This $2M Nursing Brand Might Be Impossible to Buy

0:00Welcome back everybody to another episode of Acquisitions anonymous the internet's number one podcast for small business M &A. I'm Mill Snell, one of your co-hosts. Me, Bill, and Heather talk about a fascinating business today. It's an online business, does$6 million in revenue, $2 million in SDE, and they are a niche nursing education program. They offer study guide materials. They sell direct to e-commerce, direct to consumer through e-commerce. It is a fascinating business. They come off the top of the listing description that it's SBA pre-qualified. We talk about whether or not that really matters.

0:41Heather always has a strong opinion on this. We talk about whether SBA or traditional financing is really the right path or not. And this is a really interesting business. I really like it a lot. We all liked it, had really positive things to say about it. I hope you enjoy the episode. Stick around after a quick word from our sponsors. Cool 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 tell you about maybe the most exciting sponsor we've had in a long time on the pod.

1:16It's called CapitalPad. And it is the thing that I wish existed when I started my journey of operating and investing in small businesses. So CapitalPad 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. So 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.

2:01They handle standardized terms, standardized governance, standardized distributions all up front in black and white. Basically, CapitalPad professionalizes investing in small businesses and the returns can be really, really good. I'm so stoked they exist. It'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 all right you are joining us for acquisitions anonymous lightning round because the host talked about you know we talked amongst ourselves for 40 minutes and then forgot to hit record so we have 20 minutes left in this recording vlog but we have a cool deal that we want to do.

2:50So we're going to skip the banter and get right into it. I'm going to put it on the screen for our YouTubers. If you don't follow us on YouTube, you should check it out. You can see the teasers. You can see a lot of fun pictures. Sometimes we have cool things to see. But this week, it's from our friends at Quiet Light Brokerage. This is an SBA pre-qualified six-year-old number one nursing education brand with six million bucks of revenue and two million dollars of SDE. 14 % year-over-year growth, 3 million followers on social, and 67 % margins. They're asking$9.2 million. So that is four and a half times.

3:31So let me tell you a little bit more about it. This is a six-year-old company. It is the number one D2C nursing education brand in North America. $6 million of revenue,$2 million of TTM SDE, 14 % year-over-year growth, and almost 68 % gross margins. Founded in 2019 by a registered nurse who created simplified study materials during her accredited nursing program, the business grew from Etsy into a trusted Shopify brand with more than 3 million social media followers. Their nursing school bundle is the most recognized supplemental resource for nursing students nationwide. Revenue stabilize at current levels as the owners transition from a founder-dependent viral business to a systematized operation built for scale.

4:16A 12-person team led by a COO with four years tenure handles all operations, content production, and marketing execution with systems and processes that enable seamless transferability. Diversified traffic includes paid Google, 18%, organic search, 16%, email and SMS, 15%, organic social, 32%, paid social, 11%, and referral, 9%. So very well diversified traffic sources. A 425 ,000 person email list generates$7 ,000 to$18 ,000 per campaign with average order values of about$120. dollars. Clear growth paths offer a substantial upside. Number one, prerequisite product creation, which I think is for, you know, other types of study.

5:09NCLEX test prep represents the highest value opportunity as nursing graduates invest heavily in exam prep, and this company's established trust with 3 million followers positions it to capture this market. Membership monetization offers recurring revenue potential, with existing portal requiring minimal development to convert product buyers into paying subscribers. Four, immediate cost optimization through 3PL transition project projects$200 ,000 of annual savings by reducing per-order fulfillment from$19 to$14. And five, Amazon FBA provides quick wins as the company captures less than 1 % of Amazon revenue despite 5 ,000 monthly brand searches.

5:52After six years, the owners would like to focus on family with the founder seeking 10 % to 20 % equity retention and providing one to four years for filming and marketing continuity at 15 to 20 hours weekly. That's all I got. What do you guys think? This is an amazing business. You a little excited, Mills? Yeah. I mean, I did Google search it a little bit not to like try and out this business or the founder, but just to try and figure out exactly what it is, because they're not an accredited program. Like this is not a substitute for nursing school, which obviously would be a very just like red ocean.

6:32I think this is all just like you're already in nursing school. Here are pre-made study guide flashcard type things. And I think I found the business and it kind of checks all the boxes. Like this one has 862 ,000 Instagram followers and they have a podcast and they say, you know, if you use our test prep for NCLEX, we're at a 99 % pass rate. Like you would basically be stupid not to just try it because the price point is so low. The price point's 120 bucks, right? Well, it looks like, So they have a study guide bundle that is like nursing guide collection, volume one, two, and three. That's$179.

