Business Name: Confidential

Location:  USA (but operated out of South Africa)

Business Start Date: 2019

Business Price: 3M USD

Sales (TTM): 892,661 USD

Net Profit (SDE): 225,929 USD

Business Multiple: around 3.36x ARR

Clients: 31

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The Opportunity 

This listing is a 4-year-old highly scalable digital marketing business serving the B2B cold email market. The business helps companies with email outreach as their main service - in this, they have a high-touch full-service software process to service this niche, which is in demand for any sales-forward organization. The potential buyer has the opportunity to acquire a respected brand with a solid financial foundation at a competitive multiple of less than 3.5X the ARR.

General Highlights

• This 4-year-old business is equipped with an innovative product, a reliable customer base, and a finely-tuned operational system.

• The business already is steadily growing year over year to almost 900k ARR currently and has plenty of new growth opportunities -

• The business has a credible industry presence and it is well-regarded and trusted, giving the buyer an immediate competitive advantage.

• The business boasts a steadily expanding customer base of over 31 companies with a decreasing churn rate, ripe for long-term customer retention.

Niche

This business operates in the digital marketing and communication space where it serves the B2B cold email market segment for companies seeking help managing their email campaigns as well as other agencies looking for a white-label solution

Customer Base

The company has 31 clients from a broad range of industries with the majority being VCs, ICT, Software devs, Marketing and Advertising, and Corporate gifting.

Traffic

For the period of January 2020 to October 2023, the company has 23K users with a 64.93% bounce rate and 59,463 pageviews.

In terms of demographics, 10,008 users are from the United States, which corresponds to 43.37% of all its users. Others are from South Africa (3,022 users), and the United Kingdom with 2,168 users.

The business' user acquisition is as follows:

1. Direct - 15,574

2. Organic Search - 5,376

3. Paid Search- 995

4. Social - 846

5. Referral - 284

6. Other - 21

Revenue Sources

The business makes money through the sale of various cold email packages that differ primarily on the basis of the number of email sequences that are offered.

All of its packages are performance-based and tailored to its 50+ clients' unique service needs and requirements. Pricing plans are Emerge, Embark, Envision, and Explore - with Embark being the most popular plan.

Custom plans are also available. All plans have discount options applicable if the client is willing to make upfront payments/subscriptions.

Financials

The company’s revenues have been steadily increasing since its inception in 2020. It has achieved a CAGR of 184% to date. The business has been profitable but has not yet achieved its full potential as over the recent couple of years, the emphasis has been on developing a viable product, augmenting operational systems, and hiring key employees to bring technical stability and drive growth. Gross profit margins have averaged 76% while operating profit margin was 12.4%

Sales (USD)

2021 -  119,108 

2022 - 506,579

2023 - 812,575

Profit (USD)

2021 - 18,692

2022 - 96,619

2023 - 19,800

Operations

The business augments its client's sales teams by being the experts in cold outbound sales. By scaling up its infrastructure, the company has enabled its clients to generate revenue-generating conversions. Their backend and front-end processes are handled by a combination of people and software to deliver the results customers want.

Backend processes (done by people)

• Email infrastructure setup

• Apollo account setup

• Dashboard setup

• Apollo account maintenance

• Reply categorization

Backend processes (done by software)

• Sending of emails

• Collection and storage of campaign data

Frontend processes (done by people)

• Communication and interpretation of campaign performance

Front End Processes (done by software)

• Dashboarding of data

Team

This company’s team is as follows.

1. Person 1 - CEO & Founder

2. Person 2 - Co-Founder & COO

3. Person 3 - Co-Founder and Head of Strategic Partnership

4. Person 4 - Commercial Director

5. Person 5 - Software Developer

6. Person 6 - Front End Developer

7. Person 7 - Senior Account Manager

8. Person 8 - Finance Manager

9. Person 9- Client Service Lead

10. Person 10 - Account Executive

11. Person 11 - Account Executive

12. Person 12 - Head of Customer Services

13. Person 13 - Email Strat & Analytics

14. Person 14 - Email Strategist

15. Person 15- Sequence Manager

16. Person 16- Data Scientist

17. Person 17- Head of Copy

18. Person 18 - Operations Assistant

Marketing

The business relies mainly on its own prospecting software, LinkedIn, Google Ads, and its website in terms of marketing efforts. Another channel is through referral partners. It is a marketing company so this part comes naturally.

Partners

Some of the shareholders are significant referral partners. The company runs a referral program targeted at its current clients to create a network effect on sales.

Main Expenses

The main expenses are employee costs, cold email software subscriptions, and outsourcing third-party consultants. See the financials for more details.

Work and Skills Required

The CEO is the major shareholder of the business and is also involved in sales generation. Additionally, he oversees operations and product development in terms of:

1. Adding listings

2. Paying partners/employees

3. Optimizing advertising

Who is the ideal buyer for this business?

The business has evolved to a stage where it does not need to heavily depend on its owner to continue operating, hence any investor with an interest in this space could be an ideal buyer. Ideally, someone in the cold email business who seeks to leverage our IP and unique product.

What (if any) post sale support is included with the sale?

The owner will provide 6 months of part-time support to ensure a smooth transition.

Valuation

The valuation was determined by taking a middle-of-the-road ARR multiple (3.36X) to the sales numbers to generate the current price/valuation.

SEO Analysis (Ahrefs or SEMRush) 

Authority Score: 4

Backlinks: 70

Referring Domains: 49

Total Keywords: 50

Social Media

The company has these social media pages.

LinkedIn - 1,495 followers

Twitter - 5 followers

Expansion Opportunities for New Owner

Several options to expand the business include

1. Lowering prices

2. Cutting costs

3. Cross-selling with a partner

4. Increasing features

5. Start spending money on advertising

Barriers to Entry

The company positions itself in a highly competitive industry. To sustain, one should gear towards building its own IP and goodwill. Technical expertise and connections would also be helpful in order to create a similar product-driven business in the same space.

Reason for Sale

The owner is selling the company to unlock value after having invested in a working product and system. 

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All Assets Included with Sale 

All current assets of the business will be included

1. Domains

2. Website and all content

• Home Page

• About Page

• Services Page

• Pricing Page

• Case Studies Page

• Resources Page

• Blog Page

• Contact Us Page

3. Hosting Accounts

• AWS

• Digital Ocean

• Herokou

4. Monetization Accounts

• Cold outbound email

• Referral Partner Community

• LinkedIn Ads

5. Social Media 

• Linkedin - 1451 Followers

• Twitter - 5 Followers

• Youtube - O Subscribers

6. Customer Contracts

7. Partner contracts

• Referral partners

8. Misc Accounts

• Apollo

• Sendgrid

• AWS

• Herokou

• ChatGPT

• Bouncer

• Instantly

• ExactBuyer

• Missive

• Upwork

• OpenAI

• Google Analytics

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About the Agent 

FIH.com is a Manhattan-based M&A advisory firm specializing in the sale of SaaS, eCommerce, & Digital Media companies from $1M-$100M. If you are in the market OR you are looking to exit a business that fits these specifications, then we encourage you to reach out to us for a free consultation. We offer 100% success-based services and have a financing arm for international individuals needing acquisition capital.