Read the updates from Flippa CEO, Blake Hutchison, for insights and stats on Flippa and the buyers, sellers, investors and entrepreneurs using Flippa.
CEO Update: December 2022
Thank you. In 2022, you and the rest of the Flippa community accelerated buying and selling with 14,232 sites, stores and apps changing hands. So many more of you joined the largest marketplace to buy and sell online businesses too. 306,232 started your journey and over 170,000 of you demonstrated buying intent with a combined buying power exceeding $36 billion. More institutional and company buyers joined this year and they showed their purchasing power making up 58% of the pool and representing 77% of Flippa’s Top 100 highest value deals.
You made it clear what you want. Of the 4MM plus searches on Flippa, Shopify owned the top spot with 169,000 queries for Shopify platformed assets. BUT content is still king. If you combine queries for blogs, adsense, affiliate sites and other related searches there were over 300,000 queries for content related assets.
And, despite the market conditions, multiples are not falling. In our 2022 Insights Report we’ve documented multiples on online businesses sold between $50k and $35MM. View the report here.
Business owners in 2023 will be able to capitalize on a new segment of buyer entering the marketplace. As mentioned, we have seen very well capitalized strategic buyers and established operators enter the space in record numbers and our relationship management team is reporting high confidence as this cohort moves downmarket where valuations are more stable. To put it simply, acquisition activity is likely to grow faster when alternative pathways to growth are increasing in cost.
Deal making still looks inexpensive to sophisticated buyers, with many buyers recording 25-50% annualized returns. This should translate to strong results for online business owners looking for an exit. Those with consistently good performance will be rewarded with good multiples and in the face of the most challenging economic circumstances we expect the market for online business M&A to flourish.
In 2023, Flippa matched the insatiable demand by adding a range of new features and offerings to the marketplace. We added:
- Deal Room where you can submit letters of intent, review and shortlist buyer / acquirer profiles with access to acquisition history, verified funds and more.
- Data Integrations from Xero, Amazon, Paypal, Magento, BigCommerce, Lazada, Shoppee and others to take our total number of data integrations to 15.
- Vetted by Flippa with full Financial Verification as we continue to offer the largest selection of online businesses for sale on the planet.
- Multi currency to support a growing business owner base out of 13 different markets.
- Global advisory and broker teams with new offices in Amsterdam and London supporting demand out of a fast growing EU / UK market.
- Benchmarking and insights enabling both acquirers and business owners to transparently compare business pricing and values plus performance data.
We also expanded our marketplace with the launch of Flippa’s Off Market and Flippa Invest. These innovations set you and the rest of the Flippa community up for a successful 2023. We are committed to continued growth and improvement and take our responsibility as the #1 marketplace to buy and sell online businesses seriously. We will continue to pursue our mission to become the investment bank for the 99% by democratizing the exit and enabling a pathway to ownership for all.
Have a fantastic 2023 and thank you for your continued support. As always, we love the feedback – contact me directly at [email protected].
Let’s get straight to it. October is going to be enormous.
We are hosting Her Future
Together with an incredible group of award winning and powerful women in business we are delighted to announce the inaugural HerFuture event. It’s free. It’s a virtual event and it will take place on October 18th at 12pm US Eastern Time. Register here.
October is National Women’s Small Business Month and while the gender gap is closing and female business ownership is on the rise, female led exits are still low. According to PitchBook, 2021 exits involving at least one female founder made up just 11%. And here at Flippa, less than 15% of asset sales are from female owned businesses.
Accordingly, we’ve assembled a wonderful group of speakers including:
Cheryl Contee – Cheryl is Chief Executive Officer at The Impact Seat Foundation, an organization working to create a world in which women can succeed as business leaders.
Codie A. Sanchez – Codie Sanchez is a reformed journalist, turned institutional investor to cannabis investor and adviser, to now Founder at Contrarian Thinking. She is also the owner of 26 ‘boring businesses’ and balances her profession with non-profit service to empower women, veterans, and Latinos.
Lara Morgan – Lara started her first business at 23. The business grew into specialist global supplier and manufacturer of luxury high end brands licensed for five-star hotels and seventeen years later sold for £20million.
Carrie Kwan – Carrie is the Co-Founder and Managing Director of Mums & Co. She is deeply passionate about inspiring women, particularly mums, to realize success in harmonizing their ambition, livelihood and wellbeing.
Jennifer Pereira – Jennifer is leading the Celestial Group, a modern private equity firm which invests in impact-focused women with a goal to make M&A opportunities available and accessible to women across the globe.
