In this session, you will hear from three buyers who are actively on the hunt.
Stacy is the creator of Her.CEO, a website that inspires entrepreneurs and shares website buying and selling experiences of her own and the Her.CEO audience. While still in a 9 to 5 job, Stacy got her start buying websites on Flippa, which is what allowed her to gain financial independence and break free from her corporate job. She now works for herself buying and selling websites as well as managing her current portfolio of sites. Stacy’s perspective is from the website buyer side, and she is happy to answer any questions related to the individual buyer perspective and what others in her position are looking for when purchasing a website.
Ted is a co-founder of engage:BDR, Inc. Ted serves as Chief Executive Officer & Chairman of the Board, overseeing all aspects of engage:BDR’s businesses.
In 2017, Ted took engage:BDR public on an over-subscribed IPO, which has yielded successful acquisitions and more than $50M in capital raised. Prior to engage:BDR, Ted was with MySpace.com from its launch, developing strategic marketing initiatives. Working very closely with founders Chris DeWolfe and Tom Anderson, Ted was responsible for launching the brand in its infancy. Also, Mr. Dhanik innovated the business development practice at LowerMyBills.com in its early stages through acquisition by Experian; he was an integral part of the early development and launch of the consumer lending program at NexTag Corporation, a competitor to LowerMyBills.com and LendingTree at the time.
Mr. Dhanik has worked for or been a partner at several other companies in the areas of business development, sales, and key managerial positions. Ted sits on boards or advises other tech startups and is an active mentor to Los Angeles-based startups.
Ted is passionate about remaining a thought-leader in the digital advertising industry. His writings are regularly published in publications including Ad Age, Forbes, Fast Company, AdExchanger, VentureBeat, and several other top-tier U.S. publications. He contributes to the development of industry standards and positive change, sitting on IAB committees including Anti-fraud Workgroup, Anti-malware Workgroup, Traffic of Good Intent Task Force, Programmatic Counsel, Digital Video Committee, Mobile Advertising Committee and Performance Marketing Committee.
Bryon is the CEO/Owner of Human Proof Designs. His company has been helping entrepreneurs start and grow online businesses since 2013. Bryon started his career in technology twenty years ago as a development engineer and spent many years providing technology consulting services for large U.S. based firms such as Microsoft, Accenture, Berkshire Hathaway, and Exxon. He started his first consulting firm 12 years ago and has since founded several online businesses. Bryon currently manages a remote team of 60+ professionals across multiple countries building and growing online businesses.
Q: Tell us what it is like to take a company public?
Ted: It’s very exciting. I’m a startup guy and going public means I am no longer a startup guy.
Q: What was the first thing you bought and did it work out for you?
Stacy: Unfortunately, the first thing I bought was not a success. Due Diligence is key. Make sure you get access to everything you can to verify it. Cross you i’s and dot your t’s.
Q: What are you looking to acquire and why that asset?
Bryon: Looking for opportunities where the site can be improved. Where can I save costs and where are there revenue opportunities that are being missed. It’s about finding those that have upside and can be improved.
Ted: I don’t want to inherit someone else’s problems. Accountability is key from the seller and looking for single points of failure and bottlenecks. Currently looking for Apps and websites with traffic either with or without ads.
Q: What do you want to acquire next?
Stacy: I’m looking for something that has a very strong brand. Not reliant on one source of traffic. For example, the website is reliant on Google search so if there is a Google update I want a lot of direct traffic so it won’t be as adversely affected.
Bryon: No blackhat practices. Give a lot of the information up front as we are buying 5 – 10 sites a month so we don’t have time for a lot of back and forth.
Ted: Just to add to that, there is this holy grail of organic traffic that doesn’t exist. A lot of the big sites out there it’s about content arbitrage and we love it. As long as you are buying traffic from the right places. Your only limitations are capital. We can grow a business fast just based on what media we are buying. That is where we think a business can grow. Being able to really demonstrate where your traffic is coming from. Demonstrate you know how to buy media.
Q: What do you think about conduct and how a seller should conduct themselves?
Bryon: Developing a personal relationship and get to know the owner. Develop a connection with the seller. Be realistic about what the market is saying it will sell for. A buyer will not pay 40x if they can only sell if for 30x in three months’ time.
Stacy: I agree with Brian and how the market sets the pricing. You do have to be able to sell at the same rate. Responsiveness is key as a seller.
Q: Is the expectation that founder and/or owners stick around?
Ted: I don’t want to buy anything where someone leaves. I’m not buying commodities I’m buying businesses that require people to continue to run them until knowledge transfer has happened. We set that tone from day one.
Q: Are you structuring earnouts?
Bryon: Typically if the deal is more than $20k we have some form of earnout that guarantees successful transfer or training that the seller has to participate in.
Ted: Just one thing to be careful of projections perspective because that is what your earnout is going to based on.
Q: What does a good deal look like?
Ted: I think it depends. I’m not in the business of repairing things. We tend to take things that are marginally losing money and optimize if through resources being removed. The bottom line is that our valuation is based on a multiple of EBITDA. We base it on that.
Stacy: When you can see something in the site that the current owner doesn’t. If you buy a site for 20x multiple, I look to earn that back in 10 months.
Bryon: The biggest one is financials. Lots of businesses we encounter are not tracking financials correctly. Likelihood is that if you don’t have clean financials, we will get it a discount.
Ted: Get a real accounting firm involved. These are tech businesses, so all your development can be capitalized and they go on your balance sheet and removed from your P&L. Now you are profitable. All the money you spent building the site is now on the balance sheet and removed from your expenses and that could be the difference between being profitable and a valuation standpoint. That is a big win I normally find.