In this episode of JackQuisitions, Jack flips the mic to bring on… JackQuisitions favorite and Owned & Operated’s own John Wilson. Together they break down two real deals in Ohio: a premium pool service route in Northeast Ohio and a 221-ATM route in Franklin County (Columbus). They dig into seasonality, margins, route density, and the very real difference between buying a cash-flowing job vs. a scalable business. If you’re weighing service routes, LSA arbitrage, or sticky B2B contracts (YMCA/schools/hotels), this one’s rubber-meets-the-road deal analysis.
John and Jack unpack how pool service plugs neatly into a home-services platform (maintenance → service → replace), where the margin leaks might be, and why commercial indoor pools can spin off restoration/mold remediation upsides. Then they turn to the ATM route: 221 machines, ~two people to run it, eye-popping EBITDA… but relationship concentration, pricing, and “are you buying a job?” realities.
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JQ EP 23 Transcript
John Wilson: [00:00:00] Established 221 ATM route generating 424,000 of annual cash flow.
Jack Carr: That's funny. How many people do you think are employed by this business?
John Wilson: Like maybe one and a half or two?
Jack Carr: Yeah. Oh wow. But from an HVAC perspective, like I would need at about a 10% to do 4.5 million in revenue. Is so much more difficult than dropping off cash once a week.
John Wilson: But there's some business models out there that run like at 50, 60% free cash, like what am I doing with my life?
Jack Carr: Welcome back to Jack Musicians. Today we have the man behind the curtain, the myth, the legend, John
John Wilson: Wilson. This is great. This is good. I have, I been on Jack acquisitions maybe one time.
Jack Carr: Yeah, once. It's good. It's good to be back in studio with you.
John Wilson: Yeah, it's, it's good. Yeah. This is, uh, I'm glad to be [00:01:00] back.
I'm ready to talk some deals. I'm ready to talk some acquisitions.
Jack Carr: I'm ready. So today I have, I'm very excited 'cause we have two acquisitions that we're gonna break down with you. Okay. And I feel like. You're gonna really like them. So, I mean, let's jump into it.
John Wilson: Yeah.
Jack Carr: Um, what I'm hoping to get out of this is I'm hoping that you are gonna go out and buy this business after we're done.
John Wilson: Okay, I'm glad that we're setting expectations.
Jack Carr: Probably one of the most important decisions you can make in your ETA journey is which SBA lender. You are gonna pick a lender who will be in your corner to get you closed on the deal, as well as set you up for future expansion. That is why we partnered with Alan Peterson from First Internet Bank.
He and his team take a how can we approach as well as I personally know, they specialize in home service acquisitions. Mention the show or my handsome bald head and receive a reduced good faith deposit, [00:02:00] as well as a detailed deal review and maybe even a buy-side pre-qualification, no strings attached.
Head on over to Alan FIB. Dot com. That's A-L-A-N-F-I b.com, or click the link below to get connected. So the first deal for everybody not watching live is a pool service company in northeastern Ohio. And not only is it a pool service company, it is the premium service provider, the top service provider in northeastern Ohio, where John is located.
John Wilson: Oh, I love it. Alright. Can you zoom in a little bit? I can't, I can't actually see it.
Jack Carr: Uh, opening it up. There we go. Awesome. Okay, so to break this deal down from the numbers to start, so gross revenue just under 2 million with EBITDA coming in around 25% at just under half a million. Yeah. So [00:03:00] 454,000 cashflow, SDE 554, which tells me that the owner's pulling a hundred thousand dollars a year off this business.
So. Decent established, 1963 old. I didn't realize that Northeastern Ohio had this many pools to start off, but, um, apparently it does. And
John Wilson: uh, yeah. Well, I actually talked to a guy, um, I wanna say three years ago, and he was, he was also based here in Akron. Mm-hmm. They were doing 5 million with 750 of earnings.
And I mean, I had the same opinion. I was like, what are you doing? Uh, but it was a bunch of like college pools, high school, you know, like, uh, ymca. Indoor pools. Outdoor pools. Exactly. Yeah. YMCA, so a lot of commercial accounts, which was good. There is a ton of residential work here. It's just that it's only four out of 12 months.
Yeah.
Jack Carr: You.
John Wilson: We basically only the summer
Jack Carr: is the cool part to this, right? 'cause the asking price is three x. So this business does $2 million in a very, very [00:04:00] short period of time, like you said. So we're at a three x of ebitda, which is not bad. Yeah. Um, does not come with real estate. Yep. This is what I found super interesting.
It's been in, in the, your area for over 50 years, um, eight employees. Um, and they started off doing. Installations building. Okay. Gunite, all that kind stuff, but they actually don't do that anymore. So this is 1.5 million a year, or excuse me. Yeah, 2 million a year. Just like
John Wilson: route, route based service work in
Jack Carr: all service and installation of like heaters and, and like actual repair and maintenance.
John Wilson: That's kind of interesting. I wonder why, you know, I'm just like thinking through this. I would imagine that a, a route-based pool service company is gonna be like. 80% gross margin. Like it's just chemicals. Right? So the fact that they're only producing 25% net is a bit odd, right? Like wouldn't you think it'd be like [00:05:00] 50?
