Acquiring Digital Properties: Why, What, and Where to Buy

Today, we are discussing how to acquire digital properties: WHY, WHAT, and WHERE to buy. 

I have been buying digital real estate such as agency websites, SaaS platforms, e-commerce applications, content publishing websites over the past 11 years. Some sites are well-established and successful while others are starter apps I integrate into my portfolio or bundle into existing solutions.

Buying digital properties has definitely been one of the endeavors that I have been enjoying quite a lot.

My Experience Buying Digital Businesses

Some of the acquisition deals have turned into great business opportunities or just tangible investments that have led me to tap additional skills, talent, or whatever it is, into our broader business initiatives. Just like most strategic deals, buying a business is not just about the P&L – what you spend and the possible profit margins. It usually entails a broader strategy that amplifies other areas of work – cross-polination of services or building a portfolio of apps together.

But only some purchases have been a hit. Some brought little to the table or were more challenging to manage than expected. However, even those experiences were valuable because they taught me what to avoid in future deals. So, whether a buy turns out to be a winner or not, each one teaches me something new that I can use going forward.

I have had good and bad deals. I have had some that didn’t make sense and some that I thought were strategic decisions, and some that weren’t. Out of all these practical experiences, allow me to take you through the WHY, the WHAT, and the WHERE to buy a business. 

Why Buy a Digital Business

Business acquisitions are usually closed for several reasons:

  • Buying an existing business from a purely financial standpoint – maintaining the current expense rates and profit margins as best as possible. You spend $50K for a SaaS that makes $4K at $1.5K monthly cost and hope it carries forward.
  • Strategic acquisition – buying a business that you are uniquely positioned to optimize and improve individually or through your team/brand, or assumed into another business.
  • Brand play – amplifying a larger business through a showcase product – like acquiring a media site to amplify an influencer brand or an event platform for a real estate agent specializing in events. Or an e-commerce store to boost product sales.
  • Data play – any tools and SaaS aggregating data that is invaluable to interpret user behavior or consumer habits, thus elevating professionally or strengthening another business.
  • R&D – pivoting into AI, NFTs, or anything else modern that’s not a core expertise. This could end up becoming a strategic solution for another platform, existing or not, or creating a community out of it.

It all boils down to professional incentives and figuring out the “build vs. buy” factor – is this a great buy now and is it worth it going through the hassle of building from scratch, developing a brand, aging a domain, gathering community, collecting emails until you get to that certain point.

Buying a Business to Diversify Income

Business acquisitions are one of the preferred ways to diversify your income. While there are passive assets such as stocks or gold, engaged entrepreneurs may prefer to leverage an existing product and grow it 100X over the next few years.

As an a serial entrepreneur and an angel investor myself, I’ve managed to scale several acquisitions both as passive revenue sources and as strategic assets for the other companies.

And while launching a brand new asset takes time, acquisitions carry certain benefits:

  • Domain Authority and Credibility – Existing businesses, unless they have just started out like three months ago, have domain history, and high domain authority, which nowadays is hard to acquire. Their domain history, internal and external links, and even stories have built their credibility over time. 
  • Content Assets and Solutions – These assets could be actual products or solutions that come with the website,  or simply content that rank well and have already been tested to do well with SEO and do not need to be built from scratch.

Defining Acquisition Goals

The thought processes in deciding on investing in a digital property usually entail knowing the following:

  1. The type of investment – I can either pick among stock, real estate, leads, or any of the other endeavors
  2. The purpose for the investment – Will I use that as a diversified channel? Or should I focus on that to grow the strategy? And if I’m about to grow that strategy, it is either complementary to what I do for a living and must serve as an additional source of income. I also recommend that to people who want to work on something, but can’t really build or don’t have the skills or strategy to build an entire portal, platform, strategy, and so forth. 

Indeed, it is easier to pay upfront and get something going from what is already out there and has been started. Deals can vary quite a lot. There are some turnkey solutions that literally cost a couple of hundred dollars while there are actually profitable deals that cost tens of millions. The variety will provide a handful of opportunities in the process.

