Micro M&A

Last Updated on November 19, 2021

I wanted to brain dump a rough summary of what I say when I talk to someone who’s new to the idea of micro M&A.

What is micro M&A?

Mergers and acquistions (M&A) is a general term that describes the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.

Micro M&A is a term used to refer to M&A on a small scale.

What’s a digital asset?

A digital asset is just what it sounds like, some thing of value – an asset, in a digital form, such as:

  • Content websites
  • Ecommerce websites
  • Web apps/SaaS
  • Mobile apps
  • Ebooks
  • Ecommerce FBA etc

Often they will be grouped by the monetization type – how the asset makes money, e.g. affiliate commissions vs ecommerce etc.

Why would you acquire a digital asset?

For the same reason you would acquire any other asset type.

In my case it was to build a portfolio of assets that I can grow over time.

The best case is often where there is a digital asset acquisition made when there is a synergy between your existing asset/s and one you buy.

You also just might prefer buying to building something new. There’s no right answer, both have their pros and con.s

How do I find and acquire a digital asset?

There’s a few ways.

Informally peer to peer

A lot of transactions happen via people that already know each other in some capacity. A lot also happen via the plethora of facebook groups, some specifically for deals (e.g. Niche Websites for Sale for example), or groups related to a particular software or affiliate network for example.

Some buyers suggest they have had success with cold outreach too, although I think this needs to be done at scale and can be difficult informally as a solo operator.

Online broker

An online broker has some kind of listing site and provides full sale and migration support. Most of them will take about 15% commission of the sale price for their services.

FE International are great reliable brokers from what I’ve seen and heard. Empire Flippers also have growing reputation.

There are loads more, Quiet Light, Investors Club, Motion Invest and so on.

Marketplace platform

There aren’t really any platforms that manage the transaction itself, but there are listing marketplaces. Flippa has always had a platform component, and Empire Flippers appear to advancing their marketplace, and more recently MicroAcquire have built a SaaS focused marketplace.

These are listing marketplaces with some basic integrations such as Google Analytics to help with early DD. But the tail end of the process – the migration and integration is generally managed but the buyer and selling when using Flippa or similar.

More on the overall process below.

The overall process in Micro M&A

Here’s the rough simplified steps as I see it from a buyers perspective.

  1. Strategy. What do you want to acquire?
  2. Deal hunting. Find deals you’re interested in via online marketplaces, brokers, forums etc, or cold outreach.
  3. Deal chasing. Get in touch with the seller or representative.
  4. Early due diligence. Find out the high level metrics that concern you in order to quickly qualify or disqualify the deal.
  5. Send LOI. Send that letter of intent if you like what you found out.
  6. Due diligence. Dig a bit deeper into the business and it’s claims!
  7. Contract. Create and send the deal contract if you like what you uncovered.
  8. Escrow. Put the cash component of the deal in an escrow service.
  9. Migration & integration. Migrate all the components of the deal and integrate them into you operations.
  10. Release escrow. Pay that seller!

Check out The Website Flip for more detailed guides.

Problems with micro M&A

I bought a few content sites which was cool, but I had a LOT of deals fall through.

My experiences buying digital assets was very interesting, and my inner product manager god very interested in the software that facilitates these transactions, particularly the fulfillment end of the process.

Deal management platform

This doesn’t really exist. I’ve done some customer research work on this, and a little prototyping, contact me to learn more.