'cause there's gonna be almost no cost of goods.
Jack Carr: Yeah, but it's gonna all be labor, I would imagine, right? It
John Wilson: you think 50% labor or like 40% labor?
Jack Carr: I think if you're running eight people, which is what it says, um, year round, because I'm. It doesn't, yeah, it says a mix of commercial and residential, but there's no way that they're doing $2 million a year off of a four month season.
So they're probably opening and closing pools. They're probably doing pool maintenance during the summer, spring and fall. And then in winter they're doing indoor pools, commercial, just like you said, colleges, high schools, um, indoor, YMCA pools, things like, uh, hotels, right? Because like the hotel we stay at for breaking 5 million has an indoor pool, so.
John Wilson: Oh really? Yeah. I actually didn't even know that. Alright. Yeah. So yeah, scroll down a little bit. Let's see. What, let's, let's see, let's see. All right. I thought it said something about two businesses. Uh, there are two smaller [00:06:00] competitors. Competitors, okay.
Jack Carr: So like I said, this is the premium service provider in your area, John.
Amazing. To go along with your premium service in hvac, plumbing, electrical drains, restoration. See, I
John Wilson: actually pool, I wonder, I wonder if this is the company I talked to, uh, 'cause they were the largest in market. Mm-hmm. And uh, now their staffing was crazy. So the guy that I talked to, $5 million, but what they were doing, which I thought was just fascinating, was half of their revenue.
Was renting lifeguards, so their staff would go from like 10, 15 people. Oh, that's wild. Year round. Yeah. To like service these commercial pools. And then during the summer they would go up to like 250 employees and it was all these like part-time high school kids and they would like rent lifeguards to your YMCA or your community pools or whatever.
So that way these [00:07:00] companies didn't have to like figure out how to staff. You know, all these high school kids, uh, for like four months. So it was, it was really interesting.
Jack Carr: That's, I mean, if I, if that was me and you talked to me three years ago, I would've split these two businesses, right? Run one as a staffing agency and run one as a.
Repair and maintenance and service business. I mean, maybe
John Wilson: that's what happens and then, yeah, maybe that's what, yeah, so off
Jack Carr: the service business side. 'cause the staffing agency, yeah, you're making, that would be the difference between two and five would be 3 million in actually only four months worth of service a year.
Yeah. So much, much easier business to run, but found this very interesting. I mean, the numbers are crazy. Yeah. Considering, you know, you're only running eight employees, 80,000 in inventory, it reminds me of a lot of HVAC in the sense that Right, you're not keeping a ton of inventory on hand. Mm-hmm. You're keeping some pumps, some motors, some really light.
Stuff. Then the rest is, like you said, chemicals. I don't know what they're doing with 13,000 square [00:08:00] feet to hold that. It seems like an excessive amount. I don't either. Right. Includes inventory shelving, service area offices, conference rooms, retail space. Um. Well-known traffic. They probably just owned the building.
Yeah. Forever back when they were installing pools would be my guess. And that they were able to,
John Wilson: that's, yeah, that's my guess, too. Yeah. Because I feel like you could run something like this out of like, well, I mean, our rule of thumb was always like a thousand square foot per million. Yeah. And so like you could run this out of like two to 3000 square feet and like be totally fine.
Jack Carr: Yeah, exactly. Which is two to three contractor garages, maybe two contractor garages. Yeah. Or right on each other that could store everything needed. Um, when they say Northeastern Ohio does that, what is the um, size that, that, I mean, kind of encompasses it?
John Wilson: That's pretty big to be honest here. How about you open up Google Maps?
Yeah. This, this is an interesting lesson in geography, uh, and I think this is like this for a lot of cities. All right, so yeah, zoom in a little bit to like Akron. [00:09:00] So yeah, Northeast, Ohio's big. So you know, it'll cover from Akron to Cleveland. It'll go down to Canton, which is below. Um, and it basically goes over to the border.
So like Youngstown Youngstown's an hour away from where I live. And we're both in northeastern Ohio. Uh, there's some sections of Ohio that are like right here, Amherst or something, and that's like an hour and a half from where I live. It's up at the top right there of Ohio. Yeah. So, I mean, I'm
Jack Carr: looking like right here.
Yeah. It's a big chunk. Yeah. Right. So if it's, I mean,
John Wilson: it's a, it's a quartile of the state. It's literally Northeastern Ohio and it covers, I mean, 5 million people probably.
Jack Carr: Yeah,
John Wilson: it's a lot. It's a lot. So when they say northeastern Ohio, like it could be. It could be like five minutes down the road from where I live.
Or it could be two hours away.
Jack Carr: Right. No, that makes a lot of sense. I mean, I would assume that when they're talking about Northeastern Ohio, they're probably focused on Cleveland, Akron, and Canton area just because from a [00:10:00] population density it makes the most sense. But still, I mean, service work out to, you know, Youngstown or Warren would make sense as well, uh, for those big ticket items.
John Wilson: Yeah. What, what do you think, you know, uh, like Chris Hoffman has his ele uh, his appliance repair business mm-hmm. And his appliance repair business. What, what they use it for, which I think is kind of funny. Like one, it is profitable, like $8 million or something like that. So like big appliance repair business, what they're primarily using it for is, it's super cheap LSA ads.
