Jan 12th (Mon) 9 AM NY

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Deal Alert: Cash-Flowing Premium Coworking Business (Operator-Friendly)

📍 Location: Major U.S. metro, high-demand business districts
🏢 Sector: Coworking / Flexible Office
🏪 Locations: 2 established sites
💰 Asking Price: $3.5M (~3.8x EBITDA)
📈 Financials: ~$2.7M Revenue | ~$920K Adjusted EBITDA
🧑‍💼 Owner Involvement: ~1 hour/day
👥 Staff: 5 full-time
📑 Leases: Long-term, locked through 2028

🌟 Why This Business is Great:

✔ This Is Not “Hype” Coworking

When most buyers hear coworking, they think volatility, short-term memberships, and WeWork-style risk.

That’s not what this is.

Roughly 83% of revenue comes from private offices, not day passes or hot desks. These are longer-term members paying predictable monthly rent. From an M&A perspective, that revenue mix materially changes the risk profile.

This behaves much closer to a service-heavy office rental business than a trendy coworking brand.

✔ Strong Margins for the Sector

A ~34% EBITDA margin in coworking is meaningful.

It tells me:

  • Pricing power exists

  • Cost structure is under control

  • The business isn’t being propped up by owner add-backs or unrealistic assumptions

At ~$920K of EBITDA on $2.7M in revenue, this clears the bar for a real operating business, not a lifestyle play.

✔ Semi-Absentee With Real Infrastructure

The owner is largely hands-off, spending about 1 hour per day.

That only works because:

  • There’s a long-tenured operations lead

  • The team is small but stable

  • Daily execution does not rely on the owner’s presence

From a buyer’s standpoint, this reduces key-person risk and shortens the transition curve.

✔ Lease Visibility Reduces Near-Term Risk

Both locations are leased through 2028.

That removes near-term renegotiation risk, which is often a major diligence concern in flex office deals. While fixed rent cuts both ways, having lease certainty provides planning clarity for the next owner.

🚧 Risks & Things I’d Underwrite Carefully

Fixed Rent Is the Main Risk

This is not passive real estate.

Rent is a fixed cost, so occupancy discipline matters. Any buyer needs to understand:

  • Break-even occupancy by location

  • Sensitivity to vacancy

  • Local demand dynamics

That said, this is an operational risk, not a structural one.

Not SBA-Eligible

Under current SBA rules, this deal doesn’t qualify.

However, with ~$920K in EBITDA, the cash flow can comfortably support private debt or structured seller financing. This limits some buyer pools but doesn’t impair deal viability.

Operator Mindset Required

This is not a “buy it and forget it” asset.

It rewards:

  • Active pricing decisions

  • Corporate sales focus

  • Basic marketing execution

Buyers looking for fully passive income will be disappointed. Operator-buyers will see opportunity.

🚀 Growth Levers I See Immediately

🔹 Pricing Optimization

Most coworking businesses underprice during high-demand periods.

Dynamic pricing, office tiering, and tighter renewal discipline can expand margin without adding space.

🔹 Corporate & Team Offices

Corporate teams have:

  • Higher LTV

  • Lower churn

  • Fewer service issues

Pushing this segment alone can materially improve revenue quality.

🔹 Virtual → Physical Upsell

Virtual office members already trust the brand.

Converting even a small percentage into physical offices or part-time space can drive incremental EBITDA on an already-fixed cost base.

🔹 Marketing Beyond Word-of-Mouth

Word-of-mouth works — but it caps growth.

Basic improvements in:

  • Local SEO

  • Broker relationships

  • Direct corporate outreach

can move occupancy without heavy spend.

🔍 My Analysis:

This is a solid, operator-friendly acquisition, not a flashy growth story. The business has real cash flow, strong margins for the coworking sector, and a revenue mix dominated by private offices, which creates predictability. At ~3.8x EBITDA, the pricing is fair for a semi-absentee operation with existing management and lease visibility through 2028. The main risk is fixed rent, which means occupancy and pricing discipline matter, but this is an operational issue—not a structural flaw. With modest improvements in pricing, corporate sales, and basic marketing, incremental revenue should flow cleanly to EBITDA. Overall, this is a buy-right, operate-clean, compound-cash-flow deal best suited for an operator or disciplined buyer who values stability over hype.

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