What Digital Property to Buy?

Now, this is a segmentation of two different types of stories. We have business sizes and business categories.

In terms of business sizes, there are some bootstrap, turnkey, and very cheap solutions out there that normally are a combination of an existing solution that is being resold dozens of times. 

For example, now, ChatGPT and OpenAI, are pretty popular. And existing solutions on the market allow you to actually tap into them, connect them to a website and install WordPress, then connect the third-party provider, and have a service that generates content for you that is connected to OpenAI or like or Jasper, or any of the other solutions. 

It is fairly easy to build with these existing solutions, like when someone puts up a website, installs WordPress on a $5 per month host, connects that solution, writes a landing page, and then sells that solution for a couple of hundred bucks or 300 bucks. They can do that as a business model, just flipping or creating websites.

It is even more popular because some of those vendors also resell services such as SEO, PR, and email marketing. Imagine they are Asian businesses selling low-cost solutions, high volume. They actually create their marketing site, so that other businesses can use them as affiliated resellers. They sell the site, then other businesses send business to them, which is pretty smart actually. That’s one type of solution.

Mid-sized businesses are normally operated by one to five people, like $5,000 to $50,000 or so. They are solutions that make some money. They generate some revenue and then you have to decide whether it is worth acquiring that digital property. It is normally based on different multipliers. And professional deals, especially with the largest category based on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) a more complex financial formula unless you’re in the PE investment world. Smaller deals often trade for a multiplier of revenue or profit. 

Again, there are a lot of different reasons why you would buy a digital property.

Some of them are strategic decisions. For example, you want to bring a team inside. Or, you want to diversify and expand. This is usually called a strategic acquisition.

Sometimes, it is purely a financial decision. You want to make sure that buying the deal is probably a market that you don’t understand very well or so, but it is diversified. You want to generate recurring revenue.

Now, there are different ways to calculate and organize that, but I’ve closed and sold several deals within 18 months for monthly recurring revenue. And especially for profitable businesses with a growth curve, even if It has slightly up to the right. If It has a growth curve, it actually allows you to buy a digital property and make the money back in 14 to 18 months, which is great.

My Acquisition Success Stories

I have three digital properties that I still have right now. One of them is a CRM system, the other one is a publishing website that has already repaid back whatever I have invested in them in about 14 months on average. And everything else since then has profit because they have been great deals and they have been traded out this way. We have done that with other digital products and also sold other digital products. Some deals are two years or three years, or four years of annual recurring revenue. 

Sometimes, it’s worth it.

Maybe, you can just really fast-track the growth curve or maybe it is a very innovative product, maybe It has a great community, and you have access to data. There are other reasons to do that. But again, that is some ballpark that you can work with.

Digital Properties By Size

You have the small ones, which are normal turnkey. You don’t have traffic, you don’t have revenue generation.

The second one is normally generating some revenue. It is a little bit. If you buy a business for 5 or 10 grand, it has probably done a couple of hundred bucks, 200 to 300 bucks a month. Maybe there are some expenses. Maybe the owner is managing this. It really depends. Sometimes, it makes sense. Sometimes, it doesn’t. And sometimes, it has fake traffic or so, so you definitely need to do your due diligence.

But, again, some of them are purely legit businesses generating revenue, or agencies or e-commerce businesses, like drop shipping or selling actual products, or publishing businesses that are generating revenue for months. Lots of opportunities and stuff. So, this is a good idea.

And then, there are larger businesses. There are actually larger teams that can buy an extra business with 20, 30, or 40 people, or just a company with 10 people running serious, solid operations, some branding efforts, PR relationships, networking, and lots of other opportunities, which is normally, over $100,000 or $250,000.

There are SaaS solutions at half a million or a million or like e-commerce, actually commerce platforms at 2 million and more, marketplaces, and so forth. So, this is a little bit more ambitious. In some cases, some of those deals make sense if you have some money set aside and if you can get a loan or investment or funding. In some of those cases, you can actually get a loan similar to how you take a mortgage for real estate and get that and invest in that business. And that business will repay that mortgage maybe two or three times so that you’re actually making a profit off of the rest, even with the interest rate of a personal loan compared to a mortgage.

