April 7, 2023

E111: Uncovering The Rise Of Media M&A With Michael Fink, Co-CEO Of Treasure Hunter - How2Exit

E111: Uncovering The Rise Of Media M&A With Michael Fink, Co-CEO  Of Treasure Hunter - How2Exit

Michael Fink is the Co-CEO of Treasure Hunter, and is currently living in a small city in Munich called Burghausen, which is home to the longest castle in the world. He was invited to the How2Exit Podcast to discuss his experience in buying, growing,...

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Michael Fink is the Co-CEO of Treasure Hunter, and is currently living in a small city in Munich called Burghausen, which is home to the longest castle in the world. He was invited to the How2Exit Podcast to discuss his experience in buying, growing, and owning media assets. Fink began his journey more than 10 years ago when he and his then-girlfriend, now-wife co-funded Ever Growing with €1,000 and published product review sites.

At TreasureHunter, they are acquiring and operating content websites in passion-driven verticals, building out a synergetic portfolio and helping founders on the way to reach the full potential of their sites.

Watch it on Youtube: https://youtu.be/9k4cXrkbPZ0
Contact Michael on
Linkedin: https://www.linkedin.com/in/fink-michael/
Website: https://treasurehunter.media/
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[00:00:00] Ron Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Michael Fink. He's the Co-CEO of Treasure Hunter, and I'm really excited to have this conversation. You and I chat a little bit online occasionally, and I watch what you're building and what you've built already. So this is gonna be, both educational and fun for me to have this conversation with you. So thank you for being on the show.

[00:00:20] Michael Fink: Yeah. Thank you so much, Ron, for having me. And obviously I'm a big fan of your podcast and I've, tuned in a lot of shows and recently with Blake from flippa.com, or Roland Frasier. I mean, the man's a beast, right? So I had to rewind like, I don't know, for 10 times to really get all his information because he's really able to condense information in such a short way. And yeah, so being in line with all these guests, I'm super honored. Thanks for having me. 

[00:00:49] Ron Skelton: Awesome. I love the accent. You're from Germany, right? 

[00:00:52] Michael Fink: Yes, absolutely. My accent probably gave me away. I'm from Munich, South Germany. You guys probably know [00:01:00] the Octoberfest. Yeah. So that's Munich. I'm currently living in a small city, new Munich. It's called Burghausen. And did you know that Burghausen has the longest castle in the whole world? As a matter 1000 meters off long. One of the big highlights here, so like one minute in your show can already check off the fun fact.

[00:01:24] Ron Skelton: They're the longest castle in the world. And I live near some of the biggest trees in the world. So I live underneath, Sequoia and redwood trees in the California, redwood Forest. There's a few of 'em here. I live in one of the many. So let's start off with the origin story. What got you into buying, growing and, owning media assets or websites, blogs, that type of stuff?

[00:01:46] Michael Fink: Yeah, sure. Let's kick it off with a walk down the memory lane. So more than 10 years ago, I co-founded Ever Growing. So not Treasure Hunter, but Ever Growing. Together with my back then girlfriend, [00:02:00] now wife, and, mother of our three kids, of our three boys. Yeah, we co-founded Ever Growing. We chipped in both a thousand euros back then. And we started out publishing all these, product review sites. Funny enough, I think at 2011 it was the time when the wire cutter started out as well. But unless the wire cutter, we were heavily focused on the German speaking markets like tra Austria Switzerland.

[00:02:29] So we published, a lot of product reviews in depth, product guides and so on. We gained fast traction and we grew and became one of the leading product review websites in Germany. So, think of us as a European version of best reviews.com of the New York Times is the wire cutter. And then back in 2019 we saw the rise, or we saw various publishers and these big media companies entering the [00:03:00] space. I mean, you guys probably, experienced the same in the states with, CNN entering the space, with CNN underscore, the Business Insider, with the insider picks. So we thought, okay, well now with our product review website, we're not competing against, best vacuum cleaner2018.com.

[00:03:18] But with these big renowned, authority media publishers. So we decided not to fight them, but to team up with them and enter into partnerships. So very similar actually, as the wire cutters, actually running in some kind of sub folder at the New York Times. So we started out these partnerships, first in Germany. Then we expanded all over Europe. So now we have partnerships in Germany, France, Italy, Spain, the states, with Venture Beat or with msn.com, for example. But also in Brazil we acquired a stake in Rewoo(?), a public company that's running, the very same partnerships in the Latin American market.[00:04:00] 

[00:04:00] So we had, basically our journey here over at Evergreens. We went literally from nothing, founded the company, literally out of my, student housing, living room. We never took on any investors or business angels. We don't have any debt, on the balance sheets, and we grew ever growing into now, more than 30 websites, including 20 partnerships with these renowned publishers now all around the globe, except, the Asian part. And, in total, we are consulting or we're informing and advising more than 30 million, people per year. And our partners, these media companies have a total of more than 1.2 billion, monthly users.

[00:04:47] So these are really some heavy hitters in the space. So that's the history of ever growing and we're still running the ever growing assets. So we are really deeply rooted in this, content space and in the content [00:05:00] websites. And then back in 2021, we saw all the Amazon FBA aggregators emerging. Like, raise your heyday, racer group, perch, you name it. And we were like, well, it's amazing what these guys are pulling off. I mean, they've raised like, I think a $15 billion in VC equity and debt funding combined in just a couple of years, and then we're totally disrupting the space and they're heavily aggregating. And we were like, wow.

