This E-Commerce Dental Business Might Be Dead Thanks to Tariffs

0:00Hey, Michael here. Welcome to Acquisitions Anonymous. Today's deal was a super cool one. Heather and I went through something in her hometown. That is one of the most interesting. deals we've looked at for a while. It is a carve out and also in the dental space and totally one that's getting screwed by the current change in the tariff stuff going on here in the US in 2025. So hope you enjoyed the episode. We had a ton of fun making it. Here it is. Cool set. Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % beers anymore. Thumbs down on just the plus inventory.

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1:06They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. So believe it or not, I'm in the same room that I've been recording from. The great thing is this room is getting transitioned from what was called grandma's room at our house to now what is called my office. So now my kids are 16 and 19. And finally, the room that my grandmother, that their grandmother stayed in when she would come to visit is now technically named after me.

1:46It is your office. All right. It only took my son being able to get drafted to change the name of the room. you've been promoted that is amazing but uh mrs girdley did an awesome job got a new couch that folds out into a bed so there's a couch back there but i could turn everything so i get like a better background better lighting so i'm pretty stoked so awesome good job i'm happy about it that is great you can close your door i'm my office location in the house is not where i can close a door which does drive me crazy yes yeah well so you brought a deal i brought a deal this is in my neck of the woods it's in san bernardino county california not too far from me it is a high margin b2b e-commerce dental supply business with 2 500 customers asking price is a million two gross revenue is 800 000 and it was established in 2021 cash flow not disclosed my favorite number not disclosed business description turnkey operation with strong strong brand loyalty, serving dentists, clinics, and labs.

2:53I don't know what that lasts, labs ACR. This is a rare opportunity to acquire a fast-growing, high-margin B2B e-commerce business in the dental supply space with over 2 ,500 repeat dental offices and professional buyers. This business is positioned for long-term success, scalability, and profitability. It's positioned for profitability. Operating on a streamlined Shopify platform, the business specializes in selling disposable dental products, endodontic instruments, and orthodontic digital solutions such as custom aligners, impression materials, and 3D printing tools. Over 60 % of orders are from returning customers, a testament to the product quality, competitive pricing, and strong customer loyalty.

3:39Despite minimal marketing, no social media, SEO, or paid ads, Sales have reached approximately 800 ,000 annually and continue to grow. The current product selection is just a fraction of what's possible. There are over 3 ,000 SKUs in the dental industry, and the business currently sells fewer than 100. The operation is run from a minimal owner involvement and supported by a reliable purchasing coordinator in China who handles vendor communication and sourcing. The owner spends very limited time on daily operations making this business an ideal acquisition for someone looking to scale, integrate, and integrate into an existing distribution model or simply enjoy recurring cash flow from a low effort asset.

4:21This is a turnkey relocatable and highly scalable business ideal for e-commerce investors, healthcare distributors, or buyers with access to marketing and sales expertise. Please note that this is a sale of a D2C direct-to-consumer brand and its associated Shopify store, including digital assets, trademark, product lineup, and supply chain information. As the brand operates under a larger company, and we are not selling the entire company entity, there is no formal financial documentation, P &L, tax returns, etc. etc. Shopify store performance screenshots, a full product list with purchase costs and selling prices.

5:04It includes the trademark, the website, the Shopify store, customer info, supplier info, and$200 ,000 of active inventory that can generate up to$500 ,000 in revenue. No facilities. Let's see, they go through competition, blah, blah, blah. Growth opportunities, you know, more SKUs, and owner is willing to provide 30 days of training support and vendor handoff, additional support negotiable if you pay for it, basically. So interesting. What do you think, Michael? What is this? First of all, you get co-host of the day award for bringing this deal because there's so much to talk about on this. So congratulations.

5:50I'm patting myself on the back. Good job, Heather. You defeated all of the competition, which was me, but well done. That's okay. I'm still proud of it. Yes. So, okay. Let's maybe level set. So this business is, I'm going to ask this as a question. This business is a Shopify store that has a purchasing agent buying stuff for in China, comes over to the US and or drop shipped directly to consumers who are buying that stuff for dental offices through the website that they have. So it's like a, it's a supply shop for B2B supply shop for dentists. Yep, basically. That's right. And we only know how much they sell.