So it, it's almost like arbitrage of lead flow. So he can get an appliance repair lead for like $10 still today in 2025 versus like HVAC is 80. Uh, electrical I think is pretty cheap at like 50 or something like that. But. Appliance is $10. Uh, I remember when we first signed up for excavation, we were getting excavation leads for like 10, 15 bucks, which is wild.
And that was like a, a year ago. Yeah. So I, [00:11:00] I wonder if you could do something like that here where you grab this pool business. And like the pool pumps and motors and all that stuff like that could be plumbing. Like you could run that through a plumbing department. Oh yeah. You could like use that to build, you could sell maintenance contracts, like it could be stickier.
And my guess is the leads are way cheaper for like this type of business than the primary business.
Jack Carr: And the cool part about this, which I love, is it's, and this is the interesting part, which I found with all home service companies.
John Wilson: Yeah.
Jack Carr: It's exactly the same. It is a maintenance service replacement model that you see in any other kind of plumbing business.
You're maintaining the pool, you're servicing the equipment. You're replacing large pumps and systems for thousands of dollars. So it has a high ticket to it as well. Yeah. And then like you said, you can utilize it as a cross sale for multiple ways. And my last favorite thing about this is in terms of like grading, um, like the revenue per employee basis, right?
When you're [00:12:00] looking at like a plumbing or HVAC company, you're looking about what, 300,000 revenue per employee or per truck.
John Wilson: Per truck. Yeah. I like per employee. I think 200 is supposed to be good. We're we're at 200.
Jack Carr: Yeah. So this is per employee, it's two 50, right?
John Wilson: Yeah. And so that's pretty nice.
Jack Carr: So it's, it's a nice per employee revenue, um, yeah.
Statistic. And so I think that, as you mentioned, is if you're already running a plumbing company, you have to learn how to do route based a little bit better as well as commercial a little bit better. And then, um. Understand kind of the intricacies of maintenance on pool systems. But you know, I, I love this business.
I think that this one, if, if it was in my market, I would seriously have the conversation just because it is, it, I don't think that the competition is there like two small competitors to be able to pick up, I mean, 2 million at, at how many contracts? A hundred, 150, 200 contracts probably would be super interesting.
Yeah.
John Wilson: I don't, I don't [00:13:00] know. Um. Yeah, I, I wonder how big their route is. I, I think I'm kind of into it. I, I think I could see how it helps the whole, um, if I was, if I was focused on, like, I, I think part of the question is what, are you gonna buy it as, as it is, or are you gonna put it into a plumbing, HVAC, electric like platform?
So for me it, it'd be like, how does it benefit the whole, but for not, not everyone, is that gonna be the case?
Jack Carr: Yeah. I mean, for somebody who's going out there just to buy a business, a, you're buying the. It. It's one of these like tertiary market things where you buy this business, there's not a huge growth potential.
Like maybe you move down into Columbus or up into Dayton. Yeah. But there's not a huge amount of competition. Like you said, LS, a leads are cheaper. Um, you not working year round super hard. Uh, I would assume that it's very, it is seasonal. Um, so it's one of these businesses that I think that, but not seasonal in the same way that HVAC is.
I mean, it's seasonal in the way [00:14:00] that it opens and closes, so you can actually plan labor out a lot easier than, um, other industries. Yeah, so I, I love, well,
John Wilson: unless it's a bunch of commercial it, what I do wonder is like people's growth strategy would matter a lot here, so. You know, something that we've noticed, like we're prepping to go regional, we're prepping to buy in new markets.
And something that we've noticed for us is like, hey, we have five business units. So plumbing, hvac, electric, uh, restoration and drains and drains, uh, has septic pumping and restoration. Uh, like is, is water mi. And obviously those two like don't immediately translate to like. Uh, Pittsburgh or something like that if we were gonna go launch a branch there.
Um, so I think it depends on how you're gonna grow. Yeah. Like, are we gonna grow by taking our plumbing business and adding new plumbing locations or. Do I wanna stay inside [00:15:00] one market, but I just need more density. And I think if, if you're doing that, I think this, this could make a lot of sense. Like it could help the core business.
Yeah. You're adding a couple of million bucks, you're probably adding a few thousand customers. Like it will help the core business. Um. Yeah. But if you're like, Hey, I wanna go regional with my one business and I wanna run like a HoldCo style thing, like this probably would make less sense.
Jack Carr: Yeah. 'cause we, we have a company in our area called Lee Company, which is run by a governor Lee.
Talk about fun competition. Yeah. And they, they do stuff like this where they do garage doors, heating, electrical. Yes. Drains, they do facilities maintenance. They do just like everything you could think of in your house. They have a department that covers that. And so I find it really interesting how, um, like the model of, hey, we, anything on, they do roofing.
So like any kind of home service business on your house, they have, they can touch it. Yeah. And, and
John Wilson: that is interesting.
Jack Carr: It's super interesting to watch them work. Um, just because Right, they, [00:16:00] they have so much. Push and potential from being able to, like you said, with Hoffman being able to pick up really, really cheap leads and then wrap someone into a MA membership program.
