M&A in Digital Assets: How to Find and Acquire Profitable Online Businesses with Shlomo Freund (Copy)

when I started looking at digital assets there weren't as many marketplaces as I think by now I already know about 30 different marketplaces I own one myself even but the point is that each Marketplace or have their own flavor or the kind of buyers the kind of verification they do about on the data the size of the deals as example with SAS your first try would probably be with acquire.

comom okay that's that's a the right move with that one with content websites you'd probably go to flipa but if you want a larger size deal you might go to Empire flippers they do more vetting and you probably want more confidence there but if you want the best deals you need to go to private deal flow they would not be on the marketplace but that requires more work and it's worth mentioning there is now a platform that aggregates all marketplaces called deal slide you don't say

Google this anymore you say GPT this now so basically you'd get all those all this data and all those listings in one place I'm John Wright and you're listening to affiliate bi the business intelligence and affiliate marketing podcast brought to you by sta welcome to the FBI podcast today we're chatting with schomo Frey who is the founder of free financial self and CEO of asset bolt uh schlomo welcome to the show thank you John for inviting pleasure being here thank you so much all right so

we're in a group called snowball and we're chatting a lot of m&a stuff in the background so I want to jump right into it what's your current state of work in terms of in investing m&a and tell us a bit more of what you what you what you do I've been doing internet marketing for many years now but at the last let's say 4ish or so I've been starting looking more seriously about digital assets because these are great cash flowing businesses so we're talking 30 40

sometimes 50% a year even better sometimes so I've been I've seen thousands of deals and I've acquired some myself at the last let's say two years or so are more focused on finding deals and helping companies and individuals finding digital assets so more into the Consulting side but I've done through the whole finding those assets and then migrating them and then operating them and now I'm more focused as I mentioned on the deal side helping others would you say that deal flow and just finding the

right asset is like most of the work or half the work I think that's important but what is your take on take on that that's a wonderful question every person has their sweet spot the things that they're good at the things that they're not as good as and I found out that I'm better in finding the good deals and not so much about the operation so whenever I had an assets or almost every case eventually I brought in a partner and just like every business some

of them are good some of them were not good but the point is there's somebody else who would help or do the operation or be something and I was good at finding the first finding that deal and initiating this the thing is finding for me a good deal is finding either undervalued or with a lot of easy wins so it's hard to say what's the percentage of that I'd say probably yeah 50% of it is finding a good deal at least with that but there are

of course a lots of other moving Parts when you get to do the migration and do the operation But first you need to find a good deal of course would you say that this is like a layer of business that is oblivious to most business owners that like I'm on the faing marketing side so I've been building websites for a while and we see the m&a space of people buying and selling websites but do you think that there's more opportunity for SAS companies SEO agencies to

go hey let me explore and see what we can do to improve our business whether the obvious is stacking Revenue but the other ones like maybe you can acquire a company that's just pure strategic value definitely so this whole world of buying digital assets is basically saving a lot of time when you build that and you probably know that John when you buil something from scratch you're looking at probably six to 18 months until you see some tractions unless you have a community and you have

something else that that pushes you even faster but if you're just starting you're saving a lot of time on on basically acquiring something and the nice thing is that from day one these businesses are already cash flowing so you're already starting to get your that the return on your investment and you want to leverage that as I mentioned with those the easy win wins or undervalued assets uh I want to take it to the kind of I wouldn't say the negative side but let's say the

the unfortunate side of let's say mergers and Acquisitions where I've seen in affiliate marketing a lot of companies getting acquired with no real strategy about how they're to integrate that and they end up just getting like bloated so it's a big company with a lot of money they're just basically buying things left Center where people are like oh they're just overpaying what are the some of the mistakes that things go wrong in m&a so you need to find and digital assets who what's the audience there

there there are tons of just random people going into that let's say a Blog okay so you need to dig in mostly on the buyer's intentions and this could be through comments this could be through their Google search console finding what qords they're they're ranking for what people are saying on their social network profiles and and things like that so I think that can mitigate a lot of the problems I assume with the larger companies as you mentioned it's because they have so much money just

