In this Red Light, Green Light call, Dan Giordano presents an acquisition opportunity for a sublimation print-on-demand company based in Florida. This long-standing business, operating for nearly 30 years, specializes in cut-and-sew production, where they manufacture and print products in-house using sublimation technology. The father-son owners are looking to sell due to internal disagreements, presenting an opportunity for Dan, who sees significant potential given its alignment with his existing sports-related eCommerce business.

The company has substantial strengths, including its experienced senior staff, particularly a committed General Manager with operational expertise. However, the business currently lacks marketing, sales teams, and growth strategies. Its revenue relies heavily on strategic partnerships with platforms like Shopify but suffers from minimal outreach and underutilized eCommerce assets. This lack of active promotion highlights a key growth opportunity, especially in untapped markets such as custom sports jerseys for local teams.

Financially, the company experienced a decline in margins over the past two years. Revenue dropped from $2 million with a 48% profit margin to reduced earnings and a current margin of 14%. Factors contributing to the decline include increased freight costs during the pandemic and losing competitive contracts. The ask price is $1.5 million plus $650,000-$700,000 in inventory, mostly raw fabric. Additionally, the company holds $1.3 million in surplus cash, offering a creative financing opportunity by using that cash for the down payment.

Key concerns raised during the discussion include customer concentration—with one platform reportedly accounting for 60-70% of revenue—and the declining margins, which may limit SBA financing eligibility. Despite this, Dan’s strategic positioning gives him a competitive edge. The cross-selling potential through licensing opportunities for college and professional sports products presents an immediate upside. Additionally, his expertise in eCommerce marketing and online sales makes scaling the business more achievable.

Suggestions for structuring the deal include negotiating a lower price point, leveraging seller fatigue, and incorporating earn-outs or seller financing. Some participants emphasized scrutinizing the equipment value and inventory during negotiations to reduce costs further. Dan’s planned in-person visit with the seller is seen as a critical step for building rapport and uncovering further motivations, especially given the seller’s frustration with the sale process so far.

The group expressed broad support for Dan, given his experience and the strong fit within his business portfolio. While not ideal for a first-time buyer, the deal aligns with Dan’s existing operations and presents opportunities for significant growth through better marketing, improved operational efficiency, and cross-selling.

Full Transcript:

Dan Giordano. Dan, are you ready?

Yep. I’m ready, Carl.

You’re ready.

Now Alright.

Sounds good.

No stranger to pitching deals and closing deals.

So I’m, I’m looking forward to this.

And I also have Cecilia and Jessica that have been working on this with me, so I may bring them in for some of their insights at some point.

Oh, perfect. A a a team deal. This is one of the things, right, in Protege that makes me the most proud. Right?

A lot of you guys are partnering with each other, and a lot of you guys are sharing with each other. And that’s, for me, what I always dreamed about when I built this community. This is what it’s all about, which is great. So whenever you’re ready, Dan, have an able screen share.

Let’s get the model up, and, picture’s your deal.

So, this is a sublimation print on demand company, here in Florida. Right? And, my initial interest was in this because of the, sports related store that I have. I figured I might be able to do some print on demand products that cross promote. So when I started looking into this, basically, the company’s been around, for quite a while. Right?

You know, just, probably, you know, almost thirty years. The father and son basically are are the owners. The, main reason for selling is because, they’re not getting along. Right?

The dad has a tremendous amount of commercial real estate holdings. Son wants to go do real estate stuff on his own and get out from underneath the father, and he’s kinda stuck in this business. He’s not really running the day to day. He does minimal things, mainly ordering.

He has a GM in place that’s running the day to day.

And, the, the the other thing it does have is and we’ll get into the strengths and weaknesses here. But thing it does have is it has four or five ecommerce assets that are not being promoted. There’s no marketing going on, no paid advertising.

Mainly how they leveraging and get clients as they have their strategic partnerships with companies like Shopify and and, those types of platforms where their apps run through their those platforms to print on demand, for the products that they offer. And, and one of the unique things about them is that it’s cut and sew. So literally, they they manufacture the product right there. They have seamstature seamstresses in house, to actually, you know, make the product right there as it’s printed out, so and through a sublimation process. So pretty much anything you could imagine that needed to be print wanted to be printed on a on fabric can be done there.

The, let’s see. The biggest strengths, is obviously business tenure and the senior staff staff’s been with them for for years. The the guy who runs it actually plays an attorney from Venezuela, the GM, with, you know, extensive background, and, you know, doing what they do there, but he’s also, just totally committed to, you know, growing the business and running the day to day.

