They Want $1.6M for a Marching Band Business?!

0:00Today's episode, and Michael Gridley here, giving you the intro to this one, is about bands. and we did something special. Instead of going through a deal, I actually sat down and told some stories and jokes about when I went to band camp. Now, actually, the reality is I never did any of that stuff. Today's deal is actually in this high school band space. Heather Mills and I broke it down. It was fascinating kind of where we went with the whole thing because I think if you want to truly understand how business buying works and where it's broken and where it succeeds, this is a great deal to totally understand that.

0:34So stick around to the end and you'll hear from Heather also how things went down and how things are getting funded these days. Totally fascinating episode. And here it is. Hope you enjoy it. We'll set Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. And thumbs downing on just the plus inventory. Hey everyone, it's Bill. And I want to talk to you about Quiet Light brokerage. I was so psyched when Quiet Light agreed to sponsor the podcast because I am a customer. I have used Quietlight to sell three businesses. And if I were selling an e-commerce or a SaaS business, I really would not consider anyone else.

1:11Like I said, I went back to them three times. I work with three different brokers at Quietlight, had a great experience all three times. Even on one occasion, they found a buyer for a business that I just didn't know it was even going to be possible to sell. So they have pulled rabbits out of their hats several times for me. They've been in the e-commerce and SaaS business brokering game a very, very long time. They really know what they're doing. They have great reach with both buyers and sellers. And the other thing I really love about Quietlight is all the brokers there are former operators.

1:42So you can't just show up and go, hey, I'm a lifetime business broker. I want to work at Quietlight. You have to be a former operator. So they all know what it's like to be in the operator chair. So if you go to Quietlight.com, they have free business valuation calls, which they'll do with you. No obligation. Just tell you what they think about your business, what they think it would be worth, and then what you might need to do to kind of get it ready for market. Those guys over there are great, great SOPs, great systems. I just felt like I was in really good hands all three times with Quiet Light.

2:11So if you're interested in selling your business, especially in e-commerce or SaaS, hop on over to quietlight.com, fill out their onboarding form for a free valuation call, and you can tell them Bill or Acquisitions Anonymous sent you. Good morning, Heather. Good morning, Michael. So the crazy thing about all this is usually me, Bill, and Mills show up super perky because we're on Central and Eastern time. And we have to remind ourselves it is 7.30 a.m. in SoCal. Yeah, I'm showing my Starbucks. Free advertising for Starbucks here. Yeah, I have to start extra early because it's the West Coast. But that's the story of our lives.

2:51On the West Coast, you wake up and you are already behind every single day. So you have to kind of learn to manage that stress. Yeah. Well, you do have a huge win if you're a sports fan, which is all the other matches are, you know, if you're watching stuff on the East Coast, a lot of times you're up till midnight for a West Coast game or 2 a.m. It's not even possible. Right. It is a totally different culture. The East Coast is a later, I think they start later than we do. We just naturally have to start earlier, so we do. But then we end the day earlier. So it's just like we all kind of live on our schedules.

3:25But it is a little stressful when you wake up and you feel like before you've even had a, you're not even out of bed and you look at your phone and you've got emails that you feel like you should be returning. The best was when I went on our anniversary trip with my wife. And it was, I think, our 20th or 25th. I can't remember. They're all, the years are blending together. and we were in Spain in Barcelona and it's like eight hours ahead. So there was this window where I would wake up and I knew I wouldn't be full of American email and stress until like noon. Yeah. And it was so great. Yeah. It was so great.

4:04That is great. Yeah, it's nice. Speaking of great, I brought a very unique deal. Can I pitch it to you? Yep. All right, when I saw this, as like band nerds. Band nerds are for us. Speaking of band nerds, here's Mills. What instrument do you think I played, Michael? I think it's a very barbell probability. I think you're either a big guy who they were like, get over there and carry the tuba or the drums, or you're the guy who was walking at the front with the little tiny cymbal. Or a clarinet or something like that. Piccolo, yeah. There's no middle ground. I did. I played percussion in middle school, but I never made it a marching band.