And that membership program is so much more valuable because they have so many more areas of your home they could touch. So you really have a one stop shop for everything. And uh, yeah, good competition in our area. They, they are, um. They're good competition. But yeah, either way, I love this business. I mean, I don't think three x multiple is crazy for, uh, you know, half a million in, in cashflow.
I think that's kind of right along the lines. Maybe a little bit high for a plumbing route or a, excuse me, a pool route. But not, yeah, not like, wow. I mean it,
John Wilson: yeah, it's not terrible. I think, like, you know. My usual rule of thumb for getting comfortable with the business this size is, is the purchase price, 50% of annual sales.
So in this case it's 75%. So I'm not like jumping up and down, but it is an interesting deal. Yeah, I, I [00:17:00] do wonder like the outside versus inside is probably such an important piece of this because if it is inside, like, or, or if it's inclusive of outside work, like outside pools and stuff. I bet that out of 554,000 of cash flow, I mean it could be like 500 of that happens in 90 days.
So the way that you have to think about like cash flow planning is, can get, I assume, pretty complicated, but
Jack Carr: it's. Also some interesting things to think about if it is indoor pools talk about mold remediation. Have you? Oh yeah. Have you done any work? I mean, from a mold remediation standpoint when, well, dude
John Wilson: cut and dry does mold remedi.
It is crazy. Yeah. Like, we'll do, we'll do like $20,000 tickets. Like it's insane.
Jack Carr: Well, what I'm, and, and so mold's a crazy deal on those in indoor pools. I mean, they're notorious for having mold and ventilation issues. Yes. Yeah, so like I just, I feel like you could just keep adding on to like these big contracts where you get, you know, hotel that has now a huge mold issue.
'cause their [00:18:00] ventilation system wasn't working properly. So now you have HVAC plumbing involved, mold remediation involved, and you got the plumbing contract, so you're just hitting them from every angle. I,
John Wilson: I think this would be fun if you were gonna like, um, I'm, I'm kind of interested in this idea of facilities maintenance or like commercial facilities management.
I think it is. Interesting. I think it's sticky. Um, I'm finding more and more people who are, uh, like higher net worth families that a big portion of their, like they're keeping money inside real estate and they're, a lot of them are building these like captive property management businesses. Yeah. And I feel like this would be a killer addition to something like that because it's gonna get you to manage commercial pools, but it'll also get you.
Into the, you know, the maintenance, uh, of other properties too.
Jack Carr: Okay. So, but yeah, I'm seeing
John Wilson: more and more like property management. Like, hey, I own, you know, 10 million square feet of real estate. I also own this property [00:19:00] management company. And like, yeah. It's kind of interesting.
Jack Carr: So from the real question, from a brand new acquisition entrepreneur going out to buy something like this
John Wilson: Yeah.
Jack Carr: One to 10.
John Wilson: I mean it, I would say it depends a lot on how much of it is summer work versus year round work. I think that is like a big, you know, people should play easy mode and 90 days for 80% of your cash flow is kind of tough. As a whole, I think I'm kind of into it. Like I, I think I'm into it. Uh, I think if it's commercial accounts.
I'm really into it because it's gonna drive sticky relationships. You can go at a B2B salesperson, you've got the revenue and the cash flow to do that. You can go close on YMCAs and you can go close on schools. And, um, like I could see how this could be a $10 million business if you really focus on commercial.
And like each new account [00:20:00] was 50 grand a year. Uh, like I think you could do it. And in, in Ohio, like there's more than enough pools to get to to get to that number. So, yeah, I, I think you can
Jack Carr: six out 10, seven out 10,
John Wilson: I think. Yes. Six and a half. Yeah. Six and a half, seven. Like I could see it. I'm into it.
Jack Carr: Sweet. Okay. Like what, what do you, what do you
John Wilson: think,
Jack Carr: you know, to be honest, I, I think I'm even a little higher than that. I think I'm around seven and a half, eight. And maybe it's just I'm, I've been, I've been screwed up and mentally by HVAC multiples recently and, and seeing deals that are trading at like half a million for eight x, I'm going, Ugh, gosh, that's terrible.
But like, this is, even if you, you get a little bit off on this and you do have to worry about that, right? From a seasonality standpoint. You're hiring a few people if you're hiring in the pool industry, they know the deal. Like they know that, yeah, I get hired in the summer. I don't work in [00:21:00] after summer for nine months.
Like those people who are working in the pool industry, they all know this. They all play by the same rules. Yeah. Um, so with that being said, and, and the thing about the seasonality here with this type of business is it's not. Like summer in hvac, in in LA 60 degrees, they are not expecting that. You expect every seasonality change here.
So you can model that in like, Hey, we can only spend this much in this month because we need to cut this amount of people and we're only gonna get this much business. So whether or not indoor, outdoor, I think that this is a pretty good business and I think that there's a lot of opportunity to grow.
John Wilson: I love it.
I think so too. I'm, I'm, I'm into it. I'm into this one.
Jack Carr: Sweet. If you're looking to buy or sell an HVAC or plumbing company, you need the best, not some generalist who just sold a Subway franchise last week, but you need the absolute goat of HVAC and plumbing m and a. And that's why I work with Patrick Ling at Business Modification Group.
