Since our IPO, we’ve acquired seven businesses. The blended acquisition multiple across all of them is approximately 3.4x their annual cash flow.
This number comes up often in conversations with investors, but I’ve found that most people hear the multiple without understanding what it means in practice. So let me make it tangible.
What a 3.4x Multiple Means
A 3.4x acquisition multiple means we paid approximately 3.4 times a business’s annual cash flow (typically measured as EBITDA or seller discretionary earnings) to acquire it.
In practical terms: if a business generates $200,000 per year in cash flow, a 3.4x deal means we paid about $680,000 for it.
That $200,000 per year means the business generates roughly 30% of its purchase price in cash flow every year.
This is not a projection or a growth assumption. It’s arithmetic based on the business’s current earnings.
The Portfolio Track Record
Here are the actual numbers across Onfolio’s acquisitions:
Contentellect: Acquired for $850,000. Annual cash flow of $300,000. Multiple: 2.8x.
DDSRank: Acquired for $600,000. Annual EBITDA of $200,000. Multiple: 3.0x.
Eastern Standard: $2.4 million valuation. Annual EBITDA of $630,000. Multiple: 3.8x.
BWPS: Acquired for $1.2 million. Annual cash flow of $330,000. Multiple: 3.6x.
SEOButler: Acquired for $950,000. Annual cash flow of $260,000. Multiple: 3.7x.
Proofread Anywhere: Acquired for $4.5 million. Annual cash flow of $1.2 million. Multiple: 3.75x.
RevenueZen: Acquired for $1.4 million in revenue with $227,000 in net profit.
The range runs from 2.8x to 3.8x. The blended average is approximately 3.4x. Every acquisition was cash-flow positive at the time of purchase.
It’s also worth noting we didn’t pay 100% cash for all of these deals. Some of them we barely put any cash in. This leverage can increase returns even further, but comes with the risk of balancing interest payments against cash flow.
Why This Range Works
Online businesses, particularly digital agencies, SaaS tools, and content businesses, typically trade in the 2.5x to 5x range depending on size, growth rate, owner dependency, and revenue concentration.
The 3-4x range where Onfolio operates reflects businesses that are established and profitable but typically too small for institutional private equity. PE firms generally look at businesses above $1M in EBITDA, often well above. Below that threshold, acquisition multiples compress because the buyer pool is smaller and the businesses are perceived as riskier.
For Onfolio, this is the opportunity. The businesses are real, generating real cash flow, but priced at multiples that institutional capital overlooks. A $600K acquisition of a business generating $200K/year is too small for a PE fund. For a holding company designed to operate exactly these businesses, the math is excellent.
The Hard Part
The hard part is not buying at 3x. It’s maintaining those earnings once you’ve acquired the business. A lot of these businesses come with risk of declining post-acquisition, for a whole host of reasons, and that’s why they trade for the prices they do. If they were more resilient, they’d cost more.
That’s where we try to create the value. Sometimes we’ll buy a business that will decline meaningfully, and other times we’ll grow one. The larger our portfolio grows, the more resilient it will become over time, without necessarily costing more to grow.
Value Investing Applied to Private Businesses
Public equity investors routinely pay 15-25x earnings for stocks and consider that reasonable. Growth stocks trade at 50-100x or more. The market prices in future earnings, competitive moats, and optionality.
Onfolio buys private businesses at 3-4x current earnings. The cash flow already exists. It’s not a bet on growth materializing. It’s acquiring an established business at a multiple where the math works from day one.
The portfolio now generates $575,000 per quarter in operating profit, up from $50,000 per quarter in Q1 2023. The businesses acquired at these multiples are the foundation for that growth.
What This Means if You’re a Business Owner
If you run a profitable online business and you’re considering a sale, the 3-4x range is realistic for what Onfolio pays. The exact multiple depends on the business’s margins, growth trajectory, owner dependency, and how it fits with the existing portfolio.
Onfolio structures deals creatively. The 2024 acquisitions used a combination of SPV co-investments, non-convertible preferred shares, and seller notes. This means deals can be structured in ways that pure-cash buyers can’t match, and sellers stay economically aligned with the business performing well after the sale.
Full portfolio performance and acquisition track record: onfolio.com/path-to-profit
I wrote a deeper breakdown of how this acquisition math compounds over time and why the multiple you pay changes everything: The Math of Serial Acquisition.
If this was useful to you, it would probably be useful to someone you know. Feel free to share it or forward it to a friend. One of the hardest things about being a small public company is simply being discovered, and word of mouth goes further than anything else.
Disclaimer: This discusses Onfolio’s acquisition history and portfolio performance using data from publicly filed SEC reports. It is not financial advice and should not be taken as a solicitation to buy or sell any security. For complete financial information, refer to our SEC filings at sec.gov.