On this episode, I talk with Mark Daoust from Quietlight Brokerage.
Mark started his first website site-reference.com in 2004 as an SEO play as a resource for website owners and online marketers to share information and publish blog posts. It soon turned into an email play leveraging a second site to build a list of over 200k subs (with almost 1k new subs a day) monetized through ads in the newsletter. He sold it in 2005 through an online broker.
The next year he started Quietlight Brokerage then in 2012 the person who bought site-reference.com contacted him wanting to sell which they did. Then the new buyer after a few months contacted Mark saying he didn’t understand or enjoy web businesses and was prepared to sell at a discount as revenue had dipped so Mark personally bought it, operated for a couple of years and then re-sold!
How’s that for flipping 🙂
Now Mark’s focus is on growing Quietlight and is on for $50MM in acquisitions this year with a focus on ecommerce and SaaS. There are still a lot more buyers out there than sellers right now. They don’t have minimum site prices but do have a minimum commission of $25k.
On the buyer side they have always had people who have the ability to do 8 figure deals such as private equity, family funds and syndicates who are looking for good deals. These people are typically looking for businesses that have bottom line EBITDA of over $1m. The buyer pool is somewhat limited to SBA lending limits with loans up to $5MM. With sites above $5MM there is still good competition from more than qualified buyers.
With EBITDA’s of more than $1MM the multiples tend to go up. Below $1MM an annual profit multiple of 2.5x is normal. With much larger sites of $10-20MM the multiples range from 4x to even up to 6x in the private equity territory.Owning your business is a good thing, and typically it makes more sense financially to own it for the long term than selling in the short term by @markdaoust on the Freedom Flipping Podcast by @richardpatey Click To Tweet
Mark mentioned how a good exit plan is actually a good growth plan, and this has certainly been the case for me – every time I go through the process of selling a business I find way more opportunities I could leverage.
He discusses how websites can show up on the equity side of a balance sheet as goodwill (due to the FBA loan on the flip side) and can even be a line item.
Mentioned on this episode
Before The Exit book by Dan Andrews