It’s not every day you receive a random email from someone wanting to buy your business. But that’s exactly what happened to Mark Whitman, the founder of Contentellect.
Last month, Onfolio acquired Contentellect to add to their portfolio of successful digital businesses.
Mark is no stranger to buying and selling web properties. Through his business incubator, Bluedot Ventures, Mark tests small projects before launching them as viable, separate companies.
His current portfolio includes an adventure travel business, a SERP API for data miners, and a keyword grouping tool for SEOs and digital marketers.
I reached out to Mark to chat about how he decided to sell, what it was like dealing with Onfolio, and how the sale price was agreed.
Mark also offers valuable advice for any entrepreneur looking to sell a business.
Let’s see what he has to say.
Mark, could you tell us about Contentellect and how you started this business?
One of my main businesses prior to starting Contentellect was a content website portfolio. At its peak, that business consisted of 15 affiliate marketing sites.
As I’m sure you appreciate, we had to build quite a large team of in-house writers and editors to run that many sites.
The idea of packaging our in-house team into a content writing service had been percolating for a few years so, in early 2018, I bit the bullet and launched Contentellect. I did this with a friend who is also called Marc (with a c).
We initially targeted affiliate marketing website owners but quickly learned that this customer segment is very price sensitive. We then pivoted the business to a blog management service for SaaS companies, which got good traction.
When did you decide it was time to sell? Did you have an exit plan in place from the beginning?
In early 2021, Marc and I began discussing selling the business. Up until that point, Marc had been running the business and I was involved on a more passive basis.
We had grown the business to around $20,000 in monthly revenue. About $12,000 of that was monthly recurring revenue, and we were nicely profitable.
We began by shopping the business around to some of the brokerages. I think we spoke to Empire Flippers as well as FE International. We also listed on MicroAcquire (now Acquire) and Flippa, and we got quite a bit of interest off each platform.
At the same time, my travel business had just gone through a year of Covid restrictions and we were basically dead in the water. I had essentially shut down the business, which freed up a ton of my time.
I also had quite a bit of cash sitting in the bank account so I offered to buy Marc out of Contentellect — and he was keen.
In July 2021, I took over the reins with a clear plan to scale the company from around $250k in annual revenue to $1 million. I gave myself a deadline of 18 months to achieve this.
Exiting was (of course) on my mind when I bought Marc out, but the initial plan was just to scale the revenue, team, and services.
I wanted to do so in a way that removed me from the day-to-day operations of the business. I knew this would make the company more attractive to prospective buyers.
What options did you explore for selling your business? For example, did you consider listing it on a marketplace or using a broker?
Although I was building to sell, I wasn’t actively looking to exit when Yury from Onfolio reached out to me in April 2022.
He was scouting for businesses to buy and randomly emailed me.
I didn’t know Yury, but I believe he saw my profile on IndieHackers and noticed I had quite a few things going on. I don’t recall talking specifically about Contentellect as I think he was initially looking at one of my SaaS businesses.
I must have mentioned that I was building Contentellect to sell (although it wasn’t ready yet). Yury and I kept the conversation going through the Summer and, by September 2022, things started to get a little more serious.
There are essential steps to work through in any business sale. What was the process like at Onfolio?
The process was very straightforward with Onfolio.
Obviously, because Onfolio is a Nasdaq-listed company, there were additional steps involved and a lot more paperwork than I’ve had in previous deals.
But that gave me quite a lot of comfort — they were dotting the i’s and crossing the t’s.
There was a bit of back and forth to agree on a purchase price but, within two months (around mid-November 2022), we had an asset purchase agreement (APA) drafted and began the process of due diligence.
By mid-January 2023, we signed the APA and the sale was completed at the beginning of February.
The entire process was incredibly professional and seamless. The toughest part has been the migration, as there have been a few hurdles transitioning our payment gateways.
Can you disclose the sale price and tell us how this was calculated?
Sure, it’s public information.
The business sold for $850,000 in cash.
