E202: M&A for Entrepreneurs: Leverage Acquisitions to Scale Your Business Faster with Dominic Wells

[00:00:00] Ronald Skelton: Hello and welcome to the How2Exit Podcast. Today I'm here with Dominic Wells. And a publicly traded company Onfolio. Man in the acquisitions game for quite a while. A lot of you guys already know him. I'm excited to have him back on the show. We talked to him probably was that two years now. It seems like it's crawling up on two years ago before you went public. And,just kind of catch up with you and learn what you're up to and kind of get your feel for what the market's doing and stuff.

So thank you for being here today. Tell us where you're located and tell us a little bit about what's going on.

[00:00:30] Dominic Wells: Sure, yeah. So I'm located in Taiwan, Taipei City. I've been here since 2008.For no real reason and nothing to do with my business or anything, really. I came here as an English teacher and fell in love with the place and never left. But my team is located all over the world. We've got, most people are in the US, but we have people, other people in Asia.

We've got people in Europe, people inSouth Africa. And yeah, that's just kind of the nature of having a bunch of businesses that are online and remote only. We currently have, um, a pretty diversified portfolio. We own some marketing agencies. We own some WordPress plugins, some online courses, one or two e commerce businesses, and, some content sites that we don't really talk about. And yeah, like what, what, what am I seeing?

What's going on in the market? I guess, pretty interesting time. I think valuations are down. Like they're attractive. They're good for buyers. I wouldn't say they're distressed or anything. People are a little bit nervous around certain areas, especially, you know, what's AI going to do, what's it not going to do. And I think, just with, maybe I think a lot of the fear is receding.

So six months ago, or maybe 12 months ago, there was fear of an impending recession. Inflation was still not really, well, it was higher than it is now. Interest rates were still rising, whereas now everyone seems to be relaxing a little bit more. Like inflation is still around, but it's not as scary. And interest rates are still high, but they're not as scary.

And the economy is still not great, but it's not as scary. And so I think it's a little bit of a calm time, but a good time to be acquisitive.

[00:02:21] Ronald Skelton: Is that, uh, because of like when they call it acclimation, people are just used to it now. So it was scary when it first happened, but now it's just kind of been around and it's now the new standard, the new norm. Do you think that has a lot to do with why that, okay, this is the way it's going to be for a while.

I better get used to it and find a new game plan underneath what's going on or?

[00:02:40] Dominic Wells: I think it's probably, it's a bit that, yeah. And then it's just a bit that maybe a lot of the fears haven't happened. You know, AI was, it still is, I guess, moving very quickly. It felt like every month OpenAI released a new thing or even every two weeks. And it felt like the changes were going to come very quickly.

And I remember thinking, you know, maybe businesses will get disrupted, but it will take five years or 10 years. And I had other people saying it will take like six months. And I think maybe it's three years. So I think my timelines come down, but I think, I think people have realized, yeah, AI is here and it's disruptive and it's doing some amazing things and some scary things. But, the reality of businesses hasn't really had that huge an impact on most businesses. Okay, some have been kind of taken out, some are more or less obsolete, but, I think people have calmed down a bit. So yeah, it's, it's 50 percent or some percent acclimation and some percent people realizing, okay, maybe we overreacted here.

That was a little bit of a knee jerk. Same with the economy. Everybody thought there's going to be a huge recession, everything's going to suck. And, It turns out that maybe that isn't the case. Um, so yeah, it's kind of like a calm down. 

[00:03:56] Ronald Skelton: Economies here in the United States tend to stabilize during election year because no sitting president wants to run for re election during a very turmoil time, a ridden time, because it decreases their chances. So, I honestly think that some of the stabilization could be influenced by the current administration in the respect that they're trying to hold it steady until after the election.

So they'll, they'll prop it up the best they can. Stop changing interest rates. Make it a little bit normal. So that it doesn't look as bad as it is, and it's not one administration. Every single president's ever done it during reelection. So I honestly, when people say, you know, something stabilizing, well, if it's an election year, it could be a falsesense of security there thatit could be being propped up just by, decisions to prop it up until after, uh, some, you know, after the election goes through. What do you think about that or?