And, customer concentration, this is something I’m I’m trying to clarify right now because I initially read it wrong. I thought that, as of yesterday, one of their clients accounted for, accounted for probably about sixty percent of their revenue, which obviously is not a good thing. Right? Yeah. But, that’s been, I’ve been going back and forth with the broker today on this to find out later today is gonna clarify, because what he’s saying is that’s not accurate, because they actually print directly, or they actually ship directly to the clients. It’s just these platforms are using them, you know, to fulfill on different product lines. So I have to get clarity on that.

But biggest growth opportunity is obviously ecommerce.

Obviously, the print on demand, you know, market is not going away, and, the segment at brand marketing for the different platforms that they have or the different ecommerce assets they have, They have no salespeople, marketing, you know, or marketing going on, in, you know, just one vertical alone is like sports jerseys, that’s, you know, for for local teams, that are, you know, like your your kids’ sports leagues and things like that. There’s nobody reaching out to print on demand, you know, for those types of businesses. They’ve just been dealing with, you know, existing clients that they’ve had for years, but no aggressive growth strategy in place.

Let’s see. So, if we look at the financials, right, basically, year, you know, this past year year twenty twenty two, they had they took a little dip that it was explained, to me based on there was a a few products that were out they were outbid on from a competitor.

And, you know, they wound up taking a little dip on on the actual, revenue last year, but that seems to be back on track here in q one.

And the ask price on this, right now is one point five, and then there’s about six hundred and fifty, seven hundred thousand dollars in inventory. That’s over and above, you know, that.

And, the, the inventory that’s what another thing I was trying to figure out is, you know, it’s not it’s it’s raw fabric. It’s because everything’s being print on demand, so it’s not, you know, it’s not like, you know, individual or yeah.

And I might yeah.

My so, so that’s that.

And I’m basically the the the numbers that I we’ve run over and over again here, it still has come back to me that it’s it’s not, you know, the valuation. It seems a little steep for what it is. Right? And, you know, I’m pegging it somewhere around between seven hundred to eight hundred and fifty thousand would be what my my guesstimate is.

There is about six hundred thousand dollars in, in, equipment. You know, equipment’s about five years old, and apparently has, you know, a fifteen to twenty year shelf life, but I’m sure that technology changes out fairly quick.

So Yeah. And is the is the asking price a million five plus the inventory, and they’re gonna take most of that cash out at close? Or can we use Yes. Okay. So what’s really interesting about this deal, like, you can tell this has been a very, very profitable business over the years because they’ve got almost one point three million dollars of cash already in this business. So, I I think we can do a deal where we include the cash and then we use it as a big part of the closing payment.

One of the things that’s a bit kooky on this deal is the margins.

So if you go back two years, they did almost two million in revenue and made nine hundred and fifty thousand dollars in profit, And then they’ve gone down, a little bit last year and then a little bit more this year, and they’ve lost three quarters of their operating profit. So their EBITDA margins have gone from forty eight percent two years ago to fourteen percent this year. Did they explain why that was? Is it COVID related?

Yeah. I mean, definitely, part of it’s COVID related with the cost of cost of goods, the, freight. You know, he told me the freight on one container, you know, went up, you know, ridiculously. Like, you know, he was I think he was paying, like, two to three thousand dollars for one container cost to get to get it here, and it went up to as high as twenty thousand at one point.

You know? And so, obviously, that ate into, you know, profits.

Okay. Because because the seller psychology scores are not that high Right. That kind of average, What do you think the, appetite would be? So let let’s say let’s say you offered them, you know, two and a half million for this business all in including the cash.

Mhmm. Right? And you gave them half of it down, which is, the bulk of the surplus cash in the business, and then you did a seller note over, say, five years or more for the rest. What do you think their appetite would be for that?

Because that’s a deal I would do right now. If that was the deal, I I would I would take that deal very, very quickly.

I I think one of your challenges is if you go to the SBA on this deal, I I think they’re gonna have some issues about the decline in margins. Just as Right.

I so I I’ve already had the conversation with them. Right? And they said that’s a no go. Right?

They wouldn’t do it. Now he’s reached the brokers. I already let the broker know that, and he’s reaching out to see what’s changed. And I you know, again, it’s the typical broker overinflating stuff and, you know, making it more pie in this guy.

They you know, he would like an all cash deal, which, you know, I don’t, you know, think Every broker would. Yeah. Yeah. He’s had three yeah.

