Daniel Batista bought a $1.9M indoor playground at 3.7x SDE with 50% margins

The Setup Daniel Batista spent eight years in international TV and film (Universal, Warner Brothers, Paramount), launched Universal Pictures offices in London and Mexico, and served as COO at a Blackstone-backed content company. Kellogg MBA. First encountered ETA in business school. Cuban-American, LA native, new father. He started searching self-funded, industry-agnostic, within an hour's drive of home and a $750K SDE floor. Nine months in, deal flow was fine but nothing lit him up. After hearing Shell Zhang on Acquiring Minds talk about buying something you're actually excited about, Daniel narrowed the aperture to family entertainment centers and tour operators. Flow dropped. Fit improved. The Deal Candeeland Downey (branded Candyland Kids, two E's in the parent brand) is a 10,000 sq ft indoor play center inside a Downey mall. Soft play structures, slides, ball pit, arcade, café, party rooms, massage chairs for parents. Built for the 3-to-8 demographic with a dedicated under-5 zone. Numbers: - Revenue: $1.9M, stable year over year - SDE: ~$900K (both 2023 and 2024) - Net margin: ~50%, well above the 35-40% industry band - Mix: 72% admissions, 15% café, 7% parties, 5% memberships - Google: 4.7 stars, thousands of reviews Purchase price $3.45M, 3.7x SDE. Capital stack: 80% SBA, 5% seller note, 15% equity (~$500K from friends and family). The seller side was unusual. Founder Peter started the concept in 2019 just before COVID, kept 50%, and his brother- and sister-in-law owned the other 50% and ran Downey day-to-day. They wanted to move back east for a family health situation. Peter has since shifted the Candeeland system to a $100K flat licensing fee and closed it to new licensees; Daniel is grandfathered as an existing owner, which preserves access to Peter's build-out playbook and supplier network for future locations. Diligence was cleaner than the three-year age of the business suggested. Tax returns tied to P&Ls. Third-party QoE confirmed cash. Equipment was nearly new. Prior owner had survived COVID with PPP. Operating Moves Daniel inherited a business that worked and had been under-squeezed. The playbook is incremental, not transformational: - Pricing: no admission increase in three years. Party rooms already bumped. Admission increase queued after the arcade refresh - Arcade: replacing a revenue-share arrangement with 15 machines he owns outright at ~$1K each - Parties: adding princess and character appearances, themed upsells - Events: booking character appearances (Bluey, Paw Patrol, Labubu) to drive weekday admissions - Marketing: prior owner spent almost nothing. Social, influencer, and paid digital are all greenfield - Membership: currently 5% of revenue, undermarketed, priced low Cost structure is why the margin holds. Lease, payroll, and insurance are effectively fixed. Playground maintenance ran under $5K a year because the modular structures let you swap one obstacle instead of rebuilding. Every marginal admission after fixed coverage is close to 100% margin.