4:51I quit before then. Percussion, that's cool. You got a cool instrument. I thought so, but the girls did not. They didn't agree. Not yet. All right. So this is an established niche manufacturer with a 40-year brand and 30 % margin. located in Harris County, Texas. Quick poll for the co-host. Do you know where Harris County is? Nope. Houston. That's Houston. Oh, okay. Yeah. And it's one of the rare cities in the country where the majority of its population is not actually in the city. Houston is a huge city, but a long time ago, they stopped annexing new land. They just said, we're big enough, that's fine.

5:39so most of the county uh is unincorporated and that's where people live so if you hear like people talking about a lot of houston they'll say houston but they don't technically live in houston which is funny anyway uh thanks for listening to my mansplaining there okay uh asking price is 1.6 million dollars and it looks like mr percussion mills it looks like they have pictures of some people in the band it it kind of looks like the drum section to be honest there's no I don't see any brass or wind instruments. So we're on the right track. So ASCII price is$1.6 million. They claim to have$200 ,000 in cash flow.

6:20Gross revenue is$1.4 million. And it started in 1996. So my math, Heather, is they're asking like eight or nine times SDE? Yeah. Cool. Well, we're off to a bad start then. We're off to a bad start. Nothing new. Nothing new. All right. This business is a U.S.-based niche manufacturer specializing in premium quality marching band field equipment. Known for its rugged, customizable products, including drum major podiums, percussion carts, wagons, and uniform movers, they have built a strong reputation with high school, college, and drum corps programs across the country. The company serves a focused yet vital segment of the educational and performance arts markets, offering direct consumer service, domestic manufacturing, and tailored product innovation.

7:10They are widely recognized as one of the earliest manufacturers of marching band logistics equipment and as the original aluminum podium designer. Annual performance has been consistently strong over the years, although 2025 saw a temporary decline due to school budgeting delays affecting the purchasing cycle. So, Heather, before I go into some more of the details here. Sorry, I saw the inventory number. Oh, yeah. Heather, I was going to ask you, so what do these guys do? How would you describe it? I mean, they're manufacturing very simple pieces, but they're very customized to what the marching band uses.

7:48So, like, I guess the podiums and the, I guess the rack that you hold the drum on, you know, a person has to walk around with a drum and a marching band. So they've got to have special equipment to walk around with it. I feel like that's what they're making. Am I right? and like percussion carts wagons and uniform movers like when i when i hear manufacturing i think like they are doing like injection molding or they're fabricating something or they're like even if they're buying individual components and like putting them together i wonder though like how much manufacturing they're doing that they're not they don't say they're a distributor they kind of have more distributor level margins um so i'm very curious about this it's also like a uh a uniform mover to me seems like maybe it would be more like plastic and metal on wheels which is different than the aluminum the original designer of the aluminum uh you know podium so i i'm curious about like the mediums here so can i tell you a funny marching band story from my last month.

9:01You have one from the last month. Most people's are like, you know, when I was in high school, you have a relevant one. So, so San Antonio loves a good party, right? Like you just walk around our town and you'll see, just look at people's body shapes and the amount of body fat we're carrying. You could just see, you know, New Orleans has Mardi Gras. We have a Hispanic version of that called Fiesta and it's awesome. But one of the things they do is they love parades so much that we'll do a day parade the day before, and then they just run it back again the next night with lights on it. So what that means is by the end of this whole fiesta thing, which lasts 10 days, the people that are in the parades are so sick of just marching 10 or 15 miles that they're just ready to get it over with.

9:47And so my wife and I go to watch the very last parade. It's the night parade. Everybody's super stoked. They've been drinking for a week, all this kind of stuff. And there's just band after band after band. And the very first band to come through is the University of Texas marching band who are excellent. But the one thing that stood out was they were so tired of marching that they were just hauling ass. They went past us at like 14 miles an hour. They were playing super fast. And I was just like, what the hell just happens like watching an Indy 500 race? But it also just ties to the idea of how much physical exertion these kids do when they're in these marching bands.

10:25They're walking 10 or 15, 20 miles with an instrument by their head. It's pretty impressive. But anyway, that has nothing to do with this deal. But I was like, oh man, this is my chance to tell my University of Texas Indy 500 story from last month. I think though, like it brings up a point that Michael, like marching bands are not going away. Yeah. You know, this is not like, is it a huge TAM? No. Does the marching band have the same budget as the football team for University of Texas? Absolutely not. But it's always going to be there. I don't think it goes away. Maybe school budgets ebb and flow like they alluded to.