Yeah. He’s had three, he’s had three offers on it already. Two offers, you know, of course, were declined, because of you know, they told me it was because of the, they didn’t have industry experience, and the second one just didn’t qualify. I think it’s now that I’ve dug in deeper.

It’s it’s more the SBA just isn’t gonna do the deal. No. And I yeah.

Have you thought about have you thought about getting private financing and just going at I mean, going at them at a lower price point? I mean, when people in disputes wanna get out of businesses, they typically there’s typically blood in the water because they have to sell that business. There’s nothing more miserable than running a business where you hate your partners or you’re in the dispute.

Right.

So I think that you could you could probably squeeze them a little bit on the price. And, I mean, the broker ultimately wants to get paid.

Sure.

The broker wants to get paid. And with how the market is right now, if he has somebody who has legitimate financing and interest in the deal, I think he’ll he’ll come down a little bit back towards you.

Right. Yeah. Definitely. And I’m I’m physically going on location tomorrow to take a tour of the facility.

Oh, I’m sorry.

And I’m and meet with the actual owner in person. So just to build some more rapport and and just really feel him out. Right?

Great. Kyle, any other comments before I move around the group?

No. I I think I think it’s generally more interesting. I think I would work them down on price a little bit. Maybe I’ve just been too on the buy side too long that all I think about is work how to work people down on price.

I would bang them really hard on the inventory and just, honestly, I’d tell them, hey. Look. I’m gonna have to replace all the inventories so that it said that value to me is almost written down. I know it’s five years old, but I you can really work people on inventory.

Yeah.

The yeah. The inventory was yeah. Yeah. The inventory wasn’t five years old. The inventory is new. It’s just the, the equipment. Right?

The The equipment. That’s what yeah. The equipment that I would work them down on.

So, I mean Alright.

I would ultimately one of the ways I work them down is, let’s say, I’m gonna write down the equipment to zero. It’s five years old. I need to get all new equipment, and I’m gonna need to finance that equipment. So you want me to buy the business?

I’m gonna I I would use that as a big negotiating point. Like I said, otherwise, I think the business is good. The declining margins aren’t great, but a lot of businesses have declining margins right now because costs have been up so dramatically because of inflation.

You know, client debt service eleven percent is a lot, but, I mean, that’s just where we are right now because prime rate’s eight percent. So I’d like to see you get a little cheaper debt. I think it would help you with the service, obviously.

But that would those would be my, you know, general thought.

I know private money debt is gonna be, like, twelve plus right now. I looked at a deal last week, and it was twelve and a half, and they were getting it.

So Right.

Okay.

Okay. Perfect. Jeremy b, what do you think?

Yeah. I think any, you know, any deal that you do, I would definitely want an earn out component to this some somehow, because of the declining margins, the potential customer concentration, issue. I know you you said you’re looking into that more.

But, also, you know, they explained that the decrease in revenues is because they lost out on, you know, some some bigger contracts. My worry with that is they’re competing on price. So when you’re competing on price and your prices are going up, that’s that’s not a good combination there. So, it would have to have, you know, some sort of earn out component for for me to to do this.

Cool. Thanks, Jeremy. Sarkis?

Yeah. A lot of a lot of things have already been said. I mean, my thing, for this would be, you know, the price that you pay for a business. I think if you get a reasonable price, that’s fairly valued.

I think you could make a good go of it. There are some challenges that you have to look at, but apart from that’s already been mentioned. But if you’re able to get a decent price on this, then you could you could make a goal of it, especially because it’s in your lane. It’s kind of things that you do, and it fits in with what you already have.

So I think it could be a good addition to your portfolio if you can get the right price for it.

Cool. What what kind of cross selling opportunities have you got, Dan, with your existing business if you bought this?

One would be to be able to get the sports licensing tied in with it so we could actually print professional and college level sports products, unique products that are unique to us that we can create in house.

Nice. Okay. So there is some upside there Yeah. For sure. And then location wise, how close is it to your exit is your existing business online?

Existing businesses online, that this would be, it’s probably probably about an hour to an hour and a half for me. Okay.

It’s down in my eye. Yeah?

Yeah. Okay.

Perfect. Alrighty. Wayne Teacare, what do you think?

Yeah. I think for Dan specifically, it’s definitely got legs, just for what he’s just said there, the cross selling opportunities which create actually new unique products. But I think for someone coming at this as a stand alone purchase, you know, their first purchase maybe, this one for me would just go in the it’s gonna be too hard to finance unless you come up with some amazing deal with the seller. But the the scores, the psychology scores are are barely over fifty percent. So for me, it’s it’s one that I’d keep working on in the background, but I wouldn’t be paying a huge amount of time to this. It just could be very difficult to get any kind of fan financing on.