[00:05:29] The business model, the underlying business model is amazing. You acquire these assets that are valued at a very reasonable, at a very fair price point. Let's say a two x or three x. You aggregate them, you build out some kind of SY(?) Portfolio, and you leverage, all these synergies between your assets between who you are, Amazon FBA companies, and build out this portfolio company that's obviously trading at a way higher multiple. So we are thriving on the one [00:06:00] hand of the organic traffic and organic growth of these assets. And on the other hand, this is multiplied by the valuation of Petra. And we were like, okay. Come on, let's not start the, like, I don't know, 135th Amazon FBA aggregator, but use and applied the very same model to a space where we really have deep knowledge, where we have, our custom advertiser base. Where we have international teams in place, where we have all these, media partnerships built up over the last couple of years.

[00:06:29] And yeah, that was the reason, why we started and how we started Treasure Hunter back in 2021. I co-founded together with Benjamin, who's running ever-growing as CEO since, 2019. And, Ola Schmidtz is also one of the founders. So he's a super smart guy. Founded his first company at 17, and he has been running the whole European Amazon Affiliates, for more than five years. He's owning the largest barbecue and grilling [00:07:00] content and network, throughout Germany. He sits in a lot of boards, even the open source startup valued at a $3 billion. He's on the board of a couple of uni brands, one of the Amazon FBA aggregators. I think they've raised like $300 million in their last round.

[00:07:17] And our fourth co-founder, Daniel, he's from the e-com world. We co-founded, treasure Hunter, chipped in a couple of hundred K from our own personal funds. Have used these to acquire our first site. Rise fraud translates into something like a happy traveling search term and travel blog. And, we basically professionalized, this travel blog by, by using better SEO tactics, better content strategy, removing all the technical issues, adapting the sales processes. In the end, we more than double the revenue in the EBIT within a couple of months and even surpassed our own expectations. And yeah, this brought us to our next funding [00:08:00] round. Last year in August, closed it. We raised a couple of million and, since then we're on a shopping, tour and we've acquired now more than 10 additional, content websites in various spaces.

[00:08:13] So at Treasure Hunter, ever-growing is all, wire cutter, like product reviews, whereas treasure hunter, we're really doubling down on these communities, and on these really passion related verticals. Like imagine anything you'd like to spend your leisure time on, be it like travel, outdoor nature, sports, food and so on. And yeah. Same strategy here. Similar to ever growing. We're firing a couple of websites and then we use all the synergies between them. So really in a nutshell, that's the history and the beginning from Ever Growing to Treasure Hunter. 

[00:08:49] Ron Skelton: Awesome. I like that you guys focus on like passion, what I call, passion niches, right? There are things that, there's just huge followings for. I was looking at your website right beforehand. I'm a big guy. [00:09:00] Likes to love to go fishing. If you have a fishing blog out there, and if you know anything about, especially here in the United States, If you're passionate about fishing, it might be deep sea fishing, or you might be salmon fishing, or you might be fly fishing, or you might be bass fishing. If somebody comes out and says, this new lure catches bass faster than anybody else's, I don't care what it cost or how much your budget was for the month on that, chances are you're buying the new, coolest, latest thing out.

[00:09:23] So passionate markets are really cool in the fact that their passion often overrides their logic. They're into something really into, so here in the US it's like fishing, golf, health. There's a bunch of different passion topics. Does that help with the traffic and stuff?

[00:09:42] Michael Fink: Yeah, yeah, absolutely. Especially it helps with, the diversification of the traffic. See, compared to our product refuel sites there, if you look at the customer journey, they're really at the still end of the funnel. So right before you probably head over to some kind of, site, and then, you close the transaction on some kind of eco [00:10:00] shop at amazon.com. But these, passion verticals and passion websites, they're like, one step ahead, the value chain. So these are the communities where the ideas are sparkling. Think about, let's say you're some kind of foodie and think about, what you do next. And then you head over to your favorite, food blog and you see, oh wow, we cooking is the new thing.

[00:10:22] And, uh, you check it out and you let inspire you and these ideas are sparkling. That's all what these are passion related blogs are about it. And you are here in the M and A and, small business space. And that's basically some kind of passion vertical as well. If you take a look at the ventures portfolio, I mean, these guys are doing, I think now 2 billion in revenue per year. But they have doubled down on the financial and niche, and they're very strong in this finance vertical. So basically every big, finance asset like Points guys and so on. You visiting its own per adv entures. We're following basically the same [00:11:00] business model, but unlike our adventures, we're not doing some kind of multimillion or billion dollar deals, not yet. 

[00:11:08] But really focusing on, content sites that have like a 100 K in net profit, up to a million. So that's really our sweet spot. But yeah, completely agree. And the huge advantage of these passion related sciences, they're not only dependent from the Google SEO traffic because in these, within these assets, you see a lot of social media traffic. You see newsletter traffic. You see all of these media areas that are attached, and I think that there's a huge opportunity to just diversify a traffic streams as well as your own new streams. 

