Flipping Websites Podcast Ep 24 – Ryan Kaufman from DigitalAcquisitions.co
On this episode I talk with Ryan Kaufman from the boutique website brokerage DigitalAcquisitions.co
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Ryan has a couple different divisions at Digital Acquisitions:
- Traditional sales side brokerage model where work with owners closely to improve valuations and then list and prepare the marketing material to get the highest offer.
- Buy side concierge service where the buyers are larger funds, VCs, sometimes high net worth individuals who are looking for a specific asset to acquire
For their buyer network they have found it easier to work with ecommerce and SaaS due to the nature of content / affiliate sites where the founder can be heavily involved in terms of branding or operations.
On the sell side the objective is to get as many buyers so can be bidding; on the buy side the concierge client is the exclusive client they source deals for as a third party acquisition team where any deals discovered are exclusive to them. If they pass on those they have a secondary network of buyer representation clients.
Have narrowed concierge down to 3 different groups:
- Content / affiliate
They will only take on one concierge client per category so there is not any overlap or conflicts of interest, and they assign each category to one specific broker so that it’s a white-glove experience where the broker knows as much as the seller in terms of communicating with the buyer.
The valuation range the work with is $500k up to $5MM. Their fee is 10% up to the first million and then scales down to 1% for the next million with a floor of 4% – a graduated scale rather than a fixed fee of 15% that other brokers charge.
They don’t do a full website due diligence but they do an initial level of verification.
We discuss selling services business and what you need to do to get the multiples above 2x annual profit.
Ryan started internet marketing and site building back in 2008 with CPA networks and coupon sites sending cheap adwords traffic back when you could. Ryan met with Chris Parker at the time who had Trusted Site Seller who was brokering deals on Flippa at the time. Ryan joined his team then ended up buying him out of the business.
At beginning of 2017 an ex-client Dustin was brought on as a partner and it was rebranded digital acquisitions and refocussed avatar on boutique model.
Ryan prefers recruiting from eastern europe for support staff over the Phillipines now.
Digital Acquisitions have a website sellability score quiz. The main factor that can really improve your score is when you have moved away from owner expertise to a management structure with people in charge of different traffic channels.
Going forward Ryan’s focus with the business is ecommerce and SaaS that have the ability to scale to the valuations they are looking to get to.
They don’t publish deals on their site like a marketplace such as Empire Flippers.
At the upper valuation limit currently around $5MM, buyers are typically VCs and funds who are looking at building a portfolio or have their own funds to invest. Up to $1MM level there can be solopreneurs who have made an exit from corporate America who are looking for a lifestyle business, and then people looking to leverage SBA loans where only have to put 10-20% down. Their preference is a cash buyer or some kind of arrangement with the seller.
His ultimate goals is to become a matchmakers where when the see an opportunity they can connect directly the buyer and seller before they even take the business to market; to operate like a traditional M&A firm. A lot of sellers prefer not having the business and information taken publicly such as on FE International.
Ryan feels that people who have built their business to a million plus valuation deserve a concierge, white-glove service that understands the business and gives an extra level of attention.
Check out his LinkedIn Group Valuation Strategies for Internet Businesses
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