6:34We don't know anything about the margins. And, you know, and this is what I call a carve out. So carve out means it's part of a larger company. It may have shared services. You know, you don't know how the expense side might be kind of meshed together with that other company. And what they're saying is, we're going to get rid of this sales channel, and we're going to sell this sales channel off to you as a carve-out. And so when you try to figure out a P &L, you're basically just guesstimating and reconstructing what you think the P &L will be for you, what your costs are going to look like, what your margins are going to look like.

7:12It's a difficult, under any circumstances, carve-outs are very difficult to acquire. And carve-outs are so difficult that there are private equity investors who just specialize in them because it is so much harder than when there's a normal business. And so you either really have to know what you're doing or, well, it's just hard. So let's maybe double click on that. The specific thing you don't, what always happens in these carve outs is they give you kind of a fractional like version of the pnl for the thing like you know revenue you know kind of stuff but there's all these costs that are like have their tendrils elsewhere in the organization it's everything from like you know what percentage of the office are these people using did they eat the donuts last week in the in the conference room are they piggy are you getting a better deal on hr because you're part of a larger organization how much was the ceo actually spending on the thing but not like, versus the rest of his business or her business.

8:14Like, there's just so many things that are just unknown unknowns with, and that's why carve outs are so hard. Yeah. Even insurance. Think of things like insurance. If, you know, insurance is being paid by the larger organization, what is your new cost going to be? And what kind of insurance coverage do you even need? Every single expense in the P &L is going to be different and you're going to be guessing at it, frankly, you know, educated guess, but it's going to be guessing. So let me ask you this. Is this a business you want to be in right now? E-commerce dental supply? No. I feel like you could get crushed by much larger companies in this space.

8:50I don't know what the moat would be. I didn't hear anything in here about really unique equipment. It is coming from China, which brings the whole tariff picture into play here. I think this would be a very tough business to be in. And there's a reason why this larger company, whatever the larger company does, wants to sell this off and exit it. And I think that's the thing that would scare me. All right. It's time for a girdly finger point moment. I will tell you. I will tell you why. He's wagging his finger now. It's a girdly finger point moment. I'm preparing for a future run for office. good um dear lord no i'd be so bad you know what the problem is with me in political office i like to tell people the truth right and you cannot be successful in politics if you do that no no no way no that's just i can't do it no um free buses for everyone anyway just kidding yeah um so the reason these guys are getting out of this there is a the legislative change with the de minimis exemption.

9:59Are you familiar with the de minimis? We've talked about it, but yeah, share it again. Allow me to mansplain you about this. Please do. Yes, please do. So, but yeah, the de minimis exemption was how so many businesses like Shine and stuff like that existed, which is normally you have to pay tariffs on goods that come from China and the US, but if it's under 600 bucks, you typically did not, right? So the de minimis was why you would order stuff online and then you'd be like, why did they just ship this directly from Shanghai? Or why did your, for me, it's like, why did my phone come directly from Shanghai?

10:32It's because Apple was avoiding tariffs and that sort of thing. So I think this was a business built totally around the de minimis exemption where they were buying these things, they were warehousing them in Shanghai or whatever, and then they were shipping them directly to dentist offices from China. And that is all wiped out now with the Trump tariff changes. So this is a stroke of the pin risk business is what we like to call it in banking, meaning the business model can be destroyed by one stroke of the pin, one piece of legislation. And that's what you're saying has happened here, right? That's what it looks like happened.

11:07And my suspicion is that has killed it. And now they're not competitive with the big guys who are like, I'm sure just like there's Granger. Have you run across Granger before that business? Industrial supply? Yeah. Yeah. Yes. So basically what Granger does is have these big warehouses in all these markets and they sell you industrial stuff. Do you want to buy 500 ,000 screws? Well, you don't go to Home Depot for that. You go to Granger. So basically, I think there's got to be Grangers for the dental supply space. And I bet now you are totally not competitive because this loophole is closed. I think that's the whole thing going on here.