[00:11:45] Ron Skelton: I get it. One of the things I learned that, in this B2B mergers and acquisitions of small business space is it's a lot smaller than I thought it was. We own two newsletters in it. We have this podcast, we have some other interests we're looking at,[00:12:00] but we were trying to figure out why we can't grow them faster. They're slow to grow. So we started looking around and the biggest guys in here that you mentioned, Roland Frasier and like, and some of these other guys that have been doing this and teaching this, and they've got content going out daily.

[00:12:14] Even those guys have the tens of thousands of followers instead of like low tens instead of the hundreds of thousands of followers. Some of these other, influencers have in other niches. And, even myself, if you look across all my platforms, I'm close to about 140, 150,000 followers across all of 'em put together. And that's accumulation of you know, 14 years on Twitter and all these other platforms. So, we were looking this morning cuz we were thinking about taking our newsletter, one of our newsletters, and making a subset of it on LinkedIn. And the number one podcast in this space is, M&A Science.

[00:12:50] He's got a newsletter. He's put out 221 or something, issues or episodes or we don't even call it his newsletter. And he is got less than 6,000 [00:13:00] subscribers on it. And I'm thinking it's just such a tight, small space. So as I look to acquire and build other website and newsletters and content stuff, I'm looking for things that are more in that b2b, but broader than just buying and selling small to medium businesses. I like your content, your review sites. I would love to, like I was looking at one that reviewed, um, business brokerages of all things. Which is still really tied into this niche. Software review sites I think would be interested for me.

[00:13:34] And then I'm actually looking for what other things outside of this that, expanding my horizons a little bit. What else is out there that I would be interested in that has a much broader audience?

[00:13:44] Michael Fink: Yeah. But I think, the m and a space, if we take a look at, uh, GPT, and how it might disrupt the future space. So I think especially the digital media space, will see a lot of disruptions by the ai, be it on the content side, but as well as on the IT and software side. Basically this kind of generic how to, how I changed my, X or y this kind of a generic fact based, content parts will become a commodity. And the same goes for any, generic tech or programming. And with that said, there might be a lot of disruption, throughout the industry, but always when there are some kind of, disruption, there are always a lot of opportunities, evolving. And I think, it might be fair to say that we see a lot of content creators, solopreneurs, and small startups raising up a team.

[00:14:44] Started today run with, let's say a hundred FTs might be possible in the near future. Let's say three to five FTs and, an army of AI, marketers, uh, coders, newsletter experts and so on, that depart by some AI tech. And in the end, we might see way more small and medium, startups, on the horizon. And all of these kinds might eventually look for an exit or think about how can I optimize my business for an exit or how can I acquire a competitor? So I think the m and a space will really be one of the big winners, in this scenario, whereas I personally think that at a recease space I will get a heavy hit, because in the future and powered by AI, might not be in need of this. We see money that comes with all of these, strings attached anymore, or at least, to the extent we're seeing it today. 

[00:15:46] Ron Skelton: Yeah, I mean the whole, ChatGPT and all these different AIs that are already out there, they're really impacting, like even to today. When they first came out, I was like, that sounds kind of cool. And then I went down the rabbit hole a little bit and took a look at it. Now I'm prior tech. If you kind of look deep into my background, I'm prior tech. I was tech when I was, I was technically inclined when I was in the military. When I got out of the military, I worked for, government agencies and contracting companies to design computer systems for it.

[00:16:15] So my background is that I thought I was burned out in it, but when I went down there's AI rabbit hole, the next thing I know, I'm pulled back into technology. Cuz this is really intriguing. I left tech cuz it was boring to me. I always joke around and said if there's something wrong with the computer, it's either the idiot that programmed it or the idiot behind the keyboard. It's rarely the computer. And then human beings are so fascinated. If you look at a human being, give 'em a step by step procedure on how to do something. They'll do it their own way, whether, you know how many steps you put in front of 'em. So humans intrigue me, computers bored me at the time.

[00:16:44]Now I'm back into this stage where, oh my goodness, look at this thing that they've created. It's very intriguing. I upset somebody yesterday on a call. I told 'em, if you're not slightly scared by AI, you're probably an idiot. And the guy was like, I'm a computer science guy. I'm not offended. I'm not scared of this thing. It's nothing more than autocorrect. And he's so far from the truth. But, if AI is both exciting where it's heading with all this, with the ability for us to create content faster. And it should be a little scary, because the fast, the speed of which it's growing and the amount of stuff that it can control has the potential to disrupt everything we're doing. 

[00:17:25] So the other thing that concerns me in this until I want your opinion on this, is at some point in the human experience, if we switch our desire to have that connection with another human being, the guy that was actually physically there on the beach telling me his experience. We watch so many news and YouTube [00:04:00] and Netflix and stuff like that. We love this fake case studies, movies and drama and stuff. If AI gets so good at telling stories, at some point will we care that it was a real story and a real human being, they're a real experience? Or is it okay for it just to be something made up that just really entertaining to read?

[00:18:03] Michael Fink: I think, both aspects were true. I don't know if you're aware of these, uh, synthetic avatars and these synthetic influencers. And I've recently come across a study that I'll shoot you over the link later. And I think the engagement rates of these, uh, synthetic influencers or from real users with these influencers, were like three times as high compared to human influencers. And I had to reread it a couple of times because this was like, super weird at first. But yeah, it would totally, approve your point that at least an extent, a couple of people are thinking, okay, wow, it's completely fine,[00:05:00] to hear some stories and see some involvement of, some kind of AI or virtual avatar that I'm falling and that's evolving.