11:04But I think there's some staying power here. For sure. This business has built like a kit. The marching band needs all of these different things that are not all really the same thing. you know, movers for the equipment and the uniforms. And then, you know, all the different pieces that they need. And they basically manufacture these little kits. Like, this is everything your band needs. I wonder if they have e-commerce. But it seems to me that's what they do. They just sort of tailor to everything you might need. So I would add to what you guys are saying, and especially the point about, like, the durability of this mills.

11:41I think there are some, like, local headwinds against this. I, you know, there's obviously the, the, the one that we all think about, which is there are fewer kids, right? Just people aren't having kids anymore. The birth rate's way down. Um, but I think the second thing that's going on is a lot of these marching bands are in public schools and this is firmly a Republican state. And, you know, we just passed, uh, we just passed things around school vouchers and all that kind of stuff, right? They are actively squeezing out things like this from the budget and they're getting killed because they're not increasing spend in public schools as well.

12:19That's the other part of what's going on here. So there's fewer kids, they have less budget. And there's some examples that aren't going this way. My kid's very wealthy school district that we send them to, but by and large, most of these school districts are getting squeezed on money like crazy. They're closed at schools left and right. It's happening even here in Texas. And you do need a big public school to have a marching band, period. I mean, you can't do it with small charter schools or, you know, homeschooling or any of that. You do need a lot of kids attending a big public high school to do this.

12:55Have you ever heard about like some of the tiny West Texas towns in Texas and how they handle like football and marching band and all this kind of stuff? Have you ever heard about it? Yes. Yeah. So it's huge. But so for every Midland Odessa, like for Friday Night Lights, there are these little tiny towns, places you've never ever heard of, even if you've been in Texas, like Snyder, Texas. 5 ,000 people, and they have a high school. But in order to play football, they won't run a full football thing. They'll run what I think is called six-man football. There's only six people on the field to play football.

13:29But then I've also seen sometimes they'll have little tiny bands with eight people in them. It's like, okay, you get one drum, you get one saxophone, you get one clarinet, You get one little, you know, what you did, Mills, the little triangle. You get the whole thing. Cowbell. Cowbell, actually. But to your point, Heather, those guys don't have a bunch of budget for this, right? This is for big Houston or Dallas or San Antonio schools with 10 ,000 kids there, which those do exist. Yeah. And maybe scroll down and show us what they did say about inventory because I'm still very perplexed. like everything we've said so far kind of leans toward a pretty low multiple.

14:06And yet we have a really high one, but they're saying 446 ,000 of inventory included in asking price. That feels like a lot of inventory for this business. Y 'all, these things are really expensive. Yeah. There's a website called, there's an online website called Sweetwater that seems like it's the major e-commerce platform. like just the just the thing that goes over your shoulders uh to like hold like a big like uh bass drum they're like four hundred dollars and some of these carts are like four thousand dollars so i think they're you know average order value they don't say anything about in the listing about e-commerce though right no they didn't i didn't say anything um i may have found the site which i'm not going to out but uh there's no pricing on their website i think you have to like call for orders so i kind of like that maybe like there's like a weird kind of fixed distribution model that's not just like we're competing with yamaha who makes all these like stands and stuff like maybe they do more kind of like group orders for school districts or something like that which is a whole nother like challenge area like i've had friends who've been in this kind of servicing like school orchestras and stuff like that and it is uh it is a mess and there's like buying cycles and there's politics and there's all kinds of backroom deals going on, which kind of leads me to where, Heather, you may have an opinion on this, how this business is being run.

15:37It sounds like this is somebody who started making this stuff. They have relationships with a lot of band directors. And the ask is for you to pay eight or nine times earnings to step in and take a job and replace that person. Yeah. The margins aren't even that great, I guess. That was the other thing. Yeah, this is a buy a job. It's a really tiny business, probably based on relationships that the seller owns, and that makes it not so transferable. And I don't love the margins, and I am not too sure about the TAM and who they're competing with. If there is already an e-commerce brand out there, it feels like that's the way this would end up going.

