Underwater Camera Manufacturing Business for Sale

0:00Do you enjoy scuba diving? Do you enjoy photography? Do you enjoy banter from three middle-aged business dudes about said deal? Well, today is your lucky day. Myself, Mills, and Brad from Quiet Light went through a really cool deal that happened to be horribly marketed. So presented an opportunity so good that Brad said he wanted to actually potentially buy this business. Stick around to the end of this one to see where it all went because it was great. Here's the episode. We'll set Acquisitions Anonymous. Hello, another episode of Acquisitions Anonymous. We don't have 100 % ears anymore. I'm thumbs downing on just the plus inventory.

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1:23time. Visit enzotechnologies.com slash ETA and mention Acquisitions Anonymous. That's I-N-Z-O technologies.com slash ETA. All right. We've got another girdly claw deal. Before we start, we get in with that. Brad Whalen is with us on the show today. Good to see you again, Brad. Thanks for having me. I love having Brad on the show because Brad is a working business broker at Qualite Brokerage. And he brings, you know, we've got kind of the equity guy take. When Heather's here, we have the lender take. And so it's fun to have the broker side of the transaction take as well. And Brad is not afraid to get into it with us and push back.

2:02So this should be a good episode as it always is. Michael has brought a cool deal for us discovered by his AI blog, Girdlyclaw, who is now helping us select deals for the show. What have you got for us, Girdlyclaw? uh it is a deal off of biz by cell it is a highly scalable underwater imaging manufacturer for sale located in california and the picture here and brad it looks like a scuba diver taking a picture of a fish yeah i'm intrigued it looks like fun uh the asking price is a million dollars and cash flow is$167 ,000. Gross revenue was just shy of a million dollars,$986 ,000, and it was established in 1969.

2:51And here's the description. For more than half a century, this business for sale has set the highest standard in underwater motion imaging, earning a global reputation for reliability, precision engineering, trusted performance, and customer service. It is the leading brand professionals select for excellence in underwater imaging. An extensive client list includes Hollywood producers, research scientists in the U S and aided allied militaries and natural history productions. Sorry, if I'm stumbling on my words, it's because there's typos in this and I screw me up. It's not, I'm not illiterate.

3:30It's just the writing is bad. So, all right. Do you want to make fun of me again, Mills? or you know i was saying complimenting you like you should you should log into youtube to see how well you did with that because i was confused as i was trying to read it thanks in 2024 the company generated 836 000 in revenue with a seller's discretionary earnings of 150 000 and it is on a pace to exceed a million dollars in 2025 with a projected sde of 165 000 a diverse product portfolio and loyal global customer base have driven steady predictable revenue, supported by a robust infrastructure of skilled personnel, advanced facilities, and specialized equipment.

4:17Historically, companies' revenues have reached as high as$2.4 million, and according to the owner, the company is well-positioned to expand beyond$1.5 million with a targeted investment in marketing and personnel. Notably, the company is currently in discussions with the U.S. Navy. Seals, I'm sorry, notably the company is currently in discussions with the U.S. Navy Seals regarding their underwater equipment needs, signaling strong momentum in the commercial and defense sectors. They have$452 ,000 worth of inventory and$268 ,000 worth of furnitures, fixtures, and equipment, including the asking price.

4:52It operates from a dedicated manufacturing and assembly facility equipped with precision machining tools, testing equipment, and engineering workstations. Assets include proprietary designs, CAD files, specialized tooling, and an inventory of camera housings, lighting systems, and accessories. These resources support efficient production, customization, and ongoing product innovation. The company serves a high-end niche in underwater imaging. Unlike a better's offering standard off-the-shelf housings, it specializes in custom-engineered, mission-specific solutions. Its reputation for precision, durability, and direct collaboration with the major organizations positions it as a trusted technical partner rather than a typical manufacturer.

5:32There's a bunch more here. The current owners are retiring. They're committed to a smooth transition and will provide a thorough handover period, offering hands-on training and operations. And new owners should be prepared to assume leadership, administrative duties, and light design support. Oh, and they put their website here. GoXEO, Underwater Imaging Manufacturer. So they manufacture, they're actually, it looks like they're putting together the components, but they're not maybe manufacturing the individual components. It seems like they may take a normal camera and put it in a very special housing is my understanding of something like this.

