Stage Setup Company: Inside a $28M Theater Business Deal

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, [email protected] and mention us ;) At A GlanceBusiness Type: Theatrical supply and constructionLocation: WisconsinRevenue: $28M (2024 projected)EBITDA: $1.3M (2024 projected)Employees: 74Established: 1981Customer Base: Theaters, casinos, schools, TV studios, and theme parksOwners: Two brothers, one ready to fully retireWhat We Thought:Red FlagsInconsistent 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 FlagsStrong, 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 VerdictMichael 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.Subscribe to  weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking hereDo you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.Do you enjoy our content? Rate our show!Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.For inquiries or suggestions, email us at [email protected]