Patrick has [00:22:00] sold more HVAC and plumbing businesses than anyone I know. He knows the buyers. He knows what the company is worth and he knows how to get deals across the finish line. If you're an owner thinking about selling or you're a buyer looking for your next deal, Patrick is the guy to go to. You want him in your corner.
Click the link below or head on over to business modification group.com/jq and get on his newsletter for exclusive deals, or sign up for a free deal review and see what a business is worth. Okay, I'm gonna shift gears on you. I'm, I'm. I brought two today, so this is the second one. Okay. I mean,
John Wilson: I like the one in my backyard is the second one in my backyard.
Uh,
Jack Carr: I don't know. I don't know, but All right. You're gonna like this one too? This one's wild. All right. So also it is also in Ohio. Uh, it is in Franklin County, or it's Columbus. So not too far from you, right? You're not, yeah, I know. I'm gonna switch over. Okay. Okay.
John Wilson: Oh, okay. All right. I'm gonna read the title established 221.[00:23:00]
ATM route generating 424,000 of annual cash flow.
Jack Carr: That's funny. How, wow. This has to be one of the stickiest businesses too. No one, no one switches their ATM provider. Right. At least I don't imagine that they do.
John Wilson: I can't, I mean, 'cause to me it's like nobody gives a shit who. Like nobody cares who, who the ATM like guy is?
Jack Carr: Nope. Um, how many people, oh my gosh, how many? So 221 ATM routes. Right. You know, they have some maintenance. You have to pick up money. Yeah. Drop off money. Um, there's some risk there. How many people do you think are employed by this business?
John Wilson: Well, I don't know revenue yet. Um, lemme see if I can scroll down
Jack Carr: without telling you.
John Wilson: Yeah. Is revenue for, oh, wow.
Jack Carr: Yeah. I can say that. I, I can say that.
John Wilson: No, I saw asking price. Yeah. I didn't see revenue.
Jack Carr: So asking price, gross revenue is 530, so they make like 80% margins.
John Wilson: I mean, even before I saw that, my [00:24:00] assumption was one person, like maybe one and a half or two.
Jack Carr: Yeah.
John Wilson: I just, I don't know what there is to do.
Jack Carr: Tr pick up, drop off money, make sure it's not error Erroring out, which I'm sure there's a ton of now. Um, there's a ton of, uh, like, uh, online things that you can do and, and tie into this. And there's a bunch of stuff that you can watch for errors and make sure it's not from all remote. Um, but yeah, so it is two people.
Oh, that's so funny. Two people. Amazing. So you wanna talk about revenue per easy mode? Revenue per mm-hmm. Person. It's still hat. About 215. Yeah. Or 2, 2 75, excuse me. Give or take. Was that five 30? Yes. I wonder
John Wilson: how they, I wonder how they did that, like. Did, did you know, 'cause you'll get on Biz By Sell and you'll see like routes of like one or two of these.
Mm-hmm. Like did somebody roll these up or did somebody like go run a commercial outreach? Like let's [00:25:00] go build a sales process? I'm really curious. Like how did you get to 221 ATMs?
Jack Carr: That's what, that's what, uh, drew me. So I'm guessing that it took 'em a long time. 'cause they started in, in oh seven, right.
John Wilson: Yeah, so they start, that's a lot.
Jack Carr: Two or three here. Pick up one, pick up two here with new, new areas. Um, I don't know, Columbus as well as you do, maybe there's a bunch of new commercial like gas stations going in, high retail traffic going in C stores, but it's still wild to see. Um, yeah, that is, and then the margin always blows me away.
I mean, it, it makes sense because all they're probably paying is gas and maybe that software I'm talking about. Yeah.
John Wilson: Yeah, I mean. Yeah.
Jack Carr: Um, lemme see if there's anything else that came across. Um, limited competition. Oh my gosh,
John Wilson: that's
Jack Carr: funny. Yeah. Potentials to add locations? No owner financing. They're retiring and 90 day support, which I can't imagine it's, Hey, you open this up and you [00:26:00] put the money in.
Yeah. Yeah. And then you close it and then you leave. We recommend you put 2000 in the machine at a time. Like there's nothing to this business. I love it. But that's the downside is the asking price is not. I is wild. I mean, yes. So
John Wilson: yeah. So they're asking 1.4 x, 3.5 x four. So they're asking, yeah, four x now.
Something I was thinking about, you know, 220 machines, so how much of that asking price is the equipment? 'cause I mean, those machines have to cost something. Yeah. I mean, even if they're, even if it's like a thousand dollars or something. What's a thousand times 2 21. I mean, that's a quarter of a million dollars.
Yeah. Like, so some portion of that asking price has to be the machines just 'cause that's a lot of machines. Like if it was a vending route, the vending machines cost money.
Jack Carr: Yeah. The other wild part. So to break down those numbers. So yeah, so they're probably cost you 2000 bucks a machine. 'cause maybe use [00:27:00] machines, who knows?
But that dude, someone's
John Wilson: gonna buy the shit out of this,
Jack Carr: that, that is two, each of those machines generates $2,400 a year on average. That's it. Um, oh,
John Wilson: interesting.
Jack Carr: And that, yes.
John Wilson: Yeah, yeah, yeah, yeah.