So too hard bucket. Okay. Hearing that. Cecilia, what do you think?

I think that’s something we’ll continue to pursue.

We’re working on this. We’ll continue to pursue.

He he’s motivated to leave. He really in fact, he was really frustrated on the call why it hasn’t sold so far because he really wants to get out and get out and go do real estate. And, I’m I’m crossing my fingers on Dan being there. I think he’ll work on his psychology and and get something, reasonable.

Okay. Perfect. Steven Holland, what do you think, buddy? You’ve done some deals. Would you do this deal?

Yeah. I I actually like this deal.

I I thought you would, so I called on you.

Yeah. I like this deal.

I think well, obviously, for Dan, I think it, it makes a lot of sense, with the synergies.

I I think that there’s more, to be wiggled out of these owners. So I love that he’s going down there to meet him in person. It’s it’s proximity where he’s at. So, you know, knowing Dan, I I think he’s, I think he’s gonna be able to build some good rapport down there. He he he does really well with seller meetings, and, I think if he’s present, you know, and tosses around some different options, I think that there’s there’s room to wiggle this.

So, you know, allowing them to be more motivated than you are, I think if he just takes his time and and continues to give some logical options.

You know, I I took a phone call halfway through that, but with the the amount of cash on hand, I missed what you guys said. The asking price included the cash on hand. Were they open to doing a full a full sale including the cash and and and then using that cash as part of the down payment?

Yeah. We haven’t gotten that far. They they definitely initially you know, we’re saying they were gonna pull the cash out. Right?

So but that was the initial conversation. So I think that’s, you know, maybe shifting as they have not they and, Carl, you’ll like this. They actually has a nonexclusive LOI on it right now. And we asked him on the seller meeting.

I was like, why would there be a nonexclusive LOI? I’m trying to really understand this. And he got and the seller told me, he’s like, I don’t like the guy. He was like so it’s like so I was like, oh, okay.

That made sense.

Right? That’s funny.

Does anybody have any questions for Dan, on this deal before we vote?

Well, we had some questions on the last one.

Steph, did you have a general question, or was it related to, the last deal?

It was related to the last deal, but the the one question that I do have Dan kinda touched on as far as licensing for college and, professional sports. Have you looked into, what all it entails to get those licensing agreements in place?

Yes. I I already have distributor licenses through third party distributors. So I’d be able to Awesome. Yeah. I’d be able to leverage some of those relationships as well.

And and then I already went down the path of what it would take to get them, you know, for our own, you know, entity as well. Obviously, it’s gonna take a little work, but, you know, it’s just knowing the right people.

Yeah. Fantastic. I think that was my only question about this. Cool.

1. No problem. Amanda Lacroix, what do you think? I know you’ve looked at kinda similar deals. You’ve been messaging me on some kind of ecom clothing, type stuff. What do you think?

So I have to be completely honest. My three year old took me away from your presentation because she couldn’t find a toy.

No problem. That’s okay.

I didn’t hear the whole thing.

I’m so sorry.

Yeah. No problem. That’s okay. Gary Waddleton, What do you think? You’re on mute. Can you unmute?

Sorry. Didn’t work. Sorry. Yeah. I like a business with cash. I’m I’m obviously not my lane, but, the margins are concerning for me. I I don’t know how I would grow it, but, Dan mentioned some cross selling opportunities that I think would be exciting.

So Okay.

Perfect. Jason Marsh, do you like this deal?

Yeah. I like it. This is definitely not my space, so I don’t have a deep understanding of all of what goes into this one. I’m more in the service space. But but, yeah, I mean, I like I like what I’m hearing based on the feedback.

Okay. Cool. Last but not least, Mark Hall. Just be able to get Mark on. So when I was in Vegas last weekend, Mark was there, and, he, he gave me this amazing can you guys see it? This amazing Dealmaker World Society light thermal mug. And do you know what’s on the back?

I love numbers, and numbers love me, Which I had a big latte out of this this morning, Mark, to, Excellent. I was thinking about you when I was drinking my coffee. But, what do you think about the deal?

You know, I I mean, I like it. I mean, it’s one hundred percent outside of my, wheelhouse, so it it’s not something I would I would run after. But having met Dan in, in Tampa and hearing his story about his experience with online sales and marketing and stuff, I I think this is something he could probably run with and just crush it over time.

So, for for him, it’s probably I think it’s probably a great deal, but, you know, it’s just just not a space I know a lot about.