let's just try it's okay it's just a little bump in our in our reports that's fine our financial reports so they don't really care about that but if you really want to be good at that need to much much deeper into these into the data and figure out if that's the right audience for you with let's say if you're acquiring newsletters that will be easier because then the newsletter is most of the time very targeted and even still you can keep doing deep doing deep segmentation

either for website visitors okay if they're joining your newsletter or directly to the newsletter if you're just acquiring the newsletter and then keep getting more data and more insights and then making your decision based on that data for a yeah yeah I think we chatted before about where it's if you're going to acquire an asset it's like how can you split this up into more Data Insights and in one situation I'm in right now I'm talking with the company and I'm asking them lots of questions

and they don't have the answers of things that I think would be important which means that if I were to go ahead with this I'm going to actually have to do that work and then try to extract more value and go where am I segmenting things and where am I going to crank more value out you know what there's another thing that that you see a big mistake because whenever I see a deal I see a listing I have that on my YouTube channel so many

in many cases there is a lot of data missing even on the listing itself they haven't updated it no pnls like basic things that you just you really need to make a decision and sometimes it's up to the buyer to the the work and kind of extracting that data from the seller yeah like dude you want to sell that right so that's the thing um sometimes it's not worth it it depends on the size of the assets and what might be more work just getting all

this together so we really need to make sense for the buyer would you say that communities and newsletters are like an asset that a lot of people Overlook and going what could you do to let's say accelerate an SEO agency or salus company do you think newsletters are overlooked or are a lot of people zeroed in on that so I've seen a shift in the market three or four years ago everyone were about content websites then Google hcu hit but even a little bit before that

and then started the rise of newsletters and then communities so it's definitely more hyped than it used to be uh people are looking at acquiring newsletters there are a lot of deals in ey newsletters you hear about them maybe once a week so that this is happening a lot it's a wonderful way to get more subscribers of course but it really depends how active that list is how warm it is how much data you have and how much sales it makes it could be that makes

nothing and you just get a list of emails and maybe somebody sent them sends them something once I'm on that might be not enough so you need to warm up the list again I'd say by now there are a legitimate asset yeah would you say that there's an opportunity for let's say a partnership where it's done on a okay is this newsletter going to be worth it so obviously you could say okay let's do a partnership let's just assume it's paid you're doing like a onetime

post and go what kind of value can I get out of this would you say this is something people should consider if that's an opportunity so you can test buying an assets by just doing sponsorship to a newsletter many newsletters off offer that and then see what happens if you get a lot of value for that maybe that's a basically a good way for you to acquire that with classic affiliate sites or content sites it's harder because then how would you it's harder to measure and

then maybe the seller would not agree to do that test it's more complicated it is possible possible possible with news newsletters much much easier so going back to what I mentioned before so we're in the snow snowball club and I mentioned like I was interested in acquiring a WordPress theme company and without going into all the details what kind of advice would you have for me and I'm sure you're probably going to ask me a bunch of questions like what would you advise for me as

a potential acquiring of getting an asset like this and I think one of the concerns I had was like am I buying terms and conditions I know this asset has a lot of missing data which I know I can actually extract more value out of but when you run into friends that go hey schomo I need a bit of help how do you start things off so I'd first look at the easy wins and my easy wins are not your easy wins you have a set

of skills uh a network another business so it's worth something for you and which is different to another person yes there are some let's say Global easy wins let's say bumping up an ad Network on a Content website that's not the case here but that's an example or raising prices as as we mentioned before or or or things like that but you need to align those the the bottom line is aligning the easy wins that you see that are good for the your business I assume

that you are acquiring it to merge it to another business so that's that's strategic buying the best thing to do um I'd say even now we're live in riskier times to just buy an asset as is it's better just to have an asset and then do an m&a with another one and just build your ecosystem right with with those assets would you say it's a little I don't want to say it's even common but I've got some friends that when they buy affiliate websites they're telling