So, there are some ways to make it work then repay, then refinance, and so forth. So, some of those deals could be debt-based, but that’s a little bit more complicated. But in any case, those are some great ways that you can diversify as to what product category size you can buy.

Types of Business Properties

First off, we’re talking about digital properties, but there are some marketplaces where you can buy an actual property like from a brick-and-mortar or a local service business with a local presence such as a print shop, or a coffee shop, a restaurant among others. There are some onsite deals and I’ve been looking at some of these myself even though it is a little bit more complicated with extra house and rental, and some of them require licenses for cleaning fees or anything like that. So, it is a little bit more complicated compared to buying digital properties.

In terms of digital, it is essentially what you can buy online that would make money.

1. Domain Names

A great domain name with domain history and so forth could be a great brand asset, could come with existing links, and so on. You have mobile applications, e-commerce, any form of shops, publishing sites, software service platforms, again, marketplaces, service-based agencies, or anything along those lines.

There are several different categories, maybe more, where you can actually tap into and get access, and some of them may be aligned to the type of business that you want to deliver, and some of them are not.

For example, I personally don’t invest in e-commerce businesses, because they require warehousing and logistics and just invest more money into production and more money into stack and inventory unless you are doing traditional drop shipping, which is a little bit different.

But, that sort of logistics, shipping, and transfer fees, overseas, customs, and all that is just the type of trouble that I’m personally not interested in and it is not the field that I’m very good at.

2. Publishing

Publishers are a favorite category of mine since we’ve scaled over 10 businesses past 100 million monthly page views at DevriX. And regardless of whether you’re expanding your network, launching a new magazine from scratch, or looking into a niche option, there are tons of benefits in acquiring a property in that category.

For example, if you live in the States and you need to buy an Irish business, which is exactly what I looked into last week, or a business in the UK, the Netherlands, France, or Germany, or you’re in Europe and there’s the US business, you may not necessarily have access to all those same commission rates or all these services even if you’re working with a vendor such as Amazon.

So, even if you’re in Germany where exists, it doesn’t mean that you have all the opportunities for Prime Day or all those deals that a US publisher would get accordingly. Case in point, I’m a Prime subscriber in Germany, but I can’t watch the local video shows for privacy reasons.

The valuation of the business is going to be different because you are going to make less money due to the need of working with a specific vendor that works in a specific country.

And in some cases, some of the things that are fairly specific are deals that require and depend on recurring subscriptions, but these subscriptions cannot be transferred. And we have had that actually happening especially with PayPal. Transferring subscriptions via Pay Pal was pretty hard. Stripe was also hard, but PayPal just never made it work, unfortunately.

We had to ask people to resubscribe and some just bounced out almost half. And with Stripe, we managed to transfer, but it was a grind, it was a lot of work with support and their systems and that was probably three years ago, so it could be better now. But, sometimes there definitely the importance of due diligence, because sometimes, money is there, finances are real, your assets are there, and everything is legit, but you just cannot take advantage of the same business in the same way.

3. Dropshipping Websites

With the rise of dropshipping, selling products from China has turned a substantial number of regular people into millionaires similarly to the crypto wave.

But just like every other business category, take it with a grain of salt: for every overnight success story there are a thousand failed attempts (i.e. startups that didn’t work out.)

In Rush, we power over 2,800 stores and a good number of them are dropshippers. The model works and is proven to be profitable – and existing stores are available for sale.

4. Amazon FBA Stores and Affiliates

Amazon is the largest marketplace in the world. If you manage to rank organically, that’s awesome!

In the meantime, existing FBA stores and Amazon affiliate websites exist for any number of categories. Hunting gear, perfumes, home accessories, kitchen and cooking items, wireless gadgets, makeup or beard oil – infinite options in the Amazon category of sites.

