Deal Flow: Axe-Throwing Business

Well-Established, Multi-Location, and Profitable Recreation Business

Alright, in this week’s Deal Flow, we’re looking at an absolutely bonkers deal where you can buy a multi-location axe-throwing business. Yes, you heard that right: a multi-location business where people come together to hurl axes at targets for fun — and it’s making money.

It looks like a business that’s found a super-sweet spot in a niche that’s surprisingly light on competition. For now. You’ve got an established brand, a crowd of axe-wielding maniacs (er.. fans) who keep coming back, and a business model that’s ready to scale. It’s not some scrappy little startup either; this is an established operation with a loyal customer base. Oh, and did I mention it’s profitable? Like, it has cash flow.

And it gets even cooler. The asking price and the cash flow multiple are actually favorable. But, of course, it’s not all sunshine and double-headed axes. If you decide to buy it, you’ll need to keep an eye on market trends and make sure you can add a dash of innovation to keep it fresh. With that, this business has serious potential for any budding acquisition entrepreneur.

Before you start daydreaming about becoming the new king of the axe-throwing empire, make sure to do some hardcore due diligence. Lease agreements, cash flow consistency, and customer demographics? Yeah, these things matter. But if it all checks out, you could be looking at an absurdly cool business that’ll pay you to keep the world flinging axes for years to come.

Business Overview

Business Type: Axe Throwing Recreation Centers
Location: Palm Beach County, FL
Asking Price: $1,350,000
Cash Flow: $527,606
Gross Revenue: $1,642,146
EBITDA: Not provided
FF&E (Furniture, Fixtures, & Equipment): $175,000
Inventory: $15,000
Rent: Not disclosed
Established: 2018
Employees: 22

Business Description

This is a three-location axe-throwing entertainment business in Palm Beach County, catering to a fun, high-discretionary-income clientele. Each location is well-positioned in affluent areas with ample parking and large spaces designed for optimal customer enjoyment. The business is considered one of the earliest and most well-known in the industry, with a loyal and growing customer base. Staff includes a manager and assistant, making it relatively easy to operate, and the seller claims strong profitability since inception.

Financial Analysis

1. Asking Price to Cash Flow Multiple: The asking price of $1,350,000 is about 2x cash flow. This is attractive for the entertainment and recreation sector, where multiples typically range between 2.5 to 4 times cash flow. The lower multiple could indicate the seller is motivated, or the valuation reflects some perceived risk or limitation in the business model.
2. Revenue and Profitability: The business generates a gross revenue of $1,642,146 with a cash flow of $527,606, equating to a profit margin of about 32%. This is a healthy margin for a recreation business, particularly one with multiple locations, which indicates effective cost management and operational efficiency.
3. Asset Value and Inventory: The FF&E of $175,000 and inventory of $15,000 are included in the asking price, representing a minor portion of the total valuation. This would suggest that the business’s value is primarily based on goodwill, brand, and cash flow rather than physical assets.

Operational Analysis

1. Ease of Management: The business benefits from a structured staff hierarchy, with an established manager and assistant in place. This reduces dependency on the owner and makes the transition smoother for a new owner. The staffing structure can contribute to a more passive or semi-absentee ownership model if desired.
2. Location Advantage: Being in affluent areas with significant foot traffic and parking availability makes the business accessible and attractive to the target demographic. This prime positioning likely contributes to its strong customer retention and brand recognition.
3. Loyal Following and Minimal Competition: The business benefits from a loyal customer base and minimal competition, indicating strong local market positioning. Its reputation as one of the first axe-throwing locations in the area adds a competitive advantage, especially as it gains brand loyalty and trust from customers.

Market Trends and Growth Potential

1. Rising Popularity of Axe Throwing: Axe throwing has seen rapid growth in recent years, especially as a unique form of entertainment for events, corporate gatherings, and leagues. Televised tournaments and national clubs have made axe throwing more mainstream, and these locations have leveraged this popularity through club memberships and beginner and expert activities, which keep customers engaged.
2. Expansion Potential: Opportunities exist to expand through additional locations, new services, and partnerships with local event planners or corporate team-building programs. Adding more group events, private party options, or branded merchandise could enhance revenue.
3. Untapped Revenue Streams: The business could explore additional revenue streams like food and beverage sales, themed nights, and loyalty programs. Introducing franchise or licensing opportunities for other markets could also capitalize on the brand’s reputation as one of the original axe-throwing centers in the region.

Risks and Considerations

1. Niche Activity and Market Saturation: While axe throwing is popular, it remains a niche activity. A long-term risk is market saturation or waning interest as trends change. As such, you should consider how the business can innovate or expand offerings to maintain relevance.
2. Lease and Real Estate Dependence: Although details on lease terms and rental expenses are not provided, the fact that the business is relocatable suggests leases are involved. Understanding lease terms, rent escalation clauses, and the flexibility of the landlord agreements is essential to determine location stability.
3. Operational Costs and Staffing: With 22 employees, managing staffing levels, employee turnover, and training costs will be critical, especially given the unique skill set required for axe-throwing instructors. Making sure that labor costs are sustainable and align with revenue during peak and off-peak seasons will help manage cash flow.
4. Owner Dependence on Transition: Since the seller is leaving due to unforeseen circumstances, the transition period will be important to maintain operational continuity. A comprehensive transition plan and support will be critical, especially in retaining key managers and training staff.

Valuation Considerations

1. Reasonable Asking Price: The 2.5x cash flow multiple is reasonable and aligns with the market, potentially making this an attractive acquisition, especially if you’re interested in expanding in the entertainment sector. This multiple also leaves room for you to invest in growth initiatives while achieving a good return on investment.
2. Verification of Profit Margins: To stay profitability, you should review detailed financials to verify revenue and cash flow consistency across all locations. Seasonality, peak periods, and slow times should also be considered.
3. Growth-Driven Potential for Value Creation: If so motivated, you could leverage the business’s established brand and explore expansion opportunities like adding locations, diversifying offerings, or implementing additional membership tiers. Given the brand’s strong foundation, these initiatives could drive a strong return on your investment.

What do you think? Check it out and let me know!

Deal Flow: Axe-Throwing Business by The Silverwave Podcast

About: Silverwave Deal Flow combs through and analyzes thousands of businesses available for sale that may be of interest to entrepreneurs looking to acquire an existing business. We are not affiliated with the business listed for sale unless otherwise disclosed.

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