me that they're able to achieve rois as fast as 6 months obviously if we could do that all day long I think we'd do that but what would you say what's your take on how do you find these opportunities to just say I'm gonna I'm gonna get the ROI in six months so we spoke about finding those good deals and really I've seen thousands of those and there are gems in the Hast stack really there are they're just hard to find even still and I'm talking

from personal experience the gems might not be gems and I'm not saying it's not like they're not gems but you might did something raar wrong or evaluated it the the the wrong way and it's not uh as you expected basically as example I bought a website that was that was undervalued undervalued because two years two years before that I bought another one with the same traffic and the first one cost 10 times than the second one that I mentioned I was like wow that's amazing and

I still hold both assets they both dropped because of a um however I thought that I'd be able to do more with the the one the gem that I found that cost a 10x less than the first one and that didn't happen so it's also about taking a chance but I really thought in that case that will be a really good acquisition I still think it's a good acquisition but now based on the opportunities that I have it might not be it's not the best thing

to work on right on right now that makes sense so you have a a free resource which is I think it's where to start with buying Niche websites so I wanted to ask what's inside the resource and does this cover like the whole range of let's say could you apply these things to SAS for example so I'd say that the resource is mainly listing the main marketplaces for buying different digital Assets Now when I started looking at digital assets there weren't as many marketplaces as there

is right now and now I think now le nine on that resource and I think by now I already know about probably around 30 different marketplaces I own one myself even but the point is that each Marketplace or have their own flavor or the kind of buyers the kind of verification they do about on the data the size of the deals every person can find what's their fit as example with SAS your first try would probably be with aire.com okay that's that's a the right move

with that one with content websites you'd probably go to flipper but if you want a larger size deal you might go to Empire flippers they do more vetting and you probably want more confidence there but if you want the best deals you need to go to private flow that would not be on the marketplace but that requires more work so it it's you need to move between those and then find the right one um and it's worth mentioning there is now a platform that Aggregates all

marketplaces called deal slide you can uh you don't say Google this anymore you say GPT this now so um basically you'd get all those all this St and all those listings in one place and they keep adding and improving it really saves a lot of time I never heard of that now I want to go to the the Dark Side of these whole marketplaces which is I think I've experienced this but I don't know I've heard of a lot of people say that yeah go to

these marketplaces because you'll find affiliate sites for sale and you get all of their data for free and then you could use that against them to go Target a market or you could just basically just mine data if you're an affiliate marketer you're like let me learn about what's on the market and you're just getting access to like search console Revenue data analytics what's your take on is this like an inevitable part of the business that you just can't just can't avoid so to be honest

I've never uh bumped into that's more of your side of the deal with affiliate uh sites uh sites however many marketplaces right now um you need to go through and NDA and tnc's and stuff like that even flip out which was very open many of the deals now you need to sign an NDA the good ones so I guess that yeah really mitigates what you just you just you just mentioned that that's probably why they did this move hopefully it does yeah yeah because I I

know in in in uh in our situation we raised money to we're bootstrap compan and we did a bit of fundraising and we were warned about this we're like you're going to run into investors that they're just going to listen to your ideas and then they're going be that's great but we're also working on that so it's I see on parts of business like SAS I did but then it's not until after the fact that you actually eventually hear stories or you realize what they're up

to sometimes you do the due diligence and you're like y clean and then 6 months later you're like oh that's what you're up to great I see okay for my experience at least with the transaction I closed all of them were clean and and fine so that's my personal experience I'm going to ask a really weird question which is we're a startup we're not not quite profitable but we're able to raise money to grow when is the right time for a company like mine to start

acquiring assets should we be looking to see if we can pick up small Assets in like the 10 to 20K range like little things that we think could actually help revenue and help us get more customers so with uh 10 to 20K at the current market suppliers you're probably looking at around an asset that makes fiveish hundred a month just for cash flowing I assume that doesn't change so much the bottom line for a growing business you you're basically acquiring it for the traffic and then

