it in front of her house, runs a tube down the street sewer, and that's how you empty it?

18:02No way. Not the street sewer. Definitely not. But she uncaps a cork in her yard and just unloads the city sewer in front of her house? No way. Okay. No, no. Here, this is great. This is a great question. Okay. It goes to a licensed municipal sewage treatment plant or a specialized waste treatment processing facility. So wherever there is one. They go to the sewage plant. Yeah, they go straight to the plant. They don't put it into the sewer. Okay, so you got to grab that. The neighbors just breathe a sigh of relief. Yes. I'm not any more willing to have this at my property yet, but still. So, I mean, let's talk about this business overall.

18:45Like, is this a good business? Is renting porta-potties a good business? Do you guys like it in concept? I've seen them that I really like. they're a little bit bigger than this. I think this is a tough size to start with potentially, unless you know exactly how you're going to grow. But I've talked to folks who have bought them. I think it really depends on your customers. Some bigger port-a-potty businesses have, they serve like data center construction sites, which are great for a long, long time. You know, they're putting hundreds and hundreds of potties out there year round because the construction is going on all the time.

19:21Talk to other folks who serve the oil and gas construction market, and that's cyclical. So if the customer you serve is cyclical, then you're going to be cyclical too, and that can be more problematic. So I think it comes down to who do you serve and how regular is the business? What are their needs like? Do we think the Amish are cyclical and farmers? I think they're consistent. The Amish are there. They probably are. Yeah. This must be their non-technology solution, right? I guess. I guess. So the thing that is also interesting to me is these guys have ballpark 100 potties. And they don't have the other half of this business that you always see paired with port-a-potties.

20:09Do you guys know what that is? Ooh. What is it, Bill? And is it your favorite business in the whole world? It is my favorite business in the whole world. One day I would like to own one. Almost every time you see dumpster rental paired with porta potty rental. And the reason is the job sites are the same, right? You're going to do construction, you need a dumpster and you need a porta potty. So you're visiting that job site to haul off the dumpster and to clean out the porta potty. I'm just kind of shocked this business has been around for as long as it has and they don't rent dumpsters. No mention of dumpsters, no picture of dumpsters, nothing about dumpsters.

20:46That would be one of my first questions for the seller is, did you try and fail at dumpsters? Why have you never done dumpsters? Because if they've never tried, that could be a major growth area. You could buy 10 dumpsters, which are a couple grand a pop, pretty minimal CapEx, and you'd be in dumpster rental business overnight. You're already going to all these job sites. This episode of Acquisitions Anonymous is brought to you by Quiet Light Brokerage. and I'm sitting here to tell you I have both sold businesses with Quiet Light and bought businesses from 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.

21:41And 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. And 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.

22:13They'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. So 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 there are some of the dumpster models that have like a port-a-potty attached to them now they're like integrated we have those here in san antonio yes that's right there's so there's a big franchise that has like it's like one giant hunk of metal with a can both types of cans in one unit and they just kind of pick it up and drop it off uh i can't what i can't remember what it's called it's called like red box or red their rent.

23:05Anyway, I get that, but there are also tons of businesses that don't do it integrated, and you just drop off one of each. So I'm very curious here. I mean, there's probably plenty of construction going on in Madison, Wisconsin. There's need for dumpsters almost everywhere. I'd be curious why they're not doing dumpsters. Big growth area, if there's no reason they're not. Well, if they're retiring, they may have just decided to just stick to porta-potties. Well, yeah, but they bought this business 30 years ago for the broker from the original owner. So they've had 30 years to add dumpsters and never did, which I think is weird.

23:41There's got to be a reason or they tried and failed and got out of it. I mean, there's just no way it didn't occur to them for 30 years to start doing dumpsters. Didn't say it's SBA pre-qualified, but I think this is an SBA-sized business. So this is the kind of deal where you'd use an SBA loan. So Heather, let me ask you, for lending, are lenders going to like the asset base here? I mean, there's half a million bucks of FF &E porta-potties, right? I mean, that's depreciable, or maybe they're expensable,$179. But either way, those are assets. It's an asset base. Does that count or no? Not as much as people think it would, because what a lender has to consider is, what is this collateral going to be worth, and is it going to be there if this business falls apart and the loan goes into default?