11:44Right. So the ones that were sort of doing it legitimately without the loophole are going to own the market and the loophole businesses, this type, are unable to compete anymore because they're not going to have to pay the tariffs. Right? Yeah. Subscale supplier business, not good. Not good. Not good. And there's nothing unique. There's not some special product here or anything. So this is buyer beware. This is a buyer beware sort of moment here. Someone might look at what they're pitching on this listing and think that they can make money with it somehow. I mean, even asking$1.2 million without any idea what the actual cash flow is, it seems a bit crazy.

12:29They're asking for$1.2 million? They're asking for a million two on gross revenue of$800 ,000 and no idea if there's any margin, you know, if there was any margin before with the loophole. And certainly there is none left now without it. All right. That is just like, OK, well, I appreciate it. It would not surprise me if this business was incubated as part of a larger business. I've done that and they've looked up and they're like, well, there's something here, but it's not great. It's hard to grow and there's a lot of headwinds. So, like, let's see if there's a greater fool to take it over. Hey everybody, if you've listened to the show, you've probably heard us talk about franchises.

13:04While franchises can be a great path to business ownership for the right person, like there's a lot of pitfalls and it's important to be really careful as there are certainly good franchises to be in and bad franchises that you don't want to be in. Connor Gross is a friend of the pod and a resident expert on franchises. And Connor not only owns and operates his portfolio of multiple franchises, but he's also a franchise consultant and helps others work through while picking the right franchise for them. So as he's sponsoring today's episode, everyone should totally click in the show notes below to join Connor's newsletter and attend one of his gateway to franchise ownership workshops.

13:36If you're ready to move and move quickly, schedule a call with Connor and his team today. This is definitely the greater fool theory type of deal. Yep. Hmm. Well, as somebody who is only kind of a fool, not a greater fool, I'm probably thumbs down on this one. I'd like to be a lesser fool as often as possible.

13:56so i will be thumbs down with you yes oh man this was a great one so yeah i mean i think this is one of the first carve outs we've done it's totally getting screwed by a current event thing i got to stick my finger in the air like 10 out of 10 good this was fun this was a good one how'd you find this one biz buy sell you know and i think it came up because it's close to me So there you go. There you go. All right. Well, so it sounds like we're both thumbs down on this one. Yeah, we are. Pass. Got to kiss a lot of frogs to find a prince. You do. Or a princess. Or a princess. Correct. Or a Subaru Outback.

14:37I was just making fun of my Subaru. Oh, your Subaru. Okay. What kind of car do you drive, by the way? I have a Tesla. um you know and it is not it is not a political statement i happen to like it i like driving electric cars because they feel much different you know they pick up a lot faster once you get used to them it's it's actually hard to go back to gas because yeah you rent a car and you go gosh what's wrong with this car so i i love my uh i love my tesla and i use self-driving a lot so watch out you see me out there i'm not even driving i'm just sitting there do you have a model Y? I have the X.

15:13Oh, you have an X. The larger one. Yeah. The reliability stories on that are horrible. I know, but I haven't had any problems. I have heard that. Yeah. So Mrs. Girdley, I was driving her car and we got rear-ended. I was taking our son to something. And so basically the car is not drivable. So there's now a bunch of back and forth going on to try to get the other guy's insurance to pay for it because he's totally at fault. I mean, he told the officer, I didn't see them and I hit them. I was like, okay, well, that's so we've, we're on our third rental car now. And we went and rented a, we went to basically thrifty and the first car they gave us, uh, smelled like was a Toyota Corolla smelled like smoke.