the next question is what's the traffic if it's big enough I've seen very profitable websites with very little traffic so that might not be worth it and I've seen wonderful websites with lots of traffic and not so much RI Vue because you're going with the traffic because you need that you probably need to look more into those and because they don't make so much profit you might still be able to find good ones for the 20K range basically your first look is on the traffic not

on the revenue in that case that's the thing yeah and just to give a bit of color I've been looking go ahead no go ahead I'm listening okay I was just saying just talking about like some of the situations where it's like WordPress plugins and newsletters we found some where the owner is just basically look I don't want to do this work anymore I just want to straight up exit the revenue is like 10 15K a year and I want a 2X multiple of the revenue

like that to me sounds like it's almost obvious with a couple exceptions that things are slowly grinding down and and acquires a bit more TLC to keep that asset going I'd say if this guy it depends on it it's not about the revenue it's about the profit how much he's investing in in in building this and running this if he has a full-time developer and basically that cost 5,000 that that 10,000 is not 10,000 um and then you put that expense on your company so this

is the first thing basically to ask and evaluate this the the asset with that and then the second thing is really understanding where his her traffic is coming from and sales sales sales is that declining is that straight line is that maybe going up he's just tired of this so what's the story behind do you have that have you asked them these are really important questions yeah I I have so yeah I've asked a lot of questions so I'm not as experienced as you but I've

been on the acquiring side and the selling side of a couple affiliate websites so I ask questions like what's the monthly Revenue what's is this trending up or trending down what's the breakdown of it and and some of these assets I'm talking to they're actually almost totally neglected they're just like running on autopilot but they're slowly trending down so the traffic is okay but one thing that's interesting and this is where maybe we can take another Insight is that these are plugins that are dependent on

affiliate sites now we know that uh a lot of courses like Authority Builder they're basically shutting down their phit marketing courses so my personal take is I think some of these plugins will still make money but I think they're going to struggle where how many more people are going to buy these things if they think I don't want to say seo's dead but we've seen helpful content update for the last two years year and a half just extend so I think these assets are going to

get weakened over time and I think maybe they're look I I don't want to invest any more time or programming effort into this no marketing so that's why I'm looking at it going can I still extract the right value and get the ROI without have this turning into not just a Time sync but a loss I see to be fair though a year and a half ago this asset would not cost 20K it would cost 35k so you also get the opportunity here it's not the

same market market right yeah I think that but then again as we mentioned before it's about your business and how you're doing the right m&a to what you have already so you're coming with your let's call it unfair advantage over there or secret sauce and maybe revive it maybe you kill it all together and just blend it into your asset that you already have and then it doesn't matter maybe what traffic they have you have all the subscribers and they keep paying or you can keep

mailing them and then maybe Market something new to to to them basically it's a whole different animal so it's not necessarily just like you mentioned a little bit of TLC and there's a good chance it'll be good I want to shift a little bit to the investing side so I know that you're looking for like passive Revenue that can come in and in a perfect world we'd all want something that's just a cash machine that requires no effort what do you think about companies like Capital

pad with what Travis is building and I'm assuming that you're working in the background of everyone wants these opportunities are these opportunities only existing for people like us that have the experience in working in these various types of businesses or is there another marketplace where people say look I have money I want to trust someone like you to just deploy it what do you see in this whole new space of growing digital assets with recurring revenue and the dream of just having passive passive passive income

so the trend in the last it's not even the last few years I think it's already running for a few years that there are funds that you can invest in that invest in digital assets even if I can mention web Street the or that Empire flipper has that's web Street on folio does the same thing they're a public traded company they also doing that dumb Wells so and with those Investments it's hands off and you can expect expect probably 15 to 20% let's see be more

conservative probably conservative probably 15% a yearly return on your investment but if you want to do more then you got to buy the asset yourself and then you do as we mentioned 30 40 50% cash flow or like the example you in six months you get all your investment back that yeah that is possible but that's not with the funds that I mentioned yeah so we of course we got to ask the AI question do you think there is a possibility that AI is going to