Kaitlyn Knopp – Kaitlyn has over a decade of experience in compensation and this led her to create Pequity in 2019. Founded on the principles of fair pay and opportunity for all, Pequity’s software solutions automate compensation workflows to save companies time, money, and talent.
Cheryl Robinson, Ed.D. – Cheryl is a Doctorate of Education in Organizational Leadership. She develops and hosts leadership workshops for corporations. Having interviewed over 400 women, Cheryl focuses on women who have pivoted within their careers, emphasizing their mindsets.
Extraordinarily proud of the team pulling this one together and delighted to be a part of it. Get your tix here.
Pulse ’22: Flippa is revolutionizing online business M&A
You expect more. We’ve listened. We’ve built new category defining products and services that give you more deals, more options, more data and more flexibility. All will be revealed at Pulse ‘22.
We will be broadcasting globally and will be presenting live from Las Vegas. Meet us in person (drinks are on us) or register for the global virtual conference here.
Masterminds: Buying a Business
Our latest Mastermind session is live
Last month we released our first Mastermind video. It was all about SEO and how you can set yourself apart. In this next edition, it’s all about how and why you should buy a business and we’ve involved Codie Sanchez from Contrarian Thinking, James Camp from NanoFlips and Sieva Kozinsky from Enduring Ventures.
Their tips are outstanding. To make it easy for you, explore by section:
01:13 – 05:25 Introduction
Watch the full episode here.
Finally, there’s some outstanding online businesses for sale right now. These are my top 5:
- Ads. Asking: $14MM
This graduate recruitment platform is a market leader with top tier clients and an 82% revenue retention rate. Trailing 12 month revenue is $5MM. Take a look.
- Ecommerce. Asking: US$5.7MM
Price Reduction. Household name and market leader in Singapore’s homewares segment. Revenue of $8.8MM with an 86% CAGR. Take a look.
- Marketplace. Asking: US$2.7MM
This on-demand marketplace connects top-tier influencers, photographers, models and other talent with leading brands around the world. Revenue has grown at a CAGR of 44% from FY17-21. Outstanding. Take a look.
- Ecommerce. Asking: US$5MM
Established in 2003, this Muscle Car Parts business is a top Ebay seller, with 170,000+ items sold, ~$3MM of tooling, and a 98.6 positive feedback score. Take a look.
- Affiliate Site. Asking: US$320k
11 year content site brand in recipe niche | $7800/m av profit L3M from 18 affiliate programs, Amazon & AdThrive | 90K+ users from search L30D | 77K subscribers. Take a look.
As always, I’d love to hear from you. Join our huge announcement and release event here or send me a note at [email protected]
Firstly, Happy Birthday to the iPhone. Yesterday, the iPhone turned 15. After 34 versions, we are still as addicted as ever. Last year alone, there were 32 billion app downloads and most of us spent 100 hours monthly on the apps that make this whole ‘thing’ tick. Ecosystems are immensely powerful.
For those interested, we’ve written a review of the apps ecosystem. It’s now a burgeoning playground for next generation roll-ups and aggregators who are betting big on the publishers that occupy our daily lives and for good reason too. We are not near peak penetration. By 2025, Statista forecasts that m-commerce sales will make up 10% of all US retail sales. Personally, I think it will be far bigger than that and many savvy app acquirers agree. In fact, in the first half ‘22, Flippa has seen 54 companies register acquisition intent for apps, with a collective acquisition budget in excess of $330MM.
Beyond the apps ecosystem, I think it’s worth commentating on the dramatic public market sell off and tech valuation blood bath (can you believe that Shopify is down 80% from their all time high?).
The main street and lower middle market is not seeing a downgrade. Small profitable businesses, from sub 500K to $10MM annual revenue are still hot property. For one, these assets were never over-valued. And two, savvy digital acquirers taking a long term view, see the obvious. Digital isn’t going anywhere.
A look at Flippa’s Top 100 Index, suggests the average online business is valued at 2.39x Annual Net Profit or SDE and 1.71x Annual Revenue. We don’t see these compressing. As you can see, it’s still a very inexpensive way to acquire cash flow and returns are therefore really strong and predicatable.
We often get asked. What’s the maximum I can achieve? If you are a business owner and looking to understand peaks, the best results achieved in the first half 2022 are as follows:
- A small business utility app sold for 5.45x Annual Net Profit. Notably this was also 3.06x Annual Revenue. This was a ~$30MM sale.
