This couple bought an upscale nail salon for $33.5k down (deal breakdown inside)

If you’ve ever thought about buying a nail salon, today’s deal breakdown will be right up your alley.

Our subjects today are two Acquisition Ace students from North Carolina:

• Ben (who had just spent 10 years in the army)

• And Andrea (who formerly ran a small marketing business)

After they got married, they decided they wanted to work for themselves while also gaining more leverage over their income.

They joined Acquisition Ace in late 2023... and less than 12 months later, they closed on an upscale nail salon in St. Louis.

This was a stellar deal that’s paving the way for Ben and Andrea to achieve total financial freedom in the next few years.

(And it only cost them $33.5k at closing!)

Let’s dive into the details:

Why did they choose this nail salon in particular?

First, they catered exclusively to high-end clients.

Their unique selling point was that they used non-toxic formulas, which they charged a premium for.

They also had a simple service menu — they offered only a few main services, but executed them to perfection.

Second, they didn’t use 1099 contractors for their nail techs like most salons do.

Their technicians were W2 employees, which meant that labor costs would be consistent on a monthly basis.

Third, the salon had been in business for seven years already.

And, it was run by a seasoned team of nail techs and managers who had grown it from the very beginning.

Fourth, their books were spotless.

Having clean books, in and of itself, makes a business worth a higher multiple.

Fifth (and this is important) this deal included not just one, but two separate locations.

But only the first one was fully operational.

The second space was leased with everything ready to go, but the seller never got around to actually filling it out with equipment and employees.

So Ben and Andrea could potentially double the business’ size once they finish what the previous owner started.

Sixth, all the equipment was included.

This included super high-end chairs and other salon materials for both locations.

Now, let’s take a look at the numbers...

• Purchase price: $675,000

• SDE (Seller’s Discretionary Earnings): $240,000

Which puts the multiple at 2.8x.

Ben and Andrea partnered with another buyer, and they got an SBA loan to cover 90% of the price ($608,000).

This left 10% ($67,000) to be paid as a down payment. Each party brought 5% ($33,500) at closing.

After paying the debt service for the SBA loan, cash flow was around $125,000.

They kept 20% of that in the business, which left $100,000.

Ben and Andrea then split that with their partner, which gives them a yearly payout of $50,000.

That’s a 150% return on investment in the first year!

Mind you, this is not passive income yet — everyone will be working together to keep growing the business.

Their goal over the next year is to:

• Improve their onboarding

• Create training videos

• Add a subscription model

• Start selling products in-store

After that, Ben and Andrea will turn their focus towards their next acquisition, to keep scaling their income.

My favorite aspect of this deal was, they didn’t have any experience running a nail salon, but took advantage of this opportunity anyway.

And they did it in a safe and responsible way, by:

• Buying a business with a skilled management team already in place

• Paying for it with savings they already had, without overextending themselves

Which is what I love to see!

If you’re looking to buy a small business, and want access to the same type of step-by-step coaching Ben and Andrea received:

Let me know you’re interested by filling out this 2-minute survey.

Or if you’re selling your business, and would like me to send qualified buyers your way:

Tell me about your business here.

More to come Thursday,

— Ben Kelly