15:56And my wife was like, I can't do it. So we went back and we're like, this smells like smoke, not going to do it. So then they gave us, they're like, okay, we're going to give you a Corolla hybrid. So 10 minutes later, we're sitting in the corolla hybrid trying to start the thing and the engine won't turn on and i'm like what is this piece of shit like sorry part of my friends like what is this ui doing because toyota is so big they think they can just design their own ui and they don't have to do the conventions everybody else does and uh so we go back in and my wife says yeah the guy says everybody's doing what we're doing just put it into drive and press the pedal so i did it and we drove off this hybrid you know you needed to you needed to learn these things yeah it is a there's a there's some little tricks to the hybrids and the the electrics but i do like electric vehicles and i you know what i love about tesla is the buying process just seems so much better so great and in fact i have to take it in for service and even that's in the app you make an appointment in the app and it even it even tells you you tell exactly what's wrong and it's going to even uh tell you exactly what the cost is going to it tells you the cost before you even get there it's awesome i have owned four subarus in a row and we have we are two subaru house my wife loves her ascent and it's the every time i have to buy a new subaru and go through the conventional dealer process it's just hell and And, you know, there's it.

17:27It just makes me that is probably going to be the compelling feature where next car is just like either Carvana or or Tesla. Just because I just. Carvana is great, too. Yeah, I don't have it in me to go in there and be like, OK, like, let's talk to the finance manager. Do you want a maintenance plan? And I'm like, I want you not to do this high pressure crap to me. That's what I want. You know what I did? The last last cars that I bought for my kids, I did. I negotiated everything or had them negotiate everything on the phone and I would approve it. And I told them in no uncertain terms that I'm coming in.

17:59I'm wiring you the money and I'm coming in and picking it up. That's it. Don't talk to me about anything. And that's how I do it if I have to buy from a dealer. But I hate it. I hate it. So I did that with our last Subaru. My wife's assent. I said, here's what we'll do. I'll call around. I'll do everything by the phone. You go figure out which car you want. And then whoever quotes us the best cash price, we'll go with them. so one group quoted us about a thousand dollars less for an identical then as the other folks and i called the guy i said we have a deal give me the exact walk out the door number that it is we're going to show up with a check for that amount and get home uh that night my wife goes pick up the car she's like i love the car it's great and then i'm like okay how did it go she's like well you know they added on 500 bucks on it for undercoat or some bs like that and i did not call.

18:51I texted the sales rep and I said, you turned me into a liar over 500 bucks. You promised me this price and you guys took advantage of my wife when she was there because she's a nice person. And because of that, you either need to mail me a$500 check right now, or I'm bringing the car back tomorrow and I'm leaving it in your lot with the keys in it and it'll be running. And those are your two options. There are no, there's no in between. And 30 minutes later, he said, I talked to my GM, we're mailing you a check for$500. Unbelievable, though. It's just unbelievable. Yeah, it's just why. Yeah, I wire the money before we pick up the car.

19:29This is the final price. It's wired. The paperwork is ready. I go in, I pick it up. But it takes quite a, I have to be very insistent even to get them to do that. It's horrible. Just a horrible process. The thing I learned is they are all terrified of that post-sale survey that comes in. They're all terrified of it. So that's your leverage. It's a huge amount of money to them. When Subaru or any of those guys or you buy a Toyota, when the manufacturer reaches out to you after your dealership experience, that is all the leverage that you have. All the leverage you have. They are terrified of getting one or two stars.

20:05Have you seen this? Yeah, awful. Yeah. Everybody should give them one or two stars, though, because it is pretty awful. The whole system. It's horrible. We don't need it anymore. No, we do not. We do not. Buy a Tesla. Yeah. Well, it was the whole dealership system was built for a time when cars were unreliable. And like the internet didn't exist. Telephones didn't exist. We didn't know how to finance things efficiently. Yeah. Highway highways didn't exist. Like they needed a trusted partner to run them and build the market. And like that world left 30 years ago. We don't need it. Yeah. True. On that note.

20:40On that note. Join us next week for grumpy old folks. Get mad about this. Old man yells a cloud. Oh, grumpy old folks. Yeah. Okay. Well, you're not old. I'm old. No, I am old. I fully own it. It's okay. We good. All right. Everybody, thanks for being here. Hey, great. Great deal today. 10 out of 10. Yeah, that was fun. All right.