Welcome to Upper Market

Each week, I hand-pick & highlight one business that passes the “eye-ball” & “tell me more…” tests.

The end of the financial year is nigh.

With two weeks of FY26 left, the owners who have been preparing to exit are beginning to surface. As surely as Feehley Hill behind Arrowtown will soon turn its vibrant orange and red, the call of life after business is starting to reach these sellers.

Expect to see stronger businesses coming to market over the next few months.

And don’t let the allure of a European summer distract you from looking.

What’s ahead in this Newsletter

Earlier this week, I announced a waitlist for an in-person workshop I’m running in Auckland on Saturday 25th April (9am-2pm).

9 of the 20 Workshop tickets are gone

4 out of the 5 Private Dinner tickets are gone.

If you’d like to join, here’s the → waitlist

You can expect me to come prepared and give you my best.

We’ll start from the top (why buy businesses/build a portfolio), walk through sourcing, negotiating, due diligence, financial engineering, finding investors.

And even rip through what to be prepared for after closing.

I’m looking forward to it and once again, here’s the waitlist.

Friday Night I was Newtown (Sydney) and found myself in a Frozen Yoghurt Shop.

Truthfully, I didn’t get into the store for about 20 minutes

Because the line was so long.

This gave me enough time to take notice of what was taking place and reflect on how hospitality outfits are not all the same.

The store wasn’t selling anything warm. So it didn’t need a full spec kitchen or extraction. Yes, it did need equipment to serve Yoghurt and keep it cold.

The staff weren’t Chefs. There was also only three of them. They didn’t need to know how to do anything other than instruct customers on how to serve themselves from the machines, replenish toppings when they were low and take payment (easy to hire for)

Everything was paid for in weight (practically no wastage)

There were no tables, so no firm need for large floor space, eccentric fit out or hours spent cleaning.

Everything was repeatable and just made sense.

A business like this is almost primed for scale. The capital input can easily be defined after the first store is set up and works.

All that’s left to do is understand population and foot traffic requirements to help you figure out where to put the coming stores as you scale.

I found it particularly interesting that four dessert shops have come up for sale this past week in New Zealand.

Trash isn’t boring - it’s sexy.

Construction, renovations, clean-outs and demolitions all generate waste. Someone has to collect it, transport it and dispose of it.

Two skip bin businesses are for sale this week, both located in Auckland.

Individually, these types of businesses are typically small owner-operated logistics operations. But when you see two appear in the same region at the same time, it raises an interesting question.

What happens if you combine them?

The first thing to understand about skip bin businesses is that the economics are largely driven by truck utilisation.

The business is effectively a “glorified” transport business

If the truck is moving bins throughout the day (dropping off, picking up and cycling through jobs efficiently) the business can generate strong operator earnings.

If the truck sits idle or spends too much time travelling between jobs, margins deteriorate.

Anecdotally, I’ve seen several others come up for sale over the last couple of years. This tells me there are more out there that are available for you to buy, build and grow through acquisition.

Waste removal isn’t discretionary.

Builders, renovators and landlords don’t debate whether they need a bin. The trash HAS to go. They simply need one delivered and collected.

Speed and reliability often matter more than price.

Which means operators who can deliver bins quickly and service jobs efficiently tend to capture repeat customers.

This is where scale begins to matter.

A slightly larger operator with more bins and more trucks is able to respond faster and handle higher demand without stretching capacity.

Here are a couple of things that I’d want to look at:

First is bin utilisation.

How many drops and pickups are happening per day? Understanding the current job volume is critical to determining whether the truck is already near capacity or whether there is room to grow.

Second is customer acquisition strategy & cost.

Who are their existing customers, how are they currently getting them and what’s the cost to this.

This gives you the inputs needed to understand costs on pushing up bin utilisation.

Third is customer mix.

Is the business primarily servicing residential customers doing clean-outs, or does it have relationships with builders and contractors who generate repeat work?

Construction-based clients tend to provide far more predictable demand. How did it get these customers and how can it get more of them?

The Drawbacks: Capital Expenditure

To grow, you’re going to need more bins. This is going to cost money. Capital expenditure can be painful in a business during its early stages.

That’s why in a fragmented industry, growth through acquisition is the ideal strategy to utilise. You’re going to end up spending money buying more bins, why wouldn’t you look to spend it on owning a competitor?

The Drawbacks: Hiring

Finding quality staff to operate the vehicle may be tricky. The blue collar world does exist, but you are unlikely to have a steady stream of high quality applicants looking to do this work.

Final Note: Businesses like this generate a lot of interest for one reason:

It’s simple to understand and operate.

If you want more details on either of these businesses or would like an introduction to the sellers, just reply to this email.

Beauty Salons are a good example of a simple service business producing strong operator earnings with relatively straightforward operations.

There’s a South Island based clinic which is currently operated under management and allegedly nets over $10,000 cash surplus per month.

It seems as if the team and systems can support day-to-day operations without direct owner involvement. Necessary for anyone new to the industry to be able to take the business over in peace.

This sits under the earnings threshold that I would recommend, however here’s why I like them:

1) These systems can scale. Majority of the output is labour orientated, perhaps mildly capital intensive with machines. Watch out for fit-out costs.

2) The industry is fragmented. More will come up for sale and it will fit into a buy & build a group strategy. This is the only time I would recommend a smaller business (if it’s part of building a group of similar companies)

3) Upsells. I can guarantee you that not all beauty based businesses are run the same. They will use different machines, provide unique services at varying costs. Researching the industry will show you what services you are missing and which will yield better returns. Implement what’s necessary in all future acquisitions and assess deals under your new lens.

4) Customer Lifetime Value. The number one metric to measure. If you know on average how much a new customer is worth to you, you can be certain of your advertising & customer acquisition costs.

If you can figure out points 3 and 4 in this industry and understand how much customers buy, how frequently they buy, what you should pay for customers and how to get them to buy more - you are playing a very unfair game when it comes to 2nd, 3rd, 4th acquisitions.

^these deals are better than pornography.

Note: These customers will be paying at the time of service (perhaps even a portion in advance to book the appointment? So the cashflow cycle also checks out.

Risks

The main risks sit around staff retention and labour availability, as beauty services depend heavily on skilled technicians. These technicians may also be incentivised or interested in started their own clinic in the future.

People say you can’t get good talent, but I disagree. VIVO hair studios was acquired by Castle Rock Partners (who also own Hells Pizza, Majestic Horse Floats and The Tile Depot). The nature of the talent is similar, but they’ve figured it out. Back yourself and figure out what the right system is to find + train them.

New treatments, machines and up-skilling. Take pizza’s for example. The method we use to make these hasn’t changed much. Making people beautiful has. Take Clavicular’s approach for Bone Smashing for example (I’m not linking this).

It’s not a slam dunk, it’ll take some work, but the mechanics may be there.

If you want more details on this business or you’d like me to put you in contact, reply to this email