16:22But like you said, there's politics and within school districts, maybe they go to their guy. But if you're not the guy, you buy this business, you're the new guy. I think that makes this business a little scary to transfer. Well, I guess Mills, on top of that, you wanted to talk about this inventory. How are they sitting on$450 ,000 in inventory? Like, and$100 ,000 in furniture fixtures and equipment in a 10 ,000 square foot building, which I guess they don't really talk about whether that transfers or not. I think it says it's included, right? The inventory is included, which makes sense why the price is so much.

16:59So if you back the inventory out of this, it's like more like a four times multiple, but they have two turns of inventory, you know, two turns of EBITDA in inventory. Yeah, but I was asking the real estate. Is the real estate coming with this? Oh, sorry. It doesn't look like it. I don't see anything that they own it. But the seller owns it, which is always the, uh-oh, did they bake in rent in this EBITDA? So your$198 ,000 of cash flow, if this seller has not been expensing any rent to themselves, if they own it outright, which is very common, then your EBITDA is going to go lower when you start paying rent.

17:38So this one is listed by Transworld Business Advisors, which is a franchise. Which is a franchise. guys, does this smell like one of the classic business broker deals where the guy says to the seller or the gal says to the seller, I will list your business. I will win your deal and your listing by promising you, I will get you. We'll go out to market for eight or nine times and I think you'll get it. PE loves this space. Is that our working thesis of what's going on with how this ended up basically as a listing pricing crazy bill that's mine they and they are hoping the market will teach the seller rather than the broker teach the seller what it's really worth and so you buyer that you know you might as well put in your offer at what you think it's worth not anything close to what it's listed for but you will be the you will be part of doing the broker's job of educating the seller what it's really worth yeah yeah which means that you You have to disappoint them.

18:42Assuming this hasn't been on the market for two years, you have to go disappoint the seller, look like the bad guy, try not to completely burn the bridge, and stick around if you actually want to do the deal for another months, years, who knows, and wait for the market to kind of marinate them into the right price range. They did say retirement slash health at the bottom of the page as the reason for selling. So if health is an issue, there may be more urgency and that whole cycle may happen faster if the seller gets a few offers, but they're going to have to come down in price if this is going to trade at all.

19:24And I'm sure the broker knows that. This is the unfortunate way so many deals are listed. Way, way, way. I call them fantasy valuations. It's just pure fantasy. That's not going to happen. 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 acquisition deals.

20:10So if you want to back somebody buying a small business, CapitalPad is the place to do it. And if you want to buy a business and need capital, you can go on CapitalPad to be introduced to investors. So the really great thing too from the investor side is that CapitalPad takes care of all of the details that can get hairy with small business acquisitions. They handle standardized terms, standardized governance, standardized distributions all up front 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.

20:47It'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. By the way, we're doing for Bedrock, our new quality of earnings business, we are doing outreach to business brokers amongst other profiles to get a deal flow for them to do quality of earnings reports. Seeing the email replies that come back, the funniest and probably some of the craziest ones are from business brokers.

21:27Everybody else a super professional, but like. Yeah, they're anti-HUOV or they're getting better, but they used to like say, I don't even want to give the, you're not going to get the LOI if you're going to do a quality bearings. I had brokers say that to buyers. So I can't do diligence. No, not that kind, you know. We had a guy yesterday who, by the way, had a hat on in his profile picture because I went and looked him up. But he sent us back like a two paragraph email telling us all the things we should do differently in our marketing. And he's like, I'm moving your outbound to trash. I was like, okay, well, why don't you just do that instead of wasting everybody's time?

22:06That's funny. Yeah, that's an interesting, I think if I were a broker though, and I understood what a QAV, if I took the time to understand what a QAV does and what it's all about and the fact that all buyers are getting them now, like almost nobody skips this step, I would want at least a light, you know, scope QAV. I'd want my seller to get that done before I spent my time listing the business. Will is working with one broker now that won't take listings unless the seller pays for a sell-side QOV to get done before they go to market. Because they don't want to waste time on it. I like the pre-sale.

