Potential Cash Flow
This small 16 year old firm, which operates in 25 states, is the undisputed national leader in its highly niche area of the financial services market (broadly speaking – as it does not engage in traditional financial service related activities). The company relies on its private investigation licensing, data collection and data management abilities, and in-house 18 person print, direct mail and customer service staff to facilitate client’s financial settlements. It is not a debt collection or debt settlement company or legal service; in fact, is quite the opposite. It could best be described as a ‘feel good’ service whose 400,000 plus past clients welcome its unique value proposition. In fact, those who do not qualify to become clients wish they did, as the company is only paid on a performance basis!
Accounts Receivable Included in Asking
The business can be operated from a 2,500 square foot office with a 1,000 square foot warehouse, or less if any of the printing, mailing, information technology or customer service functions are outsourced. While the company’s information technology know-how, licensing, business processes and best practices are invaluable, its 85 million person database, which is deemed to be 97% ‘clean’ (usable and accurate) is its crown jewel. Systems for continuously aggregating and improving this database are in place.
The database is comprised of name records that span across all states. The records typically includes resident’s first and last name, middle initial, suffix, previous or current street number and name, city, state, zip code as well as date of last update. At a potential range of $0.08 - $0.15 per record, this database may possess a $6.8 - $12.75 million value. Any measures to expand or improve the database, including entering into partnerships or joint venture relationships, could result in enormous increases in profit to all involved!
While small and comparatively unsophisticated mom and pop style operators may work in overlapping states, none are as heavily invested, licensed or capitalized to rival this firm’s dominant market position. Certainly none has amassed the aggregated database that’s been developed or invested as heavily in data scraping and automation systems. As a result, due to varying state licensing requirements, data sciences investments and 16 years of best practices that have been developed, significant barriers to entry exist and competition is considered to be low.
Growth & Expansion
The family operated enterprise has run on ‘auto-pilot’ for several years, so a number of avenues for growth exist within its current business model. Far more potential exists when its offering and database are applied in the larger marketplace.
Organic growth may be achieved from the firm entering new markets (e.g. new states, some of the largest of which remain untouched), improving the database to be even large and more accurate, utilizing technology to further streamline process and enhancing the company’s credibility by highlighting its unique offering and underscoring its historic accomplishments. Improvements in any of these areas could vastly improve their key metrics, which include an 8% - 9% initial direct mail response rate and a 5% - 7% customer conversion rate.
Tremendous growth may also be realized if the company is able to utilize social media data matches or apply family based locations services such 23 and Me, Ancestry, MyHeritage, Family Tree, to its business model to locate client’s family members.
Perhaps the company’s greatest potential stems from its ability to provide an enhanced service offering to established subscription-based credit or identity monitoring services, or by otherwise partnering with these service providers to capitalize on their reach and credibility. The enhanced trust that a Credit Karma, Free Credit Report, Experian, Equifax, TransUnion, Fico bring to the table could yield unbelievable results. These firms would also reap immediately benefits from their ability to offer this value added service alongside their own offerings!
Support & Training
Reason for Selling