6:10It, I don't know. It seems kind of small given the specificity of what they do and how big their, you know, their target market, I guess could be, they're talking about aerospace and defense. You could get one,

6:28they have a video sorry I clicked on it

6:40this is another for sale buy on it right or no it's not for sale so I thought Exio is the broker I think Exio is the broker but it almost looks like it's like user submitted like he he gave the audio on that video uh it looks like maybe it's kind of like a user-generated platform you know like hey you populate your own information and uh we'll just give you the place you know the landing page and some of it sits behind uh maybe a paywall or an nda wall create account and sign nda what do you think about this website brad have you ever seen this before i have not uh it feels like one of those ones where you could just press a button complete the nda and they show you everything it's like okay well great which is a pro and a con um so in that video though it showed kind of the housing and it looks like a very specific thing that you put your camera in you know so that you can take pictures underwater i still think that this business is kind of small yeah i mean they do hyper custom small super niche imaging equipment housings what's cool you know these devices are probably 25 000 cameras that means they're selling 40 or 50 a year maybe i know brad what do you think do you do video do you do underwater videos like this for your clients?

8:08If not, why not? No. No, but the video keeps playing on repeat. Are you the one controlling that video? Yeah, I played it twice. It's kind of hard to have a conversation with it going. I'm kind of intrigued. I'm with Mills. What is the deal with why this company is small? This feels to me like it should be a Shopify website with a bunch of products that you can choose from and they sell it on different platforms. But for some reason, that's not what I feel like we're looking at. But what I see is like, like I have my oldest son who's in college. We were in Alaska last week and he's got this, all these camera contraptions.

8:53And, you know, he said one day that bag has$3 ,000 worth of camera equipment in it. And I was like, oh man, whoa. Lugging around 3 ,000, a 19 year old lugs around$3 ,000 worth of camera equipment. And I'm like, who paid for all that stuff? Yeah. But as I'm looking at these products on here, it looks like it's taking those fancy camera components, putting them in waterproof, you know, machinery, and then, you know, kind of doing stuff. So here's what I wonder. You know, I spent a lot of years in the t-shirt business. And one of the things, one of the lessons that I learned from being in the t-shirt business was this idea of you're either a marketing company or you're an operational company.

9:40And I have found in my career that this is almost always true. Whenever I get on a call with someone who wants to sell their business, I'm always thinking, is this an operator or a marketer? The marketers generally are the ones that are better visionaries. Just as a general rule. They're the ones that, you know, um, you know, a lot of them are like the, the C student that, you know, no one ever thought would be all that successful. And then they go and do these great things. So as I think about this in the t-shirt business, we were good at operations. I was like a one man marketing show running this website and stuff that was supporting a hundred plus people.

10:25But what we were really good at was producing t-shirts for groups and things like that. The biggest competitor we had was called Custom Inc, which I'm sure everyone's probably heard of. They're like half a billion or more size company. Great marketing company. Not great at production. They needed to outsource their product. They tried to take on production. They ended up closing all those facilities. So what do we have here? It says they're a manufacturer of this stuff. I am really wondering right now, is this a company that is really good at manufacturing and has no idea how to market their product?

11:03So I think to support that, just if you Google underwater camera housing, there are, it seems so crowded and none of them look like the one that they showed. There's like Icky Light, AquaTech water imaging technology, OutTech's underwater camera housings, blue water photo, backscatter underwater video and photo. Like there's a ton of companies that seem like they're doing this. And this could be the case like Brad, this, these people could make the best one and they're really bad at telling their story. That's what it seems like. Well, yeah. I mean, just look at the website for the whole thing or the listing.

11:39We're all totally confused. Signed to make really good cameras, suck at talking about them. And the average order value of these things looks like in some cases, it's like$1 ,500 per skew up to like$8 ,500 per skew. So if the business, you know, is doing a million dollars in revenue and they've been around since 1969, I mean, this is like cameras. 20 orders this month. Cameras have changed drastically since 1969. Like, you know, is there any intellectual property? They don't mention that at all. Like there's a lot of things that, you know, you could address in this listing that would help me understand this a lot better.

12:23But I don't know. The fact that this is a 50-year-old business is staggering to me. Brad, so, I mean, this is unlike some of the other deals we've done with you on the podcast. This one's actually listed by a professional broker. Like, how, like, you being on the broker side, I don't want to poop on this broker because I know it's not always, it's often not the broker's fault. That's the list. Michael, I was there when you pooped on me. and I had to listen through the speakers of my radio. And you were yelling back at us. And I was screaming at the radio, but you couldn't hear me. It makes you feel better.

13:00I don't remember doing it. It was Phil, wasn't it? You got one where you absolutely destroyed me. It's bad. You're like, let's see what our friend Brad has to say about this part.