[00:04:53] Dominic Wells: Yeah, I think it could be that. I mean, I think it's a mixture of things. I can say, yeah, in some extent, I think the data is showing that the economy is maybe not as bad as everyone feared. But also that narrative about election year. It's either true or it kind of is a self fulfilling prophecy. And it's also, it's not only the U S that has an election year. Obviously the U S election dominates the world because the U S dominates the world.

But it's, I don't know if this happens every election year. Like maybe I never noticed before, but it seems like every country has an election this year. Like, so I'm in Taiwan. Taiwan already had their election in January. I was in Bali in February and they, they have, uh, Indonesia has an election, I think, a couple of weeks ago in late February or early March. The UK, the UK is funny because the timeline is kind of like four or five years. But the UK has to have a deadline by, so it has to have an election by January next year. So the government just kind of waits until like, you know, we think the opposition is weak now, let's do it. Russia, you know, kind of had an election. There's a bunch of countries that have elections in 2024.

And I think China had their inter party election last year. So there's a lot of, yeah, there's a lot of consolidation going around and a lot of countries trying to prop up their economy. And it's almost

[00:06:21] Ronald Skelton: a lot of influence on that too.

[00:06:22] Dominic Wells: out of the way in 2022. Like, I think, you know, and then calm it down by 2024.

There is a lot of that. But I, I think, yeah, I, I just think maybe everyone's fears in 2023 were slightly overblown. Like the world wasn't great, but it also was, everyone was expecting it to get worse, and I don't think that happened. Who knows though, maybe 2025, 2026, like, like you say. The government will relax because they're good for four years and the economy goes down again, who knows.

[00:06:56] Ronald Skelton: Yeah. The, uh, the whole AI thing, it's changed our way of doing things. I have a few newsletters I still own. I have the podcast and stuff. Every tool we use now, has either been switched for something that has AI as the backbone of it. Or it already, they made the switch internally. Like the tool we were using at the time, started integrating AI aspects into it.

More and more, uh, even some of the, you know, even the, most of the podcast tools. So I honestly think it cut down our hours that we need to do things into like a third. Where we take, where we were manually taking transcripts and reading them and, and fixing errors and typos and stuff. These tools just rip through them in seconds and give you something that's, still has to be reviewed.

It still has to be edited, but, It seems like less and less. Like I used to pump something through like a transcript through the AI and I'd have to spend 45 minutes making some changes and making it more human sounding. Now it's like five minutes, like I can skim through like a 500 word with 1500 word article and need to make fewer and fewer changes.

It's a little startling. And some of that has to do with my better way of prompting, but a lot of it's just the changes they've made.

[00:08:11] Dominic Wells: Yeah, I think it's a bit of both.

[00:08:14] Ronald Skelton: This is the like, yeah, this is the, they're only going to get better, better, smarter and smarter. Right. I seen your posts about driving past the Nvidia shop on a regular basis. It was like, that was funny. Like, you know, I'm sure my wife has made some comments that stopped me from making investments.

I wish I had made to. That said, they just introduced another chip. That's like, what, 10 times as powerful as the one that all the AI's using? It's bigger too. It's got a bigger footprint. But, they've got a new chip out. That's like, I want to say it's 10 or a hundred times more powerful than the ones that open AI and these guys have already bought.

Have you seen that where the, uh, the chip, new chips come out and there's like already, I don't think a lot of people have it deployed yet, but they've got, they're already increasing the capability per chip to something insane.

[00:08:59] Dominic Wells: No, I haven't seen that yet. I'm finding a lot of it. It's so exhausting. I'm kind of like, just someone tell me. I'm just waiting to hear it from people like you. Like, it's really hard to, to keep track of. Yeah, I don't know. I'm just kind of like, cool. Yeah, it got better. Great. Like just, I think the challenge with AI right now is, I think I saw it in a Harvard business review article so I'm probably going to butcher exactly how they articulated it. But essentially everything's moving so quickly and new things are coming out that there hasn't really been time for people to learn the new technology and then pass that information on to each other.