[00:18:54] But I think, both sides might wanna hold true. So I think, these are personal relationships and these are real time events and they're going out meeting some people. I think they might stick around for a long time. But yeah, AI might really influence way more, sectors and areas that might inversion, today, thinking of like, lawyers, architects, indoor designers, bookkeeping and so like thousands of areas and especially, not the blue color shops, but really the highly trained super skill know-how based one. There might be, it's a super exciting time to live. Let me put it that way. 

[00:19:38] Ron Skelton: So I'm not ready to announce what it looks like yet, but one of the little projects I'm working on the side is something like that. It's just to see, just cuz I know AI's coming, it's gonna do this, it's gonna do what it's doing. I'm trying to figure out how do I participate in it. How do I, make it work for what we're doing. But we're working on, on something in that space where, I've already done one. I dunno if you dug through my episodes, but there's actually an episode out there where I am interviewing a guy I refer to as Ali Penman.

[00:20:04] And Ali means artificial language intelligence. It's all Ali stands for, and Penman then stands for pin name. As in a ghost writer, like a pin name. So anytime you see Ali Penman on any of my articles or Ali Penman being interviewed just means we're interviewing AI and there's a disclosure on the website that says it. I interviewed AI on the concept of what does it look like to buy a small to medium sized business, through ChatGPT, the one of the early versions of it. And the response was so good. I actually deep faked my voice, deep faked a voice for the AI and turned it into a podcast. So the podcast isn't even me asking the questions.

[00:20:39] The interview is, an AI tool, deep faking my voice, my part. I trained it on my voice. I actually recorded a bunch of sounds and gave it to it, so it spoke as me. And as a matter of fact, if you listen to it, I sound more robotic than the AI voice we assigned to the guest. But none of it's real, it's all deep fake from start to finish. It turned out really good because at that point I'd already interviewed a hundred people. So I knew the right questions to ask. This whole prompt engineering is the key right now.

[00:21:08] I don't think AI, and it may be six months from now, we may have a whole different story. I think you have to know the right questions to ask at this point. You have to what they call prompt engineering. And as a writer and a content creator for you and me, we get really good at prompt creating. We can use it to augment. I haven't had writer's block in weeks. I write some of this own stuff. If I get stuck, I have an idea. I probably should write about this, but I don't even know where to start. I just plug it into the tool and say, tell me about this and I'll read it.

[00:21:34] And a lot of times I won't use what it created, but I'll turn around and I'll start writing myself. But it's spurred it got me past that thing. And you gotta fact check the snot out of it too. Especially in a technical space, in a B2B space, when you're talking about, step-by-step procedures or you're doing something like that. I say this in almost every show now, so there's a phrase I like to use that's called competent in incompetence or, competent ignorance.

[00:21:57] AI at this point is still what I refer to as confident ignorance. Meaning it's absolutely confident it's right, but it doesn't know what it doesn't know. So it's like asking an eight year old or a 10 year [00:01:00] old a question if it doesn't know, and he gets a reward if he gets the answer right, he's gonna tell you an answer. Like if he thinks it's right. And at the end of it, you have to go, well, you have to have your own BS meter. So let's talk about, what does the future look like for you? How do you look at where Treasure Hunter's going? Where your other company is going? What's the, the path that you see AI aside, maybe integrate some of AI into your thoughts? What do you see yourself going with this? 

[00:22:37 Michael Fink: Yeah, so Treasure Hunter. We're still acquiring assets and yeah, especially we're double down on these communities and working heavily on basically redirecting all this, preexisting SEO traffic into some kind of, owned media or owned audience or channels like a newsletter or any membership areas or some kind of, dedicated groups. So to really transfer and get the bridge from the organic [00:02:00] traffic that's inflowing and then coming to really, some kind of recurring or direct traffic. I think at this, building, this bridge is, imperative and in the current environment. And yeah, we've been building out our portfolio and we'll continue to do so.

As of now at Treasure Hunter, we're in three verticals, with a couple of assets. We have, new assets already in the pipelines and a couple of LOIs and we're looking to acquire next assets in the next couple of weeks. The acquisition tour are still ongoing and might be ongoing for the next couple of years because it's very all about, building up these portfolios. When we are acquiring these assets, we're really acquiring assets. Mostly, without any management and, without dedicated team. Often without some kind of proprietary tech and really integrating all of these assets into our treasure hunt er system and putting it, under our treasure hunter umbrella, into the holding company.

[00:24:08] We are really, leveraging synergies. Think about when you, for example, run and operate one travel blog, compared to, let's say, five travel blogs or you have these high synergies in the content side, in the SEO side, regarding advertisers, regarding your tech stack and so on. That's how we're thinking about these, content verticals. And I mean, one big learning from ever-growing is that, in some cases size really does matter. And that's exactly one because, at ever growing one, fun fact, it was, I think back in, 2014, 2015. We had a lot of traction, throughout Germany and I reached out to Apple, and asked them if I get some kind of, iPhone as a product to review.

