Stage Setup Company: Inside a $28M Theater Business Deal
Sep 17, 2024
Dive into a fascinating theater supply and construction company deal that’s projected to generate $28M in revenue. Uncover the owners’ retirement plans and family dynamics as the business faces challenges post-COVID. Delve into financial intricacies, including razor-thin margins and fluctuating EBITDA. Learn about the complexities of inventory management and the significant role brokers play in business transactions. The discussion raises vital questions about integrity and the necessity of a strong company culture before a sale.
29:46
forum Ask episode
web_stories AI Snips
view_agenda Chapters
auto_awesome Transcript
info_circle Episode notes
insights INSIGHT
Irregular Margins Signal Issues
A theatrical supply and construction company shows inconsistent margins and unusual profitability during COVID.
This inconsistency suggests financial or operational irregularities that require further investigation.
volunteer_activism ADVICE
Verify Business Expense Integrity
Adjust for personal expenses disguised as business costs to understand true earnings.
Verify and question expenses to avoid overpaying based on manipulated EBITDA.
insights INSIGHT
Low Margins in Contracting Business
Low profit margins (~4.6%) are typical in project-based specialty contracting businesses.
This reflects razor-thin operational profitability despite large revenue figures.
Get the Snipd Podcast app to discover more snips from this episode
We found an interesting deal in episode 332—a theatrical supply and construction company based in Wisconsin that’s been around since 1981. It’s a niche player in stage setup and lighting for venues like theaters, casinos, and schools. The company is projected to hit $28M in revenue for 2024 with $1.3M in EBITDA. The two brothers running it are looking to exit, though one may stay on for a transition.
Thanks to this week's sponsor:
Acquisition Lab and their team have been longtime supporters of the pod.
Acquisition Lab exists to help people buy a business and navigate all the complexities of the process, as well as provide a trusted framework, tools, and resources to support you from search to close.
If you are serious about buying a business, check out acquisitionlab.com or email the Lab's director Chelsea Wood, chelsea@buythenbuild.com and mention us ;)
At A Glance
Business Type: Theatrical supply and construction
Location: Wisconsin
Revenue: $28M (2024 projected)
EBITDA: $1.3M (2024 projected)
Employees: 74
Established: 1981
Customer Base: Theaters, casinos, schools, TV studios, and theme parks
Owners: Two brothers, one ready to fully retire
What We Thought:
Red Flags
Inconsistent EBITDA over the years—especially the 2020 peak during COVID.
Margins are razor thin for a business with $28M revenue.
Large employee headcount could be a drag on profitability.
Owners possibly running personal expenses through the business.
Inventory management could be difficult with old or obsolete equipment.
Green Flags
Strong, diversified customer base, from casinos to schools and theme parks.
The business is rebounding after COVID, with steady revenue projections.
Potential for growth with AV companies needing high-end lighting and rigging.
One owner is open to staying on for a smooth transition.
The Verdict
Michael likes the business and thinks it’s the right type of specialty contracting company, but there’s likely something odd under the hood. The inconsistencies in EBITDA and odd financial behavior raise red flags. Heather gives it a thumbs down, particularly from a lender's perspective, as the unpredictable margins and unclear financials would make financing a nightmare.
Acquisitions Anonymous - #1 for business buying, selling and operating