Shell Zhang·January 30, 2025

Buying a Not Boring Business with $600k SDE | Shell Zhang Interview

Shell Zhang is a Chinese-born immigrant with a background in management consulting, Fortune 500 corporate strategy and M&A, and a technology startup who bought Nada's Italy — a boutique luxury guided tour operator focused almost exclusively on Italy — for just under $2 million (just above 3x SDE) in late 2024. The business generates approximately $3 million in revenue and nearly $600k in SDE, with high-teen net margins and a negative cash cycle driven by upfront deposits. Founded 20 years ago by Italian immigrant NADA, the company ran retail locations in Charlotte and Florida pre-COVID, then shed its physical presence and 15-20 US employees to become a fully remote, nationally-addressable business — but never properly rebuilt its digital marketing, leaving revenue below its $4-5 million pre-COVID peak. Shell saw a business with an exceptionally strong product (all-five-star reviews, repeat customers who travel up to 11 times, 10 loyal Italian tour leaders) but virtually no online presence or marketing spend, and framed this as a perfect fit for her own strengths. Her first post-close wins included cutting payment processing fees from 6-7% to just above 3% of revenue and eliminating a credit card storage security risk. She is now rebuilding the website and developing a digital marketing strategy targeting the same affluent, retirement-age demographic the business has always served, with longer-term options to expand to adjacent countries (e.g., Greece) or a younger demographic.

Deal facts

purchase price: ~$2 million (just under, with fees totaling ~$2m to close)
multiple: just above 3x SDE
sde ebitda: just under $600k SDE
revenue: ~$3 million
notes: Went above asking price due to competitive interest. Pre-COVID revenue was $4-5 million. Gross margin ~40-50%; net margin high teens. Negative cash collection cycle — deposits and full payment collected before service delivery. Working capital (customer deposits) transferred with business. Payment processing fee immediately reduced from 6-7% to just above 3% of revenue post-acquisition.

Why this business

Shell had always been passionate about travel and would have picked the travel industry from the start of her search if there were more deals in it. When Nada's Italy appeared, she was drawn to the strong five-star reviews reflecting an exceptional product, the simple and understandable business model, the negative cash cycle, high ticket prices that enable real marketing spend, and the fact that NADA had built a fully remote team. She also felt a personal connection with NADA — both were immigrants who came to the US in their early twenties and built something from nothing. She saw the business as having a strong product but weak marketing, which matched her own strengths and offered a clear growth path.

What's working

Highly experienced, self-managing team in both the US (6 full-time employees) and Italy (~10 tour leaders/contractors) who are passionate and run day-to-day operations without needing owner involvement
Exceptional product quality reflected in all-five-star reviews across every platform, with customers traveling with the company 5, 6, 7, even 11 times
Negative cash collection cycle — deposits and full payment received months before tours run, so the business always holds a cash surplus
Very small group size (capped at 12) creates personal connections between guests and tour leaders, making both customers and guides loyal and sticky
High ticket price ($8,000-$9,000 per person, ~$16,000-$18,000 per booking for couples) allows meaningful marketing spend and preserves pricing power
Immediate operational win: reduced payment processing fees from 6-7% of revenue to just above 3% on day one
Pre-COVID revenue of $4-5 million demonstrates the business can scale significantly with proper national/digital marketing
70-80% of customers at acquisition were repeat customers or referrals — extremely loyal customer base
Asset-light, no inventory, fully remote — well-positioned to weather economic downturns as demonstrated by surviving COVID

What's hard

Revenue had declined from $4-5 million pre-COVID to ~$3 million at acquisition, with volatile SDE across recent years making valuation and underwriting difficult
Travel is a high-risk category for payment processors due to chargebacks and advance collections, requiring extensive vetting to find a reasonably priced processor
Business is highly seasonal — 90% of tours run in May, June, September, and October, creating cash flow and planning concentration
Key-person risk at acquisition: NADA's name is on the brand, she had personal relationships with Italian vendors and early customers, and she is Italian running Italian tours
Acquired just days before peak season (September), leaving almost no runway to review operations before being thrown into high volume
Tour dates and capacity for a given year are set 6-12 months in advance, so marketing-driven growth has a lag of roughly one full year before it can materialize in booked tours
Very few comparable businesses come to market, making it a hard category to source in
Discovering that customer credit card numbers were being stored by the prior owner — a significant security risk that had to be immediately remediated

Notable quotes

I realized I couldn't sit there and do the same thing for years and decades. That's just not me at all.

After the first day, meeting with the team, we announced the transition, everybody was crying. And then for the rest of the week it was so quiet for me because nobody came to me for anything. I was a little unexpected because I thought, you know, it's mostly a good thing, but at the same time I was like, I have no idea what's going on in this business.

I think I paid a little bit above 3x because there was a lot of interest, given that it's a glamorous business. I really wanted to make sure I get this one because I liked it.

I think it should be something stimulating. If you love what you do you never work a day. Life is too short. I'm willing to trade money or the size of business if I get to do something that I can really enjoy.