And did you know what they answered? Yeah, me neither, because I never heard back from them. And later on, when now when we have all these media [00:04:00] publishers and this big, corporations behind us and partnered up with them, $90 billion companies are approaching us saying, Hey, can you put our products, some kind of ads into your content? And so on. That's one huge learning we had over at ever growing. When you have a decent size and a decent market share within your vertical, It's way easier to get any direct advertising, DAs or any, partnerships or any corporations or, team up with any colleagues, to do some kind of, corporation partnership.

[00:25:45] The second part that, that goes hand in hand with this is, we're really looking at this as some kind of micro private equity play, right? We're building, we're aggregating all of these assets and we're building them and transforming them into a company. Meaning, we have a management team in place. We have various departments for like SEO, IT, social media sales and so on. We have m and a department. It's really all about, finding these deals on market as well as off market. Then closing the deal, we have an onboarding department, whether just, making sure that the transition from the previous owner into Treasure Hunter is going super smoothly.

They're doing some kind of light HR process to really weed out the editorial freelancers and so on. Then obviously we have the operations team where we're really running and operating the businesses and product owners. We call them, kind of mini CEOs managing the day-to-day business of these assets and in the end, if you look at it from some kind of, parts, I feel these are not any isolated assets anymore. That's a holistic portfolio within various verticals with huge synergies in place, and we have a management team and so on. If you ever take to, let's say private equity, we've talked to a couple of these guys and the first thing that they're asking is are you selling an asset or really a company because it's like the worst nightmare to acquire an asset without management.

[00:27:18] These are financial guys. It's absolutely not their play at to, to venture into some kind of, asset based company. They're really looking for an existing management team in place for a proof of track record for history and this kind of buy and build m and a strategy. Yeah, it's basically some kind of m and a home turf. You wanna keep that in mind when you aggregate these kind of assets, especially given the fact that when you really build out and transform them into a company, there's this valuation of a trash in play. I know if you know the, study from Bain. They did some kind of case study and analyzed what's really driving at the total growth. What are the value drivers in private equity. And at first everyone would assume its operations, right? Because private equity, I mean, these are the companies with billions in assets under management. They have like top-notch connections.

[00:28:18] And so they have really a smart team in place and they have, these top notch industry connections and so on. That's not true. According to Bain, more than 50% of the value was created by multiple arbitrage and not the operations. So let that sink in. So these big private equity companies with top notchers CEOs and super paid staff are really not on average and on a longer timeframe. We're not able to drive the growth by the organic business, but instead by putting together various small companies, merging them together into this bigger one and selling the bigger one and really thrive of the multiple arbitrage.

And if you do the math, it becomes quite clear because let's say you acquire a business that, let's say, brings in a million net profit. You acquired for three x or 3 million and, you grow it. Let's say you, you double the EBIT, you're some super fancy operator and super smart, and now you're 2 million, and you would sell it at the same multiple for 6 million. But if you bundle it together in some kind of portfolio, and if you not get to 2 million, but like three, four or 5 million in EBIT and you have a synergetic portfolio and you have a management team in place and all, then you're bigger. And then it's super easy to sell the company for 10 x plus.

All these Amazon FBA aggregators like Thrasio are using. It's a battle proven case that all of the private equity guys are using and we're just applying it to the content space and, these community based assets. In the end, our business model is super boring. I mean, it's, what private equity is doing like for, it feels like centuries when you talk to the guys. [00:09:00] It's actually like, I don't know, 20 years. But the super interesting part about Treasure Hunter is really the assets and the businesses that we're working with. Cause these are really, this kind of indie publishers, and super small companies, often very, very artisan like. So that they don't often, they don't really feel like this kind of managers, or CEOs. 

[00:30:32] They just love to put out great content, adding stuff and reviewing some products, and that's their word. For me personally, it's super interesting to use this and really level it up and bring it to the next level and reach a bigger audience with their content. Because ultimately, I think, just when we focus and go down, to the content space and the content quality. I think this kind of content is often way superior compared to the big media outlets and big publishers that are very producing content [00:10:00] on us. That's where we come in at Treasure Hunt and we use their assets and their content and we help growing them to the next level. That's one of the main reasons actually why, they are selling to us. Because at some level, they're hitting a wall. They're hitting the ceiling.

I'm a content creator by heart and I wanna stay with this, content creation focus. And that's probably one of the biggest challenges, we're facing. We call it, a DNA conservation to really preserve this spirit and this kind of content quality. And I think that's only possible because you're acquiring really assets that have grown a lot and that are really at a hundred k net profit per year. Because at this stage you don't produce, your whole content yourself. You often have some kind of editorial teams or some freelancers in place. And so we're able to onboard them and thereby transfer the DNA and their style and their writing. Cuz I think that's really the heart and the core of their assets.

[00:32:08] Ron Skelton: Yeah. I was gonna ask if you, how do you handle, like when you acquire a media asset, a blog or a newsletter or something. It's been written in a style of the original team or individual that was creating it for the existence of it. That's what I was gonna ask you. When you buy these, do you keep the content creator in play or do you try to, if they want to exit, does that kill the deal for you because now you got to figure out how to write in their language? Or can you, I know with AI it's kind of cool.