22:47It's very reasonable. If you're selling a$10 million business to drop$10 ,000 or$15 ,000 for a pre-sale sales QOV. and the broker is, I think I like it because they're just like, I don't want to waste my time on some deal that's going to fall apart because the numbers are wrong. Which is pretty cool. Well, and it's like getting a home inspection before you list your house. You can go ahead and do a bunch of things. It reduces a ton of friction, you know, in the actual due diligence and sales process because you've already kind of taken some proactive steps to clean things up or address issues or at least have a narrative around them and not like, oh, shoot.

23:23I don't know what that is. Can I get on my soapbox and say my pet peeve about lenders and quality of earnings? Is it okay? Please. Do I have permission? This is a safe space. This is a safe space. Okay. No, no. I'm allowed to do my stupid band anecdote that has nothing to do with the deal, but you're not. But I can't talk about business. No, please. Go ahead, Hannah. Okay. So, believe it or not, the SBA only requires lenders to look at tax returns. They require the cash flow to be based on tax returns. So and I think it's a good thing they haven't really forced anybody to do a quality of earnings because that way the buyer has the You know, they can decide who they want to use.

24:03They can pick the vendor. They can pick the scope of work You know, I think it's better that way But because the sba doesn't require the quality of earnings and they require the tax returns There's a lot of sba banks where the credit people will not look at the q of e So the buyer goes out spends their own money gets it of their own accord It wasn't required by the bank. And it has all these great findings, and they clean up all this accounting that was being done wrong, that bookkeeping or whatever. It has a lot of great information about working capital. And you have, I would say, still probably 50 % of the banks that are active doing SBA loans and business acquisitions have this internal attitude that QAV is just to verify ad backs, and they don't need to see it.

24:46Which seems very short-sighted. Very. Yeah, but I think that's the same thing. as business brokers, it'll eventually change when they get better educated on what it is, why it's important. Done. Off soapbox, back to marching band. So I have an interesting discovery about this marching band business. I did find it, and I won't out them. It is currently owned by the founder's daughter who is in her 50s. Wow. And, uh, it's, you know, synonymous with their family name. It's like a very integral part, I think of like their family identity, it seems like. And so she's transitioning the business, uh, in her mid fifties, but that's why, like, you know, there was probably like a weird kind of thing that happened in the business when she transitioned it from her dad, you know, like you kind of look at a business like this and go, how has it been around so many years and it's still, you know, just doing 1.3 million in sales.

25:48Like it probably, when she got it, it was probably doing 600 ,000 in sales, you know, or something like that. But I'm, I'm really fascinated by the fact that they don't sell on e-commerce. There, there's gotta be some, I don't know, they don't have 30 % margins really, but they're saying that they do. So like something in the numbers doesn't really add up. Um, and I, and I think there's like maybe more here. I think some of the margin story may be that they're in the custom products manufacturing business and they have six full-time employees for$1.3 million in revenue. Doing a lot of work. There's something going on.

26:29Either they're way overstaffed, they're way overpaid, or they're just not able to get much margin, which is also possibly the case. I mean, the people I've known selling into these school bands and stuff like that, you were either making money because you had some backdoor hookup with a band director or an orchestra program director, or you were just scraping by trying to get margin. And it's all very lumpy revenue because it only shows up when they have budget to spend on this stuff and very slow. So that could be the other part of it, or they could just be massively overstaffed and not run very well, or it could be both.

27:03so it looks like they do have skews but there's too many skews relative to the level of revenue so like they have a 24 inch podium a 42 inch podium a 52 a 52 that's larger footprint a 62 a 72 a six foot scissor lift like that's just the podiums and there's one two three four five six seven different like you know parent categories like podiums so it's conceivable that they've got like a hundred SKUs and they're only doing 1.3 million, you know, in top line revenue. So like that, to me, that makes sense why they have this much inventory. And it says on their website, all podiums are in stock and they can ship them right away.

27:46So I think there's some like very kind of like wholesome things about this business. Like they probably serve the customer very quickly. The speed to delivery is great. The industry is probably doing that mostly through e-commerce and they're doing it, you know, through kind of a more antiquated channel that maybe is more durable, but also has lent itself to them being the person who takes the brunt of the working capital needs. This is an expensive way to do things and is reflected in that margin. To me, this is interesting because every couple of years, somebody comes along and they're like, we're going to transform the business of buying and selling small business.