7:20They say it's on sale from$240. But then they have pharmacology flashcards for nursing students for$49 and things like that. So the bundle basically I think puts a handful of things together, but each volume is about$80. so it makes sense why the average order value is you know that blended down right so this is a website a shopify store where you go and you buy dead tree printed stuff and they ship it to you yes yep okay and they're it's books it's flashcards it's things like that right yeah do you see not online courses it's just the material no it's just material yeah one-time purchase too right i mean that's what the broker said as an opportunity for growth is convert to a subscription or membership somehow.

8:08Yeah. And now I wonder, like you would probably have to create different product lines for that. Right. Because once somebody passes this test, they're not taking it again. Like there's planned, you know, it's like planned, uh, obsolesion or whatever, um, because you want people to pass, but then you would have to figure out, and this person is probably the best person to figure out what is the next thing. Like this might be this one test, but you're going to have something else that you would need a resource for also. Well, they say growth paths, number one, prerequisite product creation. So this, I assume there are probably courses you have to take or exams you have to pass before you get to this one.

8:50So moving back down the chain would be a growth opportunity. I am skeptical of the ability to transition to subscription given the fact that you take this test one time and then it's over. you would i think that's where it's like you'd have to create more excuse if it's 120 dollar average value uh average ticket price it's a 50 000 sales a year to get to six million dollars in revenue which i mean how many you know how many nursing students you know yeah you have to cap they must have top market share because that's an awful lot of nursing nursing students buying these packages and i'm a i'm wondering out loud does ai not disrupt this kind of test prep i don't know i think i think this is just it seems like so well designed and like they've drilled it down to like here's exactly what you need to know like yes maybe you could put it in chat gpt or claude and it could make something but it seems like so nuanced and so it's like okay could I spend a couple hours like telling it what to make maybe, but for 50 bucks, I get the flashcards.

10:01You're right. Not worth it. Maybe for the savings, it's such a low ticket price. Google says that there's, the U S requires over 200 ,000 new registered nurses annually to meet demand and replace retiring staff. That's based on Bureau of Labor Statistics. Wow. So, I mean, that means that they have 25 % of the market. Ballpark, right? The hidden, uh, issue with this that I think is not clear in the listing, but you could kind of surmise is, is the case with a brand like this. I love businesses that grew from Etsy to Shopify. Like that is so baller because that tells you like they really did bootstrap it.

10:40The problem with this though, is it is very founder centric. And I think the founder is like it, their name is not synonymous with the brand or anything, but like it's a personality driven brand, like all their customer acquisition, all their content for a company like this is because this nurse started it. And like, they were the prime candidate who was like, I needed this and my friends needed it. And that's why I started doing it. So like you lose the insider-ness, like maybe another, maybe another nurse buys it. But then the issue is like this person who has been the face in all their, you know, all their content is now, but he wants to roll equity.

11:22Um, You know, he says that, but I think that's a risk. It is a risk, and they do want to roll equity, and they also said SBA pre-qualified, so I have to jump in and say rolling equity with an SBA loan is not something, I don't know if this seller really understands what they're offering. uh the rules as of june 2025 uh the new rules that were updated say that if a seller is rolling over equity uh even if they're going to be below 20 post-close which is the personal guarantee threshold or below the personal guarantee threshold that seller would still have to personally guarantee the buyer's sba loan for two years yeah just two years though two years but nonetheless they're guaranteeing somebody else's loan who's taking control of the company you also have two more rules you have to do a stock sale you cannot do an asset sale and the third rule is if you bring in any investors and at a deal of this size you probably want to all new minority owners regardless of being below 20 percent have to pg for the life of the sba loan yeah the seller rolls any equity any yeah so if you bring in an investor who's going to own 5%, that investor has to personally guarantee your loan for the whole 10 years and may have to pledge their house and all of that kind of stuff.

12:42So to do rollover equity, you really kind of have to be bringing in all the equity yourself. That's not going to work. You're not going to bring the money. That seller's got to be okay with a two-year PG. A two-year PG. This is a real thread-the-needle situation to roll equity. Yep. Interesting. Not too many deals since that rule changed are being done with SBA and rollover equity as a result. Also, the elephant in the room here is it's$9.2 million. So if you're doing SBA, you've got to have$4 million in equity, right? Yeah, right. It's too big for someone to write one check out of their own personal, right?