disrupt what people have gotten used to so people are like oh I'm just going to invest in this business I'm going to invest in this SEO agency I'm going to invest in this affiliate site and we've seen so much change like helpful content update just wiping out affiliate sites what do you think of this new future of big big big disruption it's not SEO anymore it's now AO or whatever initials you're going to call that how you going to train the AI to find you and

then link to your website and this is why I mentioned before that if you're talking about buying a classic content affiliate website I would not do it as is right now I would merge it with something else of value because I see the risk with ey traffic declining you need something you need theote over there either built very fast maybe a mailing list that you can build very fast and start selling to so that that's a mo or the business that you're emerging it into or

any of that so you got to come prepared for such a deal and yes then you mitigate AI we have no guarantees in this industry but and many others as well for digital assets and changes but I think that's the best we can do right now and do you think the the VC space is going to be experiencing some of this disruption like we've seen like a lot of money and we're like okay look at this the The Venture Capital space so it's there's just a

lot of money being there's like funds that seem like they come out of everywhere and it's all they've got like the same recipe but we know that there's only so much money to go around to invest in really good deals and I'm just wondering if there's going to be like if the VC space is catching up to itself where it's like there's money but at some point in time you just can't like deploy and expect to to get consistently 15% returns yeah I remember some of

our conversations on Snowball comparing VCS to cash flowing businesses again Capital C pad and what Travis is doing and we we see that the VC turns most of the VCS probably don't add value so much to the deal I'm a cash flow guy I prefer cash flow over some promise for something at very early stage it's safer the key to making to sitting to sit on a large pile of money is basically just time not to make a lot of money yes to make a lot

of Mone but it's the compounding overtime that gets you there and that's the more safe sure way to get that it's not glamorous of course it's not a big exit it's nice to have big exits but they're so rare and that's they're I think the right path to most people and what do you see of the future of affiliate marketing as it intersects with business intelligence the thing is that I've been talking to a lot of e-commerce businesses recently I we spent a lot of time

in Thailand and I was at an e-commerce conference there and I've been talking to e-commerce companies about acquiring content websites basically or newsletters but with the content website side I think that there is a lot of a good future for combining content websites with e-commerce first of all for the uh affiliate sites in the world of SEO everybody are talking about once you plug in Ecommerce to your uh affiliate site there is a chance that Google will bump it back out so this is from that

side for the e-commerce company they get they can basically acquire an asset and then in instead of keep paying for ads they would buy it one time or maybe make a partnership and then they would hold that that those users their target audience potentially forever instead of keep being on the hamster wheel and keep paying for ads they can still pay for ads but they can do it in addition to the audience they already have so that's I think is a a better uh way to

look at things and the e-commerce companies don't see that because they're on the hamster wheel of keep paying for ads and inventory um and at at the what was it the changai SEO conference I was at that one too and somebody on stage spoke about building for selling from the perspective of SEO but selling to SAS companies okay he said you're all SEO guys you can build all build all those stuff and then just approach a SAS and sell that as as a strategic acquisition and

then I came to him after the his talk and told him I've been to this e-commerce e-commerce conference and e-commerce businesses don't acquire websites and that's weird to me because it makes so much sense and he said you're right very little do that but that's the next big thing for them so people who are more experienced and wiser than me said that and I'm sure there is a potential there awesome slomo thank you so much for doing this I want to pass it back how can

people get a hold of you so you can get me on either on LinkedIn with my name scha I have my website asset Bal or you can go also to U I have a personal website schof fry.com where you can everything that I do is linked there there's a quite a lot there so just whatever is interesting for you either free financial self or asset bolt or my YouTube channel you seeing deals that I that I cover and see how you can evaluate those yourself so

any of that and of course get in touch I'm happy to answering questions yeah the YouTube uh webinars are very insight thanks so much for doing this I'm going to include that in the show notes I appreciate this awesome thank you very much for inviting we'll be in touch thank you for tuning in to the affiliate bi podcast I'd like to take this time to ask for a small favor to leave a rating and review wherever you listen to your podcast that helps us expand our

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