I did this with one to test, I was looking at one. I took his top three performing blog post. I wrote a blog post and then said, told the AI to, rewrite it in the style of, and I fed it those, I think it was about four or five articles from him. And, said, rewrite it in this style. And it did a really good job. It changed my phrases and nuances to his, it made it look like it. And I sent it to him and said, Hey, did you write this? And he's like, no, I didn't write that. It looks like something I would write. And I told him what I had done and this was during the [00:12:00] evaluation of his site and I was like, cuz he wants to leave.

[00:33:10] He's just done. He's wanting to retire out. I still haven't move very far on that one. It's very small site. But I'm concerned, if you take over something somebody's been writing on for three years, can you continue, to create content that appeals to their audience because there is a connection there.

[00:33:26] Michael Fink: Yes. Super, super important question there. So if you really take over site, in this price range, if you look at these hundred K net profit per year side, so often it's structured in a way that the asset owners is producing. Like I know 10 to 20% of the whole content. And the remaining part is already produced by some kind of, freelance, editorial team and they're obviously, we look to take over the majority of the staff of the team to really, conserve the style of the writing and the editors and the, the whole, let me call it spirit of the asset. On the other hand, we've done a lot of, full exit. Meaning the asset owner, completely exited the asset, but we had his editorial team still in place.

But we've done actually one deal of the food blog, where we did some kind of, 50 50 partnership and where the current asset owner is still in place. Is still producing the content, but we are helping them. And we've lifted off all these kind of, older stuff and yeah, this kind of management stuff from it showed us, meaning all the SEO structuring, keyword researching, part of the internalization strategy, the outreach, the sales team and so on. So that the asset owner could really refocus on what it can do best. Mainly creating this really great content, figuring out new recipes. He was really able to refocus and super happy, with the setting and we're super happy and the blog is growing and I think, this is like the perfect, win-win scenario.

[00:35:08] Ron Skelton: I like that, so that makes sense. I do wanna cover one thing. I know we gotta be careful how we get into this subject. I know that you mentioned earlier on this show that you raised money to acquire you take equity in. I don't wanna go into any of that, cause I know the SEC rules, we can't. But what I want to talk about is, if I buy something with my own money or private lenders, people that are working with me, we can pay them off in a loan structure. We can give them a piece of the action over time.

But when you raise funds, typically they're expecting an exit or a liquidity event at some point. Does that cause you not to be a long-term holding company? Are you guys buying these, growing them and selling them like a private equity, is what it sounds like? Or do you have some that you're like, we wanna hold these and milk them Cuz they're a great, they're a great source of income?

[00:35:52] Michael Fink: Yeah, that great question. Actually, every time basically when you take on investors, almost in every case I know, they're looking for an exit, anywhere down the road. So yes. At Treasure Hunter we're looking to exit a company probably in five to eight years. We don't have some kind of a fixed horizon. Lucky for us, we don't have any, we seize on the board that are really pressing or any proud equity that has this kind of clear version saying, okay, our fund has to exit in five to seven years. Now we have a lot of flexibility on this and, but yes, we might sell the whole company down the road either to some kind of strategic buyer.

Like any media company or a ventures like, or some of the eCommerce companies that are looking to expand their value chain or, what would also be an obvious choice or to private equity as this kind of bandwidth strategy, as the home turf. But yeah, let's circle back to the funding structure. We did like various funding structures, in the last, couple of years. So we had this a hundred percent cash payout. We had, a hundred percent seller side financing at, 0% interest rate. So meaning we've acquired a site at, I think it was a 300 something thousand dollars. And we've been paying, the seller, on a quarterly basis.

[00:37:19] And over the next, three years, and we've acquired the asset at a three x multiple. Meaning basically when the site is flatlining, the site will pay itself. But I really have to emphasize that's really the absolute exception to the rule. This kind of, a hundred percent of financing it already, or it only happened because the seller had some kind of very specific, tax reasons and their personal circumstances that made this possible. But in general, getting someone to really exit the company, with a hundred percent, seller side financing might be like super challenging and might really be more kind of, Search fund, like a theme they really look for like the one out of a thousand companies, really the needle in the haystack.

We did anything in between. So we did some kind of, 60% down into remaining part, seller side financing. We did, 70% down into remaining part based on future performance. So some kind of, run out instructure. When it comes to raising, and let's say you are acquisition entrepreneur and you're looking to raise some funds, to acquire a media asset, the first wave will probably any, any investors that you have at hand, that you have a personal relationship with, or any family and friend rounds. And you could structure it easy in a way that you say, okay, let's do like 30% equity and the remaining part in debt, paid over five years, or some kind of a revenue based financing.

[00:38:52] They'll say, okay, 30% equity. And the remaining part has some kind of revenue based financing where you pay, accordingly to the revenue of the assets. Meaning when the assets producing more revenue and more net profit, you pay back more. If it's doing less, you pay like less. So I think there are very, I think a lot of, uh, flexible options on the table. Maybe I'll share one insight on this. I think that there are a couple of approaches, here how you deal with potential as sellers. So we are really not in the game of pushing the seller, to exit or that we've already talked to sellers. They had to experience, of some M and A brokers that kind of try to harass them into a deal. We're working on the very opposite angle as a team, has this mantra of, always being the favorite buyer. Meaning he really takes the time and listens and tunes in, so what's the personal situation of the seller?