- An education SaaS sold for 5.81x Annual Revenue. This was an ~8.5MM sale.
- A personalized jewelry Ecommerce business sold for 4.62x Annual Net Profit. This was a ~$2.5MM sale.
- A content site about privacy and compliance sold for 7.63x Annual Net Profit. Notably this incredibly high margin passive site, sold for 7x Annual Revenue. This was a ~5MM sale.
So, don’t let the fear of a recession get in your way. In fact, the June data would suggest buyers will hunt for deal flow more. Growth through acquisition will be a preferred method when compared to other traditional growth practices. Actually, that’s fairly typical of a recessionary market. More opportunities to buy.
For further context:
- An additional 12,042 buyers added 17.3Bn in liquidity. This is a marginal 2% increase from the prior month.
- We have 109,000 active buyers!
- $130MM of deal value was added in June. YTD $561MM in deal value has been added. This is up 106% on the same period prior year.
A few other updates:
- Meet us at one of our meetups. The Exit has gone global. We will be in NYC and Chicago in July and then we head to Europe.
- Our valuation engine has been improved. Get an updated valuation for your business is here.
- Jay Haussman sold Tatooing101 for 10x what he acquired it for. His story is a really good one. Watch it here.
Reach out if I can help with anything. I’m at [email protected]
In this edition, I’d like to dig a little deeper into what we’re building and why. More importantly, what does it mean for you? You’ve been shouting from the rooftops and requesting new richer features and we have listened.
Before we look at what we’re building now, let’s take a look back at where we’ve come from. While businesses have been bought and sold for 100’s of years, the small and online business market – representing assets priced up to $50M – has historically lacked liquidity, access and transparency. 13 years ago Flippa built a marketplace to trade digital assets and in doing so we created an entirely new market. From then to now, a lot has changed and now it’s arguably the most exciting asset class there is.
We are #MakingMillionaires. Successful business owners like Ramon van Meer are leading the way. Ramon started buying small sites or stores on Flippa before buying and selling his way to a turnover of $8M. You can watch his #MakingMillionaires story here:
We feel deeply indebted to you – the Flippa community – so we’ve ramped up our commitment to you. We’ve invited some marketplace experts to join our product team and we are busily building the investment bank for the 99%, representing digital assets of all types and sizes and providing the tools that you need to get deals done. This will extend Flippa from what is now; the richest network of buyers globally and the most diverse set of assets globally, to the most comprehensive end-to-end market network to buy and sell online businesses.
We are democratizing the process with a vision to become the investment bank for the 99% powering $100BN in asset or online business transactions over the next 10-years.
Around 3-months ago, we plotted a product pathway and the impact is starting to show.
What have we built?
1. Our embedded LOI feature means you can put your name to a deal faster. You can make an offer, set a closing date and stipulate terms.
2. Multi currency allows you to list and discover assets in over 14 different currencies. This has been an immediate hit. Check out this British asset listed for $1.2MM (Ecommerce | Selling Shower Heads), this Australian asset listed for $2.8M (Content / Affiliate | Travel Bookings) or even this Dutch asset listed for ~$400K (Ecommerce | Streetwear).
3. Buyer funds verification now exists as an optional toggle for >$250K sellers. You can now control exactly who sees your listing. Buyers looking at listings requiring verification can connect to Plaid or utilize Flippa’s in-house verification team to prove ‘capacity to afford’. Of course, Flippa is still absolutely free for buyers.
What’s coming next?
- An entirely new way to buy and sell. The new Flippa Negotiation Hub rewrites the rules. You can organize buyers and shortlist preferred buyers. You can arrange and host video calls. You can sync discussions with WhatsApp. You can invite third parties and you can populate a data room.
- The new Flippa Off Market. We can’t tell you too much about this one…it’s just too juicy. Let’s just say that we will bring you thousands of more assets and verified buyers will have exclusive access. To get first and exclusive access, ensure you have a full buyer profile and have verified your available funds.
Oh yeah. I should also mention that our advanced Referral Program is now available – it’s called Spotter. It’s simple, refer an asset or business and we’ll sell it. When we do we’ll pay you 30% of our success fees. That means that on a $1M sale, you would receive a check for $15,000. Register here.
Finally, if you have a feature you would like to see ping me directly at [email protected].
Buyer Data and Valuations Insight
In this edition, I’m going to lift the lid on some of our buyer data and reveal valuations for five very different, recently completed deals.
It seems that 2022 is the year of opportunity. The Cambrian explosion of new online businesses of almost all types and the growth of major ecosystems has the world awake to this alternative asset class.