But, I think a lot of positive upside there, particularly with the the licensing component and thing. If you can put that in place, that’s a you just probably start printing money.

Yeah. Great. Great. Well, guys, get your votes in. I’ve greenlit forty. I’ve, for for Dan on this, I I really liked, what a lot of the comments were, particularly what Steven Holland said, that I I think the seller psychology will change on this deal over time, especially when Dan goes and meets him. It sounds like the seller’s got some deal fatigue.

So deal fatigue is a very powerful weapon that we can use in in negotiation. You know, Kyle mentioned some aspects of the deal he would pick at, to, to increase that negotiation. But one of the things that could really helps you on a deal is when sellers just get weary. You know, once they’ve had LOIs accepted, financing’s not worked out, another offers come in that are like the buyer.

Oftentimes, you know, especially when there’s an absolute boatload of surplus cash in this business, which is, you know, at least half of the total value, you know, often, you know, they can take that out at closing as part of the deal. It’s often more tax efficient.

I know this is an s corp, not a c corp, but there’ll still be some tax efficiency for them on taking that money out. And then having a seller know over time as well could give them a capital lump sum plus, cash flow, for a number of years. So I do think it’s got legs. I really, really do.

And I think this is a good deal as a stand alone business, but I think it’s even more beneficial for Dan to combat it while he’s already gone. Because if he’s just jobs, generally, as a marketer, his ability to scale these things, I think, Dan, this could be a really, really awesome deal for you. So and and I think most people agree with that. Lots of, lots of mid to high green lights.

Even people that this deal is not in their space, they’re looking at it, you know, from a coal tower perspective.

They’re still giving it pretty, pretty decent scores. Jim Jim Helms, you you had, some good comments in your in your score there. Do you wanna elaborate a little bit more before we move on to deal number three?

We’ve got some I I’ve reviewed this with Cecilia last night, and I didn’t know Dan was involved.

That makes me feel a little better, not a knock against Cecilia, but just knowing Dan’s background and and, within this space. Did know Jessica was involved, and I suggested to Cecilia that, she have Jessica reach out to JR to review this because I know he’s been active within this space recently.

Yeah. Yeah.

But the things I didn’t like was the customer concentration.

You know, one one one client is seventy percent and then the declining revenues. I just I I just don’t take that at face value that it’s due to the pandemic anymore. At some point, if this GM that’s, the attorney down in Venezuela who’s focused on growing the business, what the hell has he been doing for the last two and a half years since pandemic ended?

Because he hadn’t been growing.

He just running the operations as on-site.

No. But I’m just saying those are questions I would wanna dive deeper on and understand. But I just don’t accept at face value. It’s due to the pandemic all the way through the end of twenty twenty two when everything else has rebounded is all.

Right.

I’m trying to be tough. I gave it a green light with for you.

But Sure.

Cool. Alrighty. Well, hey, Dan. Great job. Great presentation.

Very thorough.

Excellent seller notes. That’s what a submission, should look like. Model on one page. This was really great.

Everything on one page, all the numbers Cecilia and Jessica.

Without without the team, it wouldn’t happen.

So Okay.

Well, hey. Great great team effort. Again, love to see people collaborating, on this stuff, which is really, really good. I’ll take Joe Maguire, and then we’ll move on. Joe, what do you think?

No.

It’s it’s a little out of sight of my lane, but I do think it’s got a lot of potential for the day.

If anybody can do it, it’s Dan.

Yep. Yep. Cool. Alright. Nice. Let’s do a few more. We’ve got some time. Sean Bresler, what do you think?

I love it, especially with Dan Yes.

Yeah. I I think it’s, I think it’s great by stand alone. There’s there there’s some things that you can do to really I I think we were, you know, part, but but to get a really good deal on this, and then you could expand it greatly. So I I’m even you know, it’s, it it I you you give them a a a share, and give them some some opportunity to to gain more money, on on the back end there. I think you could you could really get a good annuity deal on this.

Yeah. Cool. Thanks for that. Eamon? Eamon, do you like it?

Well, to me, it wasn’t really in my lane. I haven’t really met Dan, but by, the accounts of what everyone else is saying, I think he’s probably the perfect guy to take it to the next level, really. But not a deal for me.

Okay. No worries. Well, hey, Dan. Pretty conclusive feedback there. It’s a great fit for you. It’s in your buy box. Lot of synergies.

Seller psychology is probably gonna change. Boatloads of cash in the business. It’s got a lot of the hallmarks of of the perfect deal. So, go, go have the meeting, build a rapport, reach out to us if you need any help. So, great job.