13:16We need a soundbite of that. We need a clip. I'm so sorry, Brad. I remember it. Hopefully we're friends now. Anyway. These things stick with me. I mean, how do sellers get themselves into a place like this where the listing is just bad, right? I mean, you have to be coaching sellers a lot. And is it they're just kind of like anybody else? Like you can make all the suggestions you want, but sometimes they just don't listen? Or how does that dynamic tend to go down that something comes out with probably this many holes in it? You know, I have taken a lot of approaches over the years, but one thing that I will tell you is sort of interesting is I describe the industry that we live in as being kind of slimy.

14:00I'm not trying to say that broker John here is slimy. but what I think happens a lot of times is a broker tells a seller hey what do you want to sell it for or throws out a price that sounds attractive then says some kind of thing like we have a lot of buyers that will really be interested in this just a couple little comments like that can be enough for someone to be like tell me where to sign I had a guy one time that I met him at a conference. He had a very impressive business built around the game, Magic the Gathering. Okay? Very impressive business. Super profitable, great seller, super great entrepreneur, built it to transfer, the whole nine yards.

14:49And we get talking and I was just like, this guy is going with me. I'm going to take this listing. And I go back to my office after the conference, all this stuff. And he sends me an email. He says, hey, I decided to go with somebody else. I see him a year later. And when I see him, I'm like, hey, did you ever sell? He's like, no, actually, I wanted to talk to you. I wanted to talk about listing. I ended up selling that business this year. So what's interesting about that story is that when he was talking to me, he said, you know, it was this, I'm not going to say the name, but it was this well-known marketplace for listings.

15:25And he said, you know, they told me they had this M &A specialist that specializes in my category. and so I signed up with them to sell it. It was just a complete fabrication. And so these people are having to trust based on very little data. So my approach now is I'm just kind of, as you guys have probably seen for me doing the podcast with you a lot, I'm just like insanely blunt at this point. I just basically tell people like, hey, just so you know, you're gonna go talk to other people and they're gonna say it's worth this and they're gonna say that this is what they have and I just want you to know, I believe that is all a bunch of fabrication because this is the reality.

16:02I sell these businesses all the time. I've been through 120 transactions. I was 26 transactions as a buyer myself. I had four exits. This is all I've done for 25 years. And I'm telling you it's worth this. Or I'm telling you it's not worth more than this to very many people in the world. And so I just try to be really blunt about it. So I do think that when it comes to selling, it's a super painful process. People talk to somebody and they kind of paint this glossy picture. and then they sign on the dotted line, which is one of the reasons why we went to a 90-day engagement letter because a lot of the firms we compete against require a year or more.

16:38So one of the ways that we sort of prove out, like, hey, we are not here to just lock you in is, hey, we want 90 days of exclusivity. So I do think that this person could have been represented much better. I've got more to say about it, but I've talked a long time, but it's just like, this is very intriguing to me and I don't think it's being represented very well at all. One 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.

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17:44That's F-R-A-N-Z-Y.com. And thanks to them for sponsoring today's episode. I've always said, Brad, because I have some friends in the brokerage space and I'll give them a hard time, they can have an opportunity come along, especially more local and like geographic, not online specific brokers, but like more, more geographically constrained brokers. They can have an opportunity to come along that is really not a fit for them. It's too big. It's not something they've done before. It really requires some specialization and they get zero points for not taking the listing. Like you've got to lock up the listing.

18:20And so the seller may say, well, I think it's worth 25 % more. The broker gets zero chances, zero shots on goal unless they lock it down. So like their, their biggest incentive at that point is lock it down. Even if the seller's expectations are unrealistic, or even if this, I've never done a$5 million enterprise value deal. I've only done$2 million enterprise value deals, but I've got to take the listing in order to try. And so you end up with these situations where, you know, a broker isn't willing to tell a seller a hard thing because they're worried about not getting the listing or, you know, making them mad or whatever.

18:57And it's like, Hey, look, we're all going to waste our time. Your business is going to sit on the market for three years because it's not worth this. I think you're exactly right. One of the things that is unique and I've never lived in that world, but I think for your typical broker, their biggest issue is deal flow. how do I get listings so I've never lived there quiet light approached me I thought the idea of brokering deals sounded like the worst career choice ever somehow I ended up doing it uh to like a pretty heavy degree and I love it but what's interesting is like we take in about 5 ,500 leads a year we turn those 5 ,500 leads into 200 sales under 200 sales between between 100 and 200 sales.

