Online businesses are a relatively new asset class with very high margins and returns. However, these assets require a degree of expertise and hands-on involvement that may not be immediately obvious or feasible for most investors.
Statistically, first-time buyers usually lose their money on the first deal.
Our Business Buying and Management Service is an opportunity for you to partner with a well-established player in the market and benefit from our expertise, network, and systems.
At Domain Magnate we’ve been buying and managing online businesses for 16 years with annual returns consistently above 100%. have a look at our results from the first fund
How?
We manage our own private deal flow, which allows us to buy the best deals before they even hit the market. Our management team then steps in to optimize and increase cash flow and plan the optimal timeline for resale.
Recent Examples:
- 130% cash on cash return from our first small family fund in a 12-18 months span.
- Amazon affiliate website in the cannabis niche acquired for under $50K, improved to increase traffic and revenue, and sold 5 months later for $165K.
- Another Amazon affiliate site in the coffee niche acquired for $52K and sold for $142.5K 8 months later.
- A beauty affiliate website acquired for $202K in July 2019. Three months later, revenue has increased to $15K and continues to grow. We plan to resell for $500K.
- … more detailed case studies available upon request.
Criteria (updated January 2022):
- A minimum budget of $250K, however budgets in the mid 6 figure are preferred, as this is where we usually find the best deals.
- Basic familiarity with the business model and our strategy. Preference is usually given to investors who have done at least one similar deal before, or invested in micro private equity funds or deals before.
How does it work?
- Fill out our investor engagement form
- Have a call with our senior staff to discuss expectations and plans
- Sign an agreement and send a deposit
- Buy a business
- We set operational strategy, outcomes and timeline
- Our team operates and grows the business
- We resell the business and split profits
In Detail
- After you fill out the engagement form our staff will review and respond via email to get more details and answer any preliminary questions you may have.
- We’ll set up a call with our senior manager or CEO to discuss expectations, plans, budgets, and other details.
- We’ll sign a short buyer-operator agreement, which outlines the roles, responsibilities, and expectations of both parties. After you send a fully refundable deposit, our team sources the best opportunities for your budget and criteria.
- We’ll show you several great deals. Our due diligence and strategic guidance will allow you to decide with confidence. We manage and review hundreds of private deals to find the best ones, so our deals are much better than what you’ll find on the market. Investors often find that our first recommendation exceeds their expectations.
- We negotiate, prepare, and sign a sales agreement with the seller, set up the transaction (via Escrow.com or similar), and handle the asset transfers.
- Our SEO and Marketing team will conduct an in-depth review of the business to decide on a growth strategy and timeline to begin executing immediately.
- We’ll manage and grow the business to increase profits and optimize it for resale.
- We’ll constantly monitor the market and financial trends so we can sell the business at the optimal time and distribute profits.
Types of Businesses
- We currently focus on acquiring and operating content, SaaS and service businesses, with mostly organic google traffic, and monetized by ads, digital product sales, services, affiliate sales.
- We use our own criteria and all deals pass through our multiple stage due diligence process, before they are approved.
Fees
We take a 12% deal fee, and take half the profits generated from the monthly revenues and resale.
- Deal acquisition fee is 12% of the cost up to $350K and 8% thereafter, with a minimum of $6K.
- This covers our brokering costs and it is lower than the 15% industry-standard fee you would pay a broker.
- The deals we buy are far better than what you would be able to find on the market. We typically get a 15%-30% discount from the market value on the business we buy, so you get an immediate return on your fee.
- This fee covers our expert team reviewing hundreds of deals, finding and negotiating the best ones, doing deep due diligence and performing the asset transfers for all domains, websites, and accounts associated with the business, in addition to changing your ads and affiliate IDs.
- Transaction Costs: As a Premium Escrow.com partner, Domain Magnate usually conducts transactions via Escrow.com. The costs are under 1%. Sometimes we also do transactions directly, where the seller first transfers the assets to us, and then we issue the payment. This allows us to save on transaction fees and do deals faster.
- Operational costs are external costs to grow or run the business, such as paying for content and backlinks, web hosting, ads, or a paid marketing budget. These do not include cost of our team managing the business. We generally try to keep our external operational costs to the minimum.
- Profit split: We take 35% of the monthly profit every month, and 50% of the profit generated after resale.
Example profit distribution:
We buy a business for $168K (with our 12% deal fee included) that is earning $5K per month.
During 18 months of operation the business reaches $14K in revenue and we sell the business for $470K (after deal fees). The business generates $175K in revenue during 18 months, with $29k in operating expenses. So you receive ($175k-$29k)*65% = $94.9k in profit distributions. From the sale amount you first receive your $168K back, and then 50% of the remaining profit, $151k. In total you received: $94.9k+$168k+$151k = $413900, with a 146% return in 18 months.
Fill out the engagement form to take the first step and find out if you qualify.
Common Questions:
- Do I own the business directly? Yes, you’ll have the full and complete ownership of the business, website, and all associated assets.
- Will I need to manage the website, hosting, payment processing, affiliate programs and other accounts? No, we take care of everything, you just receive quarterly reports and distributions.
- Can I manage some aspects of the business on my own? Yes, it’s possible, but you should tell us upfront if you plan to be involved in operating or managing the business we acquire for you, so we can confirm that the same level of security, safety, and a timely access is available for us to manage it effectively.
- I have less capital, than the minimum required for this service, how can I invest with you? Fill out the application for our fund and subscribe to our newsletter, so you can be notified of new opportunities available, with lower investment requirement. We expect to launch some investment opportunities with substantially lower investment requirements in Q2 of 2021
- Do you guarantee returns? No, we absolutely do not guarantee any returns. Investing in online businesses is risky, and past performance is no guarantee of future returns.