Jack Carr: And that means divided by, if it's a $3 fee, I mean, you're looking at or times a 300, $3 fee. No. Divided by three, that's 800 transactions a year, or 66 a month.
So 66 transactions a month with people pulling out, you know, 40 bucks, 60 bucks here. Pretty wild.
John Wilson: Oh yeah. That is, you know, we, I did this episode, uh, and this was like. Four years ago in on owned and operated, and we had a guy named Quinn. Oh, I don't remember his last name, but, uh, but he was building like a big vending route.
Mm-hmm. And I think he got like, pretty big, like, I think he got it to a million dollars revenue and like the margins were e equally ridiculous. Right. [00:28:00] And, um, it was a fascinating business. He did end up selling it though, and I think a lot of people were like. Why, like you make, you know, this guy's making $400,000 running ATMs.
Like that's the easiest job I could ever think. Like why would you ever sell that for anything, right? Mm-hmm. And um, and I think it was just a lot to manage, like 200 ATMs each. Making $2,000 is a lot to manage. Yeah. Like that's a lot.
Jack Carr: From a route basis. That route, my guess is a few hours wide. Um, but still, yes.
I mean, if you think about it, I'm thinking that each ATM probably has two to 3000 in it. 'cause based on that ma quick math, if there's 66 transactions at an average of $40 a transaction, which maybe that's way off, maybe it's a hundred dollars a transaction. I don't really use ATM, so I don't know. Yeah.
Who's pulling money outta how much? But that's like 3000 bucks. So 3000 bucks a month needs to stay in that machine. [00:29:00] So you're driving to each of those machines. If you say the drive time to a machine is 30 minutes a month of work per machine, maybe more an hour per month per machine. What do you think?
Yeah,
John Wilson: I think it's probably more like an hour per every few months. 'cause I, I would be pretty surprised if. A machine empties every month. Like I, I would be surprised. But yeah, I mean, if it's an hour a month, then that's like, you know, 200 hours, 200, oh, it's 165 hours a month of working hours. So, you know, one and a half people to run a route.
Jack Carr: Yeah. Which he has two people working there, so that makes sense. Yeah. That, that's the case. Um, my assumption is that's where the most of that EBITDA goes is to paying someone to, uh. Replace money in machines, which is probably a son or a family member who wants some easy money. And then you take the rest as net, right?
That net just goes into a, or [00:30:00] EBITDA goes into a pocket somewhere at the end of the year. 'cause there really is no ff and e or any kind of capital expenditures other than probably keeping 10, $15,000 on hand to replace machines as they break, break, break. Yeah.
John Wilson: No, that is, this is really interesting. Um, I think.
I think this is one of those, uh, I bet it's really good. If all you want is cashflow, like this is a great lifestyle business, I think like it's gonna give you cashflow. No one in their right mind would wanna run one of these at scale. Like, and maybe this is a scale, but like, can you imagine if there was like 2000 ATMs or 20,000 ATMs across multiple markets?
Like that'd be terrible. And it would be for like a million dollars of revenue.
Jack Carr: Yeah.
John Wilson: Like it'd be kind of the econ. It just doesn't like grow.
Jack Carr: No, it stops you. But for
John Wilson: lifestyle? For lifestyle, this is sweet. I mean, 400 grand is a lot of money.
Jack Carr: Yeah. I mean, if you're talking about, Hey, I'm, I'm gonna make 400 grand Net on my HVAC company, like.
And I wanna [00:31:00] pull 400 bucks out of 400,000 outta the business. A I can't do that in, in hvac. Even if it netted 400, that 400 goes back into the business for growth and marketing, whatever. Yeah. But from an HVAC perspective, like I would need at about a 10% to do 4.5 million in revenue, and like the work that goes into generating 4.5 million in revenue is so much more difficult than dropping off cash once a week.
Or once a month. Yeah,
John Wilson: I, well, I think I've talked to you about, or I've complained at you about this, but there's some business models out there that run like at scale, like at 50, 60% free cash. Yeah. And I'm like, holy shit. Like what am I doing with my life? Like these guys will run like a million dollars a month.
And like cashflow 600. And I'm like, this is, this is crazy. Uh, so like similar lifestyle esque? Yeah, but not as, um, yeah, not as, you know, like easier to scale. But yeah. [00:32:00] I, I like it. I'm into it. Someone's gonna buy this business. Like someone's gonna do this.
Jack Carr: What? So on the debt service on that, at 1.4 million, you're looking.
That's gonna
John Wilson: be 20 grand. Yeah, it's 20 grand a month.
Jack Carr: 20 grand. Yeah. So, I mean, half of that's eaten by, half of that's eaten by debt service once you buy it. But yes, it's, it's also one of these businesses that really outside of building relationships and like, you can't, it's very hard to go wrong. Yeah, I would imagine.
Yeah. 'cause there's no right, like Right, it's a negative, um, negative cash cycle in the sense that you really don't. Like, you don't lose anything. Like you're not paying monthly rentals, I would assume that there's just a
John Wilson: Yeah, usually there's, I mean,
Jack Carr: they get a portion beat sale, described it,
John Wilson: they get a portion of it, or like maybe you pay 50 bucks or, uh, a lot of people just do it for free.