13:18So this is the kind of situation where that rule kind of kills the deal for SBA funding. I mean, you really would have to do something else. Or they can't roll, right? Or the seller can't roll. And then you have the problem that Mills was just talking about because the other SBA rule that I just don't agree with is if you buy out a seller fully with an SBA loan, they have to depart the company fully in 12 months. So you could not say they're going to stay on and do some of the marketing or, you know, be the base. I have a question though about that, Heather. Like, I feel like there's certain things in the lending world and in like the covenant aspects that like, how, how often and, and when do they actually check that?

14:03Like, are they going to? They don't check it. But what the problem is, is that you've got to sell the story going in that they are like on paper, it has to look like they're going to leave. And everyone's going to go, well, this is too risky for this seller to leave. Yeah, yeah. Here's the conundrum. I do think that there's a lot of gray area like in that where, you know, crazy things happen and like plans, nothing goes according to plan. And I can't imagine the bank comes back in 14 months and says, what the heck, this guy's still here. He's on the payroll. Like, and now you're in covenant default and we're going to, you know, take back the loan.

14:40I've never seen it happen, to your point. I've never seen the bank actually come back and check with the sellers involved. But like I said, the problem is you've got to sell it to the bank and the SBA going in as if they are definitely going to leave and you're going to take over all the marketing. And anyone that reads that is going to say, ooh, that just introduces too much risk because once they understand the company, they're probably going to see that the brand is too tied to the personality of the seller, potentially. Hey, everyone. It's Bill. And I want to talk to you about Quiet Light Brokerage.

15:12I was so psyched when Quiet Light agreed to sponsor the podcast because I am a customer. I have used Quiet Light to sell three businesses. And if I were selling an e-commerce or a SaaS business, I really would not consider anyone else. Like I said, I went back to them three times. I work with three different brokers at Quiet Light, 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.

15:46They 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. So 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.

16:17Those guys over there are great, great SOPs, great systems. I just felt like I was really in really good hands all three times with Quiet Light. So 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. The only thing that makes this viable is the fact that the seller has offered to provide one to four years for filming and marketing and continuity at 15 to 20 hours weekly. I go, that's awesome, right? That's the thing that makes this viable.

16:50Now, the other thing, Heather, is if you don't get an SBA loan for this business, none of this matters and all of it works. Yeah, that's what I was going to say. I think you've got to go that route. Yeah. So they did lead with SBA pre-qualified. They did. That's why I have to say that. Yeah. Which I have a lot of respect for Quietlight as a broker. This kills me a little bit because they lead with SBA pre-qualified and they say something that basically makes it impossible. Like you basically can't do this deal with an SBA loan, right? There's too many reasons, the need for the seller to stay, the size, right?

17:24I mean, there's just too many reasons, the desire for seller role, like you just can't do this with SBA. But if you do this with conventional financing, all this is totally doable, right? You know, you can use the seller roles equity, seller can stay involved, all this stuff, no problem. But for conventional financing, this is a little small. So this is that weird, you know, this is that whole problem that I call these deals a tweener. They're too big for SBA or they have, you know, a component like rollover equity, and they're a little too small for conventional financing. So... I mean, I think this actually works though.

18:00I mean, you're looking at, if you finance like, I don't know, seven and a half million dollars of this thing, you're looking at like on a 10-year AM, a million dollars a year of debt service. Yeah. Like it pencils. This is my favorite test is does the deal actually pencil, you know? And so you have 2 million in SDE, a million dollars a year in debt service. even if you don't grow this thing, which I'm not convinced there, there is a, I think there is a way, but I'm not convinced that there's a, like a low risk way to do it. And I wouldn't bank on it. Like it seemed, it seems like a very durable thing as long as you don't lose your, you know, 20 to 25 % market share.

18:43And, and I mean, it doesn't seem like, it doesn't seem like this product has to be reinvented all that often either. Maybe, maybe there is a little bit of like pin stroke risk of like the test changes and all of a sudden you've got to redo your study guide materials, but like you could, you could figure that out. Yeah. That wouldn't be that hard. And the first thing I would do, let's say I bought the business. First thing I would start doing is introducing new faces, right? So you spent, what you do is you spend the next two years mixing in four other nurses, right? Who are your teachers, who are employees, right?

19:17And then when this person eventually wants to bail after two years, it's fine. They're only in 20 % of the videos anyway. Right. I think like the magic of this business is like, they already have a massive following. They probably have figured out like, you know, Facebook groups more than just like meta ads, you know, and like the nuance of the funnel that they've built is probably the majority of the value. Like the actual product could be recreated and ripped off probably like very easily. There's no patent protection, you know, or anything. Well, there's copyright, but still, but that, that's just, that would just be for the name.