What are his needs? Does he really need the money right now or would he be able to do some kind of, seller financing or any performance based structure where he can even profit from the future gains of the asset. Then he's super smart and super creative in the combination of basically that there are always two parts of a deal, price and terms, right? And that's where we have oil flexibility, to move the parts around and structured in a way to really become the favorite buyer. That's our approach here at Treasure Hunter. And I think that it might be that the difference to, let's say, private equity and we had, for example, we had a private equity term sheet on the table and they were like, yeah, okay, we're super flexible on the deals and on the structure.

[00:40:38] We were like, yeah, that's great guys. Okay, so let's switch A to B. And they were like, nah, sorry. Can't do that. Okay, let's move the other part around and talk about the other structure. Yeah, sorry. That's standard for us. I think that, and we saw exactly what we don't want to be. So we wanna really be flexible and, super focused on the seller.

[00:40:59] Ron Skelton: It's brilliant in the fact that, I've interviewed at this stage probably a hundred twenty five, hundred thirty advisors, brokers, lawyers, private equity companies, people, players in this space. People like you been doing it for a while. And the one thing I learned, one of the things I learned that I wouldn't have suspected, at the beginning it's logical now, but at the beginning, if you'd have told me this, I probably would've pushed back a little bit, is most of these businesses that sell don't sell to the highest offer.

Right. Most of these businesses sell to their favorite offer. Meaning that a, a lot of times they'll take somebody that they really liked and a slightly lower offer than they will the highest and best offer. One of the guys we had on the show, he said it happened to him, he's a broker, been a broker for 30 years. He said, the guy come back and said, why would, the highest offer was all cash. And significantly higher than the second highest offer. And the guy took the second highest offer. And when the broker asked him why, he says, well, the highest offer, even though it's all cash the guy's a jerk. This was a veterinarian service.

[00:41:58] He goes, these are my people. These are my, customers. These are my employees and my friends. There's no way I would stick 'em with that jerk. Right. Like the highest offer wasn't the best offer for him. The best offer is who's a safe pair of hands for his business. And I think you guys are playing that right. You're becoming a safe pair of hands. Somebody these content creators can trust. They believe in they felt acknowledged. They know that you're listening and that you have the future of the site at heart. You're not just a, a numbers crunch. You're looking to make an extra dollar.

It goes a long ways. I really think it does. On day one, two and a half, three years ago when I decided to get in this space, if you'd have told me that a lot of businesses sell to the second or third down offer because they just liked the person more, I'd a laughed and said, probably not. Like, I don't think that's true, but it is absolutely a hundred percent true. 

[00:42:45] Michael Fink: Yeah. Can't agree more on that. And we've talked to like so many asset owners and they're really hesitant to sell the asset to like anyone because it was, it took so much time to build it, to the level where they are right now. And so that they're really hesitant to hand over their baby, to any random, guy that's probably only, financially interested in this asset. A really valid point. And actually we've learned this kind of the hard way because, see in Europe, all our partnerships and the fact that the affiliate market in Europe is super narrow.

I mean, there are a couple of major players. Everyone knows everyone. We have this, huge industry reputation that's preceding us. At Treasure Hunter when we were entering the US market, we were thrilled and then we were like super excited. And then we had the first call with the asset owners and they were like, yeah, okay, who are you guys, from ever growing? Yeah. Never heard of you. And we were like, yeah, okay, but we've running these, partnership with Le Parisien, (Lav Di?) And they were like, (LA?)? Never heard of them. We were like, ouch. Okay. So this was this huge learning because we had no, or, almost no assets in the US. We had no huge US footprint.

[00:44:13] And so we really had to learn that these, the M and A outreach that went like super smooth, throughout the term and throughout the European Union, was really hard for us in the states. Because, it's not just about the money that you can say, Hey, look guys, we raised, this amount, these millions. No, it's all about trust and your reputation. And when we did a couple of deals and we bought a couple of assets, see, these asset owners are super closely, connected with any others within the vertical, but also any other kind of bloggers, let's say the food blog of some kind of outer blogger and so on, because they, on a regular basis, they meet, on virtual events and some, uh, kind of, similar Slack channels.

They're looking, following the same influencers and so on. And when we've done a couple of deals we started getting the first inbound leads and, the first asset owners responded, oh yeah, wow, I've already heard of you guys. The other one you acquired, the asset right. And yeah, he did talk to me how great the experience was and yeah. And that was where really that the tides were shifting and we really got the momentum. But it was a huge learning and, exposed, I really have to say, we did it really the hard way. Not the smart way. So the smart way would've been to really enter the space, enter the industry, and talk to a couple asset owners, build up some trust, talk to all the experts in the industry, and, first build out really your profile before you start entering these m and a talks.

[00:45:46] But we really were on a timeline and we had to move fast as we kinda just hassled our way through it. But yeah. If I had to do it again, I would definitely, switch to another approach because it's not only about having the cash and the bank account and just we're being able to really close the transaction. It's not only about having the cash and the bank account, it's really about the trust of the seller so that you're really a decent person and that you really have this industry standing. And yeah, that was one of our biggest learning when we enter the US market. 

[00:46:22] Ron Skelton: Awesome. We're getting close to the top of the hour. Let's make sure everybody knows, like, what are you looking to buy now? So if somebody asks there to listen there and they're thinking about selling their website, and you're looking, you said a hundred thousand dollars in revenue, upwards to a million. Are there any particular niches that you guys, like, I know you own, you talk about barbecue and food and fishing, but are there any like, Hey, if you've got something in this type of passion, can you give us your target acquisition profile?