I received a higher offer that involved an earn-out, but I was looking for a cleaner, faster sale and was willing to accept a lower purchase price.
One of the key factors for me was that our team would be properly treated after the sale.
I knew Onfolio was bringing in a CEO to run the company. I was cognizant that this was factored into the sales price, which I was happy to accept as it gave me a lot of confidence that our team was in safe hands.
The sales value was calculated as a multiple on monthly profit. I think it was calculated at two and a half times, which is fairly standard in the agency world for a business of our size.
How does dealing with a company like Onfolio compare to completing a private sale or using a marketplace?
Because Onfolio’s business model is all about acquisition, they are very streamlined and professional.
I didn’t get the feeling that they were being underhanded, which I’ve experienced before with buyers. You come across individuals who have no intention of actually buying — they’re just fishing for trade secrets or using sneaky tactics to get a below-market price.
Onfolio was the opposite.
They were always clear and transparent in their communications — and very fast too.
What advice would you give to someone wanting to sell their agency?
The important thing when trying to sell an agency (or any business) is to remove yourself from the day-to-day operations.
Many founder-led businesses are almost entirely dependent on the founder or CEO, and this makes them less sellable.
If you can build an agency or business that’s more productized and streamlined, and that has a great second-tier management team who ensures that you’re not involved in the day-to-day operations, it makes the business more appealing to a buyer.
Secondly, try to build an agency with a recurring business model. Obviously, it’s particularly attractive when there is a monthly revenue number that isn’t reliant on one-off orders.
At Contentellect we were at around $40,000 in monthly recurring income when we sold to Onfolio.
Thirdly, make sure you’ve got your numbers dialed in. This includes the inflows and outflows from the company, the margins (which are hopefully healthy), and very clean and easy-to-understand accounts.
Finally, start out with the intention of building a great brand, something that’s gonna stand the test of time, that’s not just a one-page website.
Every day, make sure you work on the small steps that build brand equity. Do this via your client and team relationships, your email list, your blog and social media presence, your service offering and landing pages, or your Trustpilot review profile.
Ultimately, building brand equity takes consistent effort over the years, but it pays off when you exit.
Contentellect grew out of your business ‘incubator’ called Bluedot Ventures. Is there a web property you’d like to concentrate on growing further now that you’ve exited Contentellect?
With Bluedot, I’ve got this model where I launch little projects and if they get traction, e.g., hit a certain run rate, I hive them out of that company and create a new standalone business.
Currently, I’m working on a few projects.
I have two micro-SaaS ideas, and I’ve held on to my travel business. I’m thinking of getting back into the travel space as it is one of my passions. But I’m not committing to anything at this point.
We’ve covered a bunch of questions about your sale, Mark, so let’s finish on a personal note. Like most entrepreneurs, you enjoy a good read. What books have influenced you most in business?
There are literally too many to mention, but the few that spring to mind are:
1. The 80:20 Principle by Richard Koch, which provides an amazing framework to help focus on the important things that actually move the dial in business and life.
2. The Millionaire Fastlane by MJ Demarco, which is the best roadmap I’ve read for any aspiring entrepreneur who is looking for their first success in business, and
3. Anything You Want by Derek Sivers, which succinctly captures the essence of starting and growing a business, without any fluff or waffle.
Thanks, Mark. It’s been a pleasure speaking with you.
Thank you, Juliet. I enjoyed it!
Every business exit requires a strategy.
And that strategy must start long before you intend to sell.
Mark received maximum value for his company by planning in advance for a successful sale. He implemented plans and processes to ensure his company was attractive to a potential purchaser.
The success factors included:
- A focus on building brand equity and recurring revenue streams
- Removing himself from the day-to-day operations of the business
- Ensuring the financial statements were clean and well-maintained
- A well-trained and capable team
Instead of thinking about your business exit as something that might happen in the future, rethink it as something that could happen at any moment.
Because this is exactly what happened to Mark when he received that random email.