24:30Well, usually, if it's a portable asset, it's not going to be there. You have to assume that they get sold off or something happens, and by the time the lender can actually get their hands on the asset, it's gone. so they don't tend to value portable assets of any kind as you know something that they're actually going to be able to collect on uh so i i'd say that plus these are depreciable they don't know you know what they would actually be worth on resale used porta potties and used not worth a lot that's not i'm not the person in the bank that has to go find this out and try to sell them can you imagine it's like your first day in the workout group at the bank and they're like here you go.

25:08First situation, you've got to liquidate 120 port-a-potties. Yeah, there's some pretty good liquidation stories. But banks just kind of know they would not get much, if anything, for these assets. So that's not going to change their calculus. They're going to think of this like they do most business acquisition loans. What multiple of EBITDA can they lend kind of on a max basis. And that's usually 3.75 to 4. So if we're talking 250 of EBITDA, that's a loan of 750 to a million. So again, the 1.6 million asking price is just too high relative to the cash flow. And that may be why they're having to record videos to sell this one.

25:51The price is high and it's in a small, relatively rural corner outside of Madison, Wisconsin. Like your pool of buyers is pretty limited. And I don't think any of the Amish can buy it, which is a problem. Why not? I think unless you're not allowed to use that type of pump. I think that's not allowed by the Amish. Oh, you could use the potty, but not cleaning out. Yeah. That'd be interesting. I think they're not allowed to use that type of technology. I mean, I could be totally wrong, but I'm an expert in many things, the Amish ways of doing stuff. Amish toiletries. I don't think you're allowed to use a mechanical gasoline-powered pump.

26:30Things I would not like to do manually without a pump. Own this business. Yeah. I've furiously Googled, can an Amish person run an electric pump? I don't know. So in general, what I really like about this business, while you figure out you're on your Amish rabbit hole, Gertz, is that this is entirely leveraged to construction. I mean, not entirely. It says they do events and weddings and whatnot. But generally, businesses like this and dumpster rentals are pretty leveraged to the economic vitality of the area that they are in. If there are buildings being built and remodels being done and people are moving and houses are being remodeled and weddings are happening, there's demand for this business.

27:16In a recession, there is much less demand for this business. I mean, yeah, everybody's still got to poop. in a recession, but they'll do it at home because they're not working. This and the dumpster business are somewhat technical per construction and economic activity in an area. So to me, if you're looking at a business like this, you need to underwrite the boom or bust ability of the area that it is in. So I don't know a ton about Madison, Wisconsin, Dane County, But if I felt good about kind of a long-term trajectory, there's a lot of construction going on, there's a huge population growth in the area, that would make me more comfortable buying this business.

27:58If this was a kind of flat to shrinking population area, I would feel a lot more exposed owning this business. Yeah, good point. What multiple would you pay for it, though? Let's just assume kind of middle case there on growth. i mean i think it's worth sort of your standard small business multiple i mean i think it's worth three to four x you know maybe three x cash four x with some structure um you know assuming there's like nothing wrong with it like this business is worth three to four x it's not worth five you know it's certainly not full five and certainly not cash i mean sure if like you want if you i can structure a deal that says i'm paying you 1.6 million for this but it's going to be mostly earn out with really aggressive targets.

28:43And if they haven't grown it bigger than this in 30 years, you know, as friend of the pod, Brent B. Shore says, small businesses don't say small on purpose. And this business is 30 plus years old and it's$750 ,000 in revenue. Now, if I add dumpsters and a whole bunch of other stuff and expand a new area, maybe, but that's not because of you, seller. You know, that's my capex and my risk and all that stuff, I'm not going to pay you on all those growth opportunities that you just haven't pursued, but I have to use my capital and risk to pursue. I would feel better about it in kind of Southeast, Sunbelt, Charlotte, Atlanta, Nashville, Texas, Florida, like those types of places.