For like vending. Yeah. I think that this type of thing, it, it's a very, uh. Like people start here is my impression of this type of business where, hey, I've never [00:33:00] built a business before. I'm gonna go buy a vending machine. I'm gonna go buy a arcade machine or an ATM or something. I've, I've read online that they're passive, they put it somewhere, they make, you know, couple hundred bucks a month and they're like, Hey, this is amazing.
And I think it is, I think like it's a good place for people to start. And I think that like, similar to Quinn, like he sold his and moved on to bigger stuff. I think you sell it and move on to bigger stuff. But I do think it's like a good thing to start, like I think it's a good way to start,
Jack Carr: or you just pull 400 K in cash a here and call it a day.
Well, you pour, you don't ever sell it. Yeah. I guess, you know, if you had to put someone else in charge of, uh, running it, I, I would assume that that's also a very hard portion of this is like, yeah, cash. I actually trust somebody with like 200 or $2,000 times 10 machines or whatever route they're gonna run that day.
It's like, here's 20 K in cash. I hope it all gets into the machine.
John Wilson: Yeah. Yeah. You, you would definitely, I think trust would be, trust would be pretty tough. [00:34:00] Well, I know with vending machines, a lot of what they're doing is like credit cards now. Mm-hmm. And that to like removes so much of that. Like you can still have like a breakage from people stealing, you know, like a Gatorade or something as they fill the machines.
But that does reduce that problem. La laundromats too. They have credit cards to get rid of the whole cash problem.
Jack Carr: Yeah, exactly. Because I think
John Wilson: cash, cash businesses are like, like you will be stolen from like, period.
Jack Carr: Yeah. And I like it more than like a car wash as well, because there's, you know, yeah. Or even a laundromat.
'cause I don't wanna collect quarters, man. I wanna collect. You're actually not collecting any cash, which is the sad part too. You're only depositing cash because the Yes, the credit is what comes back to you. Um, yeah. So it's a interesting business. What is your rating on this business as a new buyer? I don't think it would SBA either, unfortunately.
Even though it's, I don't think it would like a. Hm. Pretty safes investment.
John Wilson: It's a, it's a cash cow. I think it at a different price. I would feel better. I think [00:35:00] 1.4 million for, I have no doubt that it took a long time to build up 220 ATMs. Like I don't think I've ever seen one that big. Um, but it's, it's a tough, that's a lot of debt to mm-hmm.
For just like ATMs. Um, so I mean, I would feel better if it was like. 800 grand like two times, you know? Yeah. Because it, it, you are buying a job at the end of the day. Like, you're gonna come in here and you're gonna run that route and like it is a very well paid job. Like you'll be super, highly compensated.
But it is like you're buying a job, you're not buying a business, and I think you just have to price it appropriately
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Yeah, I'm, I'm in the same spot. I think that I don't know enough too about the risk of. I, I can't imagine. Oh, yeah. How many
John Wilson: times do they get held up at gunpoint, you know, at some, you know, shitty gas station somewhere,
Jack Carr: or like, I don't, my, I guess my risk is more like how many times do those breakdown, like what really is the breakdown percentage based on age of the equipment?
I can't imagine it's a ton, but maybe I'm completely wrong. And they just are freaking walking nightmares to deal with. Yeah. And then [00:37:00] the second part that I don't know about is these are all in convenience stores and gas stations. Yeah. And. Um, places like that. So I would assume that the owner, and this is a big assumption, right, that the owner has a really good, um, connection, knows somebody.
Yeah. 'cause getting into 221 locations has got to be a really difficult task, as we've mentioned about 10 times. Yeah. So I would assume that it. There is some customer or vendor concentration
John Wilson: there. Yeah. There's something, there's a relationship concentration. Yeah. Because you know, it, it is, it, that is definitely work.
I mean, it's a lot of work Yeah. To get into all those places. Like, and I would say the, the, the amount of work is also what makes this tough because it, it's very real business development, but you can't really commission somebody like, what are you gonna do? Like how do you commission a full-time salesperson to drive around?
And pick up new spots for a route when that machine might only make a couple grand a year. [00:38:00] Yeah. Like you can't, like what do you do? You give 'em 50 bucks and like you can't pay somebody. Like you can't pay somebody on that.
Jack Carr: Yeah. The value of a new unit is still only two to 4,000, so it's a very low value.
So to send somebody around with a low hit rate is gonna be way too expensive. You'll eat up your entire year one cash flow.
John Wilson: Yeah. I mean, I'm sure there's creative ways. I wonder if you could run like meta ads to be like, Hey, you wanna make an extra $500 in your business a month?
Jack Carr: Yeah.
John Wilson: Check this out. And, uh, I don't know.
I'm sure there's a way to like reduce that business development cost, but that would be, I'm sure there's some relationship concentration. Yeah. Yeah.
Jack Carr: Relationship concentration. You switch vendors or you switch owners. Yeah. And then
John Wilson: Yeah,
Jack Carr: you lose Yeah. 50 machines and you're like, oh, snap, now I'm in trouble.
John Wilson: Yeah.
Jack Carr: Um, yeah.