19:57And, and the name is not like, well, the name, but also the content, like books are copyrighted. You know, I don't know if these, I don't know if these are like, I don't know if study guides are like this. Yeah. No, I think you can copyright. Like you can't go in the library and Xerox a study guide. You know, that's copyrighted. Yeah, okay, maybe. But to the point, your point stands, Mills, which is that you can rewrite it and it's basically the same course, right? You know what they do? This is actually really, really good. If this is the business. So one of the things about the study guide volume one that it says is it incorporates qr codes that connect to follow along video content but you have to have an active membership to access that is brilliant yeah there's a lot of ways to grow this business i think even even in the nurse practitioner or this is not nurse practitioner this is actual nurses um in the nursing space um but then also you could run the same model in adjacencies.

21:07I love this business. But this also illustrates one of the things I love about this podcast, which is that this business can be totally great. But because of the financing dynamics that Heather is illustrating, it doesn't work for SBA, for the bunch of reasons we already talked about. But also, this is really tough on conventional financing, and I'd like to double-click on that. Because Mills is also right that this pencils all day long. The problem is it's very, very hard to get any conventional lender out of bed for a$7 million loan. What they will say is, eh, we'd rather it be a$5 million loan and push it through our SBA group.

21:49And you'll go, but it doesn't work because we can't do that. And they're like, okay, well, then do you want to borrow$20 million? And you're like, no, I don't need$20 million. It's the no man's land. This is it. Total no man's land. And it's such a bummer because this is a great business that deserves debt financing, I think, and deserves to transact. And it's going to make it really, the financing markets are going to make it really challenging to get this deal done because of the size and the size alone, pretty much. Yeah, it doesn't fit nicely into anybody's lending box. That's right. If this were half the size, I mean, maybe.

22:28If this were twice the size, you'd have conventional financing for it. Sure. Right? But it's just such a challenge. So if you're looking for businesses, and that's why you're listening to this podcast, that you need to understand the dynamics from the lender's point of view. It is nearly impossible to get a loan that is not an SBA loan in a notional value less than$10 million. Almost impossible because the banks are set up to run all those loans through their SBA programs, which the ACAPs out of five. Then some of them have this Perry Pissue program, which lets them do an extra loan up to$10 million.

23:05But then you still have the SBA in your capital stack, and you're still subject to all that stuff. Oh, and we have to talk about the new limit, the new loan limit. Oh, that's right. Yeah. It doesn't work in this case, though. There's now a new rule that just came out this week where the SBA said they decoupled the$5 million 7A limit from the$5 million 504 limit. So there's a scenario in which you could get$10 million,$5 from 7A and$5 from 504. But 504, you can only use the money for owner-occupied commercial real estate or equipment that has at least a 10-year life. So it has to be like manufacturing businesses and cannot even be used for rolling stock.

23:47Just like fixture type long-term equipment or real estate. So there's that, but it's not going to work in cases like this. Interesting. So, all right, because this was the lightning round, we're basically out of time. What are you guys doing with it? Are you interested in this? How do you finance it? I'm super interested in it. I think this is like a really compelling business. I would love to have a conversation with the seller and go, hey, you're in kind of a no man land, like Heather, you know, your tweener idea. Like you go to them and say, I want you to roll a little bit more and I want you to stay involved.

24:23You will have more time for family. I'm going to be your growth partner. I'll bring in traditional financing and let's grow this thing to where we can exit, you know, up market and double it in three years or something like that. And then all of a sudden at 4 million in SDE, you know, you've got a much bigger buyer pool. Yeah, I agree with, I agree with Mills, except I would do one more thing. I would talk to a few conventional lenders first to make sure I've got a lender somewhat on board with this smallish conventional loan and, you know, be sure what, how much equity, cash equity they're going to make me bring in to do that.

24:58Yeah. The financing is the whole ballgame. I think this is a really good business. It's a fascinatingly good business. It's awesome. But the capital structure is the challenge. You know, I wonder if there's some sort of earn-out structure. I mean, full standby, seller note, you know, because if you have only$5 million of debt on this thing, your service is going to be half a million bucks. You could have it paid down in two and a half, three years, and then you could start paying the seller. Like, I wonder if there's some sort of structure like that. But I think you've got to solve for that at the front end of this thing.

25:33I agree. Yeah. All right. We're going to wrap it up. I hope you guys enjoyed this episode of acquisitions anonymous. Head to our website, ACQ and on.com. We have 500 more. Yes. 500. It's crazy to me too. Just like it. All kinds of different businesses, all kinds of different industries. If you're interested in something, we've probably covered it. So go find us on the internet, find us on X also, and we will see you on the next episode of acquisitions anonymous.

26:05Thank you.