For Flippa it’s enabled us to double down on our position as #1 as we continue to build the investment bank for the 99%. As the quarter closes, our transaction volume is up 495% on the same period prior year, stimulated by record buyer demand (again!). And, I am also pleased to say we have recorded a Net Promoter Score (NPS) of 60. We measure our NPS 90 days post sale and we are delighted that both buyers and sellers are as happy as each other.
For those interested in Net Promoter Score and using it to assess their own businesses I highly recommend reading the Qualtrics article here.
Now, the real stuff. This quarter alone (Q1 2022) the new buyer wallet represents $32.5BN and the follow on effect means more competition for good deals. Private Equity is competing with aggregators, high net worths are going head to head with other institutional investors and there’s frothy demand for maturing asset types.
Take apps for instance. There’s a surge in demand as 1000 app publishers earned 1 Million or more for the first time ever and total Android and App revenues exploded 19% to $133 Billion (source: Business of Apps).
We actually saw our biggest app deal this quarter. A Singapore based portfolio of apps generating $12MM of revenue and growing ~30% annually was acquired for upwards of $30MM inclusive of upside payments from an international app publisher.
I’ll go into more detail on actual deal values below but for the moment, let’s break these buyers down a little –
For the period January to March 23rd:
- 30,774 buyers joined Flippa
- 14,107 completed profiles and were broken down into three buyer types:
- Company – defined as an established organization looking to grow through acquisition
- Entrepreneur – defined as a full time entrepreneur looking to own and operate
- Side Hustler – defined as a prospective buyer looking to earn a side income
- Companies only made up 8.9% (1,255) of overall buyers but with an average budget of $3.9M, this cohort dwarfs the other two – see chart 1.
- 76% of Side Hustlers intend to buy more than one asset. This is interesting. Side Hustlers tend to buy multiple assets. They run them all separately – typically content assets or apps – and they amass small fortunes – see chart 2.
Chart 1: Buyer type by average budget
Chart 2: The number of assets that each buyer type wants to acquire
If you would like to receive more data on the Flippa buyer set, we will soon publish in-depth insights, so drop me a note at [email protected] and let me know what you would be interested in seeing.
And, consider setting your preferences. Have you set your preferences yet? For more personalized recommendations and to improve your best match, set your profile and preferences.
Now for some recent valuations. As many of you will know, valuations vary wildly based on business model, performance, age, niche, defensibility and predictability. Accordingly, I have picked a variety of sales from an $8.5M education site acquisition to a $47,000 soccer forum.
$5.2M Sale | Multiple: 7.59X Trailing 12 Month Net Profit | Model: Adsense
A 13 year old content website, generating Adsense revenue of approximately $57K monthly sold for 7.59X trailing 12 month net profit. The $5.2M asset was incredibly consistent, more passive than I have seen most and still with upside. The seller is based in New Zealand and the buyer is based in the United States.
$8.5M Sale | Multiple: 6.4X Trailing 12 Month Net Profit | Model: Ads & Subscriptions
5 year old advertising and subscriptions platform targeting teachers with teaching kits and aids profited $1.3M in the trailing 12 months and was acquired for $8.5M. The asset had a staggering global traffic base attracting between 20-40m users monthly. The seller is based in Italy and the buyer is based in the United States.
$190K Sale | Multiple: 2.6X Trailing 12 Month Net Profit | Model: Amazon KDP
2 year old Amazon KDP store with 40 books. With over 2000 reviews the store targeted Italian language customers and distributed on Amazon Marketplace Italy. The seller is based in Italy and the buyer is based in the United States.
$275K Sale | Multiple: 2.0X Trailing 12 Month Net Profit | Model: Ecommerce
17 year old ecommerce store operating across Amazon, Shopify, Ebay and Walmart generating $11,000 monthly on a 43% profit margin. The $275K asset has a very strong repeat order rate and operated in the growing plus sized fashion industry. Both buyer and seller are based in the US.
$47K Sale | Multiple 2.35X Trailing 12 Month Net Profit | Model: Ads
18 year old soccer forum site with extraordinarily steady traffic generating 300-500,000 page views monthly and a very strong keyword long long tail, generated $1700 monthly and sold for $47,000. The seller is based in the UK and the buyer is based in Canada.
For a more in depth valuation and to set up a consultation with the team, you can get an indicative valuation here.
Thanks for reading and I hope this was useful insight. To get in touch directly feel free to get me at [email protected].