John Wilson: So, yeah, I think the business is funny. Uh, I think that it's crazy that they got to, you know, hundreds of ATMs. I think that's like a hilarious, [00:39:00] uh, business. Uh, I, I think it's gonna be a tough sell.
Jack Carr: Yeah, at the price I, I'm on the same board. It's also a high Yeah. Like, I, like you're saying high risk.
It's high risk for me because I, I guess I just don't know. Yeah. I don't know enough. And so with a four x price point, yes. Low risk mar or low risk of error here, if you mess up, it can actually hurt you pretty big. Uh, and you have to have 1.5 million in cash to buy it. Or conventional financing, which is another pretty difficult thing to go out and find.
And then pick up 20 KA month in, uh. Debt. So yeah, not my personal guarantee. Like I, I
John Wilson: bet this, uh, I bet this thing trades for like a one times revenue. I much regular
Jack Carr: ones trade. I, I didn't look that up.
John Wilson: You should look it up real quick. Yeah.
Jack Carr: Let's, let's see if we can find another, a TM route real quick.
Just to see what, yeah. Share the screen. Normal.
John Wilson: Share the screen share. I feel like it is like a one times revenue. I mean, they're asking like, you know, four times revenue and um. [00:40:00] E earnings, like it's a lot.
Jack Carr: It's a C store for sale. Let me see. Yep, we're going. We're going. Got some laundromats. Laundromats. ATM route in Cincinnati. So this is what we're generally right. Used to. So here's a great example. So
John Wilson: 14 ATMs,
Jack Carr: what
John Wilson: was that?
Jack Carr: Yeah, 14 ATMs. Yep. Um,
John Wilson: 20. 2000 net. So yeah, it, it seems like, so they're making 39,000 a year of revenue, 22,000 net.
So like way less efficient and, uh Oh, you have to join a franchise for this? Yeah. Oh my God. That's crazy.
Jack Carr: Yeah, that's probably not real numbers. Let's see. Oh, let me actually get rid of something too. I'm gonna get rid of Ohio here. We might cut this part. It's just me searching. I mean, here's another one, a 15 year in Fort Worth, Texas [00:41:00] 251 machine.
Wow. So this is probably a lot more applicable. Right.
John Wilson: That's interesting. So, so maybe, I mean, maybe we same we're revenue off base, like
Jack Carr: two 20 versus two 50. Same revenue or Interesting. A hundred thousand less in revenue. A hundred thousand Less in ebitda, but about the same percentage. Two, three people. Um.
That's interesting. That's really, that's a hundred thousand higher. Same timeframe. That is really interesting. But what about the trade? So they're trading at about four x of gross.
John Wilson: I mean, maybe that is market. I just, God, that feels cra. Well, I mean, it's also asking, not sold, but it would be really interesting to know what these actually trade for.
There's one in Jacksonville, 500001.4. Dude, maybe these things are priced at Yes, this
Jack Carr: is closer, right? This is 209 locations with a gross revenue of 5 0 2 and with a 4 0 1. So you lose about a hundred between gross revenue and ebitda, wherever all three of these machine [00:42:00] produces
John Wilson: $160 a month. That is so low.
Jack Carr: Right? Oh my God. But I mean, when you think about a $3 50 cents transaction, like that's a decent amount of transactions, so Yeah. Yeah. One 60 divided by 3.5. I mean, you're looking at 45 transactions per month at say they're bringing 60 out of these ones. Yeah. You know, it's, you have to keep $3,000 in that machine at any point in time.
John Wilson: See, I feel like, but employees this would,
Jack Carr: so like at least they're all really similar and they're all trading like this one's a little bit, trading a little bit less. It is only trading at like a 3.5. Versus a four, but still, I mean, this is funny. That's three are all the same, man. So I'm gonna say that.
Yeah, that, that it's trading at the right, right price or trying to trade at the right place. That's crazy. Yeah.
John Wilson: 297. Wow.
Jack Carr: Texas has cheap a hundred k difference on top [00:43:00] of the gross to EBITDA numbers. Um, trading at the 3.5.
John Wilson: That's amazing. Okay, so we've looked at four of these deals. If you're not watching on YouTube, which you probably should, uh, we found four other deals, same revenue, same asking price, same earnings.
Um, so yeah, I mean, I feel like, look, I'm, I'm not gonna be the one to buy this. I think that somebody that could buy it, like, are you rolling up, uh, c stores? Are you, do you have a bunch of hotels? Are you a property manager? Um, or John, I, I would
Jack Carr: be, you roll up all these big ones.
John Wilson: Oh my
Jack Carr: God. Yeah. And now you're in charge of 1,015 hundred ATM machines across six different states
John Wilson: each, each making.
$160 a month. Talk about cash. Cash flow. Oh my God. Yeah. That that is a funny, yeah, that, that's ridiculous. That is, that is ridiculous.
Jack Carr: Awesome, guys. Well thank you [00:44:00] for listening today. It's good to have John in the house. It's, let's go. We completely invite, invite me back, mess something up. Invite me and you know more about pools or ATMs than us.
Please ATM drop comments in the comment section below. We'd love to hear it. Send us an email. Let us know that. We are right on the money or we're big old dummies. Um, give us five stars wherever you listen and thanks for listening. Appreciate it guys.