[00:46:50] Michael Fink: So what we're looking for any content sites with a history of more than three years and more than a hundred K in net profit, up to a million. And preferably in verticals like food, sports, outdoor travel, the ones that we really, have a huge footprint established right now. Solid history, obviously. No shady 3 0 1 redirect, no PBNs in place, and no AI content as well, as we're still, figuring this out from, Risk reward perspective. And it should be really community focused.

So we're not looking about this. Back then you called it a made for ads and sites. So these sites were just plug in a couple of, generic content so that it's monetized and it brings in a couple of bucks and then you resell it. No, we're really in for the verticals that I really have a lot of passionate content, really unique insights, personal stories and the community are following that's really excited about, this brand and about this topic.

[00:47:54] Ron Skelton: It's interesting is that's how I entered in this space many years ago. I'm not gonna date myself. Back before Flippa and back before all these cool places to go find them. We hung out on forums. I think one of 'em was like Warrior Forum or something like that, and we would buy and sell, websites and I would find those AdSense sites, like you're talking about. Generic content websites, they are AdSense or whatever. And what we would do with them is if they got really good traffic, just using that model. We would go in and say a site had 30 good articles, they got decent traffic, they're making, a hundred, 200, $500 a month on AdSense. We would turn around and add really good articles in there and mix it in.

So now you've got really good articles, mixed in with the other stuff and we grow 'em, and then we turn around and sell 'em later. Unfortunately back then it was really easy to spoof all your stuff, these private, blog networks and all this other stuff, and I got burned pretty hard on one of them. So, I pulled out of it, went back to doing something else, and now I found myself self full circle looking at content sites again. Years later, I'm not gonna date myself, but more than 10 years later, put it that way. But I do appreciate having you on the show today. We made it through most of the show without some technical difficulties.

[00:49:01] I think we did really good today. Before we leave, if somebody can remember three things from the show today, what would you want 'em to remember of what you talked about?

[00:49:09] Michael Fink: Tough question. First of all, stay curious, stay positive. Yes, the AI is on the horizon. Might disrupt a lot of, industries, but disruption always means opportunities. And I think there are a lot of acquisition entrepreneurs are still waiting on the sidelines. And I think in the next, couple of months or even years, a lot of opportunities will open up. And this might be the perfect time for you to really enter the game. And, yeah, keep acquiring. As of now, we were a hundred percent in the bias market. And there, there are a lot of opportunities on market as well as off market. Just hold onto them, enter the market, take the risk, but always be smart about it.

Diversify, in terms of your traffic streams, in terms of your revenue streams, and just look a little bit ahead. Just think about what G P T or any AI, set up might be in the future, in the next three, six months or one year from now. And just, try to stay on the conservative side. Never enter a space where you really go all in. And a crypto like coping for the moonshot, that's not how you should, uh, perceive investing. Really stay on the conservative side and, don't invest more than you really have no problem at all to lose. Yeah. Thank you so much, for having me here on the show. Really appreciate it. My last question for you, how can I help you in any way or?

[00:50:45] Ron Skelton: I'm always looking, I'm playing in the realm slightly smaller than you are. So if you get somebody out there that has a, and you're looking for passion niches, I'm kind of looking in that B2B space. So if somebody brings you a site and goes, Hey, would you be interested in this? And it's B2B related, um, Entrepreneurial making money doesn't have to be mergers and acquisitions. I'd like to look at it if it's smaller than something you guys would look at. And I'll do the same thing. If somebody brings something to me, I'll think, man, this is probably a Treasure Hunter property, not me.

I'll circle back around and say, Hey, somebody presented me something. It's not in my wheelhouse. Are you interested in it? And we can just, we can trade leads that way and help each other grow. That would be beautiful. 

[00:15:30] Michael Fink: Sounds like a solid plan. Yeah. Would love it. 

[00:15:33] Ron Skelton: Okay. How would people reach out to you if somebody's got something, you want 'em to use LinkedIn or you got a better way for them to contact you? What's the best way for somebody to, to reach out to you? 

[00:51:22] Michael Fink: Yeah, so the first way obviously is our website, treasurehunter.media, and the second one, I'm available on LinkedIn as well. So just reach out to me or to Tiam Jafari our CSIO who's running the m and a and deal flow. And yeah, we're always happy to have a chat and, or look at an asset. We're even earning a lot of, inquiries about, or from, potential sellers that are saying, okay as of now, I'm not at this point, but let's talk about the future and how I might set up my company, to be a possible target for you in the next one or two years.

[00:52:07] Ron Skelton: Yeah, it'd be a beautiful conversation to have. Somebody says, Hey, I've got a travel blog we're doing, five figures, we're almost at six figure mark. Don't wanna sell it now, but maybe next year I will be ready to. What do I need to do to make this, an appealing product for you, appealing business for you? That would be a good conversation cuz then people can grow into something you would acquire. I enjoy when people have that conversation with me. It's like, look, I'm building X, Y, and z. I'm not ready to sell it yet, but if I were, what would you be asking me? So then they know, I do the same thing. I appreciate it. We'll call that a show. Thank you for being here and hang out for just a second.