In other cases, such as with most of the businesses that are coming from word of mouth, changing ownership means that you don’t have the same access to the same network or the same contact. So, the recurring revenue is just going to be different.

Where to Buy a Digital Property

There are different networks but I’m not going to dive too much into that. My go-to recommendation is Flippa, which is the largest ever acquisition marketplace. Flippa also monetizes the broadest number of deals, one that is the cheapest deals that is easier to browse and start with but also has some great deals.

I’ve been a Flippa buyer for over a decade and joined their ambassador program last year, organizing the first Flippa Exit in Sofia in September.

MicroAcquire, which is currently being rebranded as is another one for microenterprises and startups and all that.

One specific one for WordPress is FlipWP. Even though honestly, they rarely get any deals, and more often than not, I’m just encountering more deals on Flippa or the other marketplaces.

Empire Flippers is another market leader that’s been around for a while.

But then again, there are a bunch of different websites selling these. Sometimes, you could stumble upon Facebook groups, Reddit, or just businesses sold on Twitter.

One of the digital real estates deals that I got earlier was the one I actually saw on Twitter when someone tagged me in and I connected with the founder selling two businesses. It was not even on Flippa or so. It was earlier in the process when we got access to that deal, like first dibs. That is definitely something that I would recommend, definitely a great way to make it work.

To sum up, buying a digital property may not necessarily be of interest to you, but my personal experience in terms of return on investment is that it is a great opportunity to recoup your money in a predictable period of time—18 to 24 months or so on average or even grow it further. And then, it has immense potential to generate solid revenue.

Acquisition and Market Economy Considerations

In some cases, you want to retain the money and be more conservative, like with bonds.

In 2022, even the stock market was down, so was crypto, real estate, and almost every other asset class. In 2023, S&P restored quickly, and Bitcoin saw a bump in the process.

Some of the other alternative asset classes like real estate are just more expensive. And unless you live in the State, you just do not have access to the same opportunities to be able to repay your mortgage with the rental. Across the globe, rental income is often lower than your mortgage pay – and considering the added costs of maintenance, taxes, gaps between rent payers, it’s a cost factor.

What usually works is using a business or acquiring a business that runs on autopilot or taps into your skillsets (such as copywriting services). And you can buy a business working with the same target audience like a small hosting company with 200 clients, just an example (this is what I did with HostMines).

You can upsell that service to that set of clients and you can actually profit off of two verticals at the same time. Or, you can upsell or cross-sell hosting to copywriting or SEO, or whatever you offer. There is a great symbiosis between both, whether there is a publishing site and you have another publishing site, then you can merge and grow the domain authority.

Some of those deals, once again, are strategic.

In some cases, you could be a freelancer and you just need a brand. You just need a portfolio, logos, clients, or whatever you can acquire just to use that clout and that existing business so that it almost looks like you started a business three years ago, and not creating, or founding a company right now. There are different reasons to make it work. And yes, that is why I’m fond of acquiring digital businesses.

Note that this is not a piece of financial advice. This can actually be risky. You need to know what you are doing. You need to understand the semantics of business. But then again, some of those deals are just a few hundred bucks or a couple of thousand bucks. 

While every cent matters, there is an opportunity to choose to skyrocket your business or grow something out of the blue with digital properties, which is great.

Enter HoldCos

When discussing digital acquisitions, taxes and legal inevitably come to mind.

Running all brands under the same business works in some cases, but it may backfire for other entrepreneurs. The acquisition trend brought up a new wave of serial entrepreneurs building HoldCos, or Holding Companies. Think of Alphabet, the parent company of Google, Waymo, GV, or Google Fiber, being different companies under the same hat.

Structuring that will require a legal consultation, but high-level, here are two recommendations I can extend:

  • doola as an LLC partner for launching a business and handling bookkeeping in the US (startup in a box)
  • This LLC guide for both foreign and US founders I put together with Parshwa

(We dive deep into growth conversations in my Business Community.)

In the next series, we are going to talk about the different types of deals such as flipping, how to run SaaS or e-commerce, how to grow these financial versus strategic deals, and some of the other opportunities out there.

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