19:45So we say no, or we say, let's try again later. A lot of the time I do about two to 300 valuations a year. So, you know, I closed 27 deals last year. So that just gives you an idea of like how many times my call is more along the lines of like, here's what I think you need to do to make this better. But in this case, we've got a business that's 50 years old, that's profitable, that's an interesting category, and I feel like they've missed what seems to be a super compelling angle, which is like, hey, we're operators, and we need to add water in the form of marketing. Yeah. And maybe some positioning.

20:28Yeah, there's no discussion here about what's unique about the product, who the client list is interesting. It's just like, hey, the seller's like, hey, last week I talked to some guy at the Seals, Navy Seals. It's like, well, what about the 50 years before that? Like, what has caused you to be, you know, selling a million dollars worth of these housings for the last 50 years and two and a half million at one point? And like, there's no mention of that. Like, tell me, you're bearing the lead here, guys. Everybody thinks that their business is a premium. You know, everybody thinks that they're the market leader or the most sophisticated or the best.

21:03And it's easy to say that, but back it up somehow. You know, if they told us, hey, our average order value is$20 ,000, then all of a sudden you go, okay, I can Google this. And most of these things are$1 ,500. You probably do have something special. And now I want to know more. But when you just say I've been around 50 years and, you know, this is what our revenue is, I'm looking at websites when I Google it that look like they probably have a lot more than, you know, a million dollars in revenue. I'm more interested in them now. I think this is an inherently really, really difficult business to transition.

21:37They have almost half a million dollars worth of inventory. I think from looking at some of these websites, it's a large number of SKUs because the housing is so specific to the camera and lens setup. so you know you're buying you know basically the inventory i don't know if it's at cost or i don't know if that's you know at sale value but uh the the multiple gets a little bit more palatable based on the fact that they're throwing in the inventory of 452 000 or whatever it was but this is just a really really tricky business to sell and like my soapbox brad which i don't think i've ever gotten it on, gotten on it with you on the podcast is when people present a deal with a price in terms that doesn't pencil.

22:25And I haven't run the math on this, but I'm not sure that it pencils. I don't think you can put, you know, call it$800 ,000 worth of debt on this business and have enough cashflow to service the debt. So what do you do? And, and a lot of times I use that as a discussion point with a seller to say, hey, I don't, I'm not arguing with you. Maybe it is worth a million dollars, but no bank will finance more than X number of dollars based on a debt service coverage ratio. So like if there's a millionaire walking around or a billionaire walking around who just wants to write you a check, great. I don't think they're doing it for this type of business.

23:04You know, that's not the types of checks that they write. And let the, let the bank and the covenants around debt help make the case. I just, I don't think it's probably worth this much. I don't think it pencils. It's usually where Heather is like, there's no way it does. And I'll tell you, she's correct. There's no way it does. Let's say the price, asking price was reasonable. Who should own this business? Probably a competitor, first and foremost. And then maybe a photo enthusiast, an underwater photo enthusiast who doesn't really care about the financial performance of the business as their first priority.

23:39You know what I like about doing a podcast with Brad? doesn't feel the need to talk unless he's got something to say. It's one of your best capabilities. I like you, Brad. And I'm sorry about what I said about all your listings before. Hopefully you being quiet was just you waiting for something to say and not secretly figuring out how to bring me to my end. Michael is really laying it on thick. He's like, I don't like the fact that this guy was mad at me. I'm going to wreck the fight. One little compliment at a time. I'm not going to conflict. All right. Brad, who should own this business? I think I want to own it.

24:13Well, one, so you go through these phases of your career. I have five kids. They're all boys. And they're at the age now where they're like quoting movie lines to me and thinking about business ideas. Because my college son is creating 3D images for Amazon products and stuff. They've grown up around an entrepreneurial home.

24:45And the world is their oyster right now when it comes to that kind of stuff. So I'm looking at this. I've got this son that's really into video and things like that. And I'm just thinking like, okay, for one, this asking price of a million, I think, is not real. Did it say that that inventory would be included? Is that right, Mills? Yeah. Included, yeah. Okay, so... And 268 and FF &E. So they're asking one turn of SD. Yeah. So my thought is, and I think this a lot, and this is how I thought as a buyer, they would take much less on a cash deal. So let me just script that out. I bought a bunch back in the day.

25:25and what I did is I always came as cash. So I was fortunate enough to have some cash myself and I used that to buy businesses. But then when I exhausted that, I had a network of people that I initially partnered with on deals and made them money. And then instead of giving them equity, I would just say, here, I'll just pay you 9 % interest. And I had people that were handing me those checks more than I was willing to take them. Now, I couldn't have gone to like 10 million, but I was able to go to multi-millions with that plan. And I could literally snap my fingers and get the money. Coming as cash makes a huge difference.