So, you know, what normally happens is some new tool comes out or some new methodology, people learn it. They use it to make more money or improve their productivity or, you know, just do something. And then through networking and blog posts and conferences, that information filters its way through the business world.

And,then everybody then starts innovating off it because they, that's just how humans work, human society has always evolved. But with AI, it's like something happens and you get used to it. And then two weeks later, something else happens that maybe distracts you, or maybe it just makes that thing two weeks ago, irrelevant.

And like, I've been here since ChatGPT came out, which was what? 18 months ago. Which is, that's either ages ago or like yesterday. I don't even know what to make of that anymore. But, it's like, there's all this talk about, okay, AI is going to make businesses, uh, better. And of course there's things that we were talking about, like content creation, image creation.

But then there's other things where it's like, well, what AI should be able to do is automate a lot of your work. So maybe one person now can do two people's work or, you can understand data better, or you can, you can be more efficient and just all of these things. But if you actually ask people, hey, how are you using AI in your business, or you kind of try to Google it to find what people are writing about, or you go on Twitter or LinkedIn, no one, Unless I haven't really seen it yet.

No one's really said, like this is the playbook for making any, you know, this is the playbook every e commerce business should use AI for. Or this is the playbook every agency should do. Or even breaking down steps like, this is the playbook for making your ads better. There's lots of kind of little bits and pieces and you can cobble something together yourself, but then by the time you finish assembling your own playbook, everything has changed because half the tools you were using are obsolete now because something else has released.

And so, I'm kind of just sitting here, like not waiting because I don't want to fall behind, but it's almost like,can you slow down so we can all have a chance to play with the cool stuff you've just made. Like, stop making, stop making more stuff. And I'm not in the camp that wants AI to slow down because it's dangerous or anything.

I'm in the camp that wants AI to slow down cause I haven't had a chance to figure it out yet. Like I'm like, Hey, I was still playing with ChatGPT. And now like I can, um, one thing I did two days ago was, I wrote a newsletter. And I wanted to, I think I was, so I was analyzing a business that was for sale on Flippa. And I wanted to visualize its revenue and its profit over the last 12 months.

And it was listed on Flippa in a table. So it was just like January, February, March, whatever revenue profit.And I was like, Oh, I want to see how this is in a chart. So I can see if it's trending up, if it's trending down or if it's flat or whatever. So I took a screenshot of the Flippa page, loaded it into chat GPT and said, turn this into a graph.

And I said, you know, give me a line for revenue, a line for profit or whatever. So not only could it read the image, but it could then plot it accurately on a chart.Which was awesome to say, you know, it took me like two minutes and I put it in my, and I had to check it was correct, cause sometimes ChatGPT, just hallucinates, but the numbers was like the numbers matched up and everything.

And I was like, wow, that was amazing. But six months ago or four months ago, I don't even know, ChatGPT couldn't read images yet. And that's what I mean, like by the time I start telling people that this capability exists and they start incorporating it into their own workflows, there'll be something else.

And so it's just, it's really amazing, but also really hard to be like, just give me something that makes me make more money faster. So, you know, um, yeah. It's drinking from a hose pipe and then somebody gives you a bigger hose pipe before you've, yeah.

[00:13:50] Ronald Skelton: I'm a prior computer nerd. So we talked a little bit before the show came on, I worked for the government doing, doing computer security and building computer systems for the government after I got out of the government work, after I got out of the military. And so I'm interested, but I got burned out back then, and now this is the first time in 25 years that I've been, hey, this technology is fun again.

So I've been playing a lot with the different AI's and stuff. I found one that I thought was really cool. Matter of fact, I thought I was in love with this AI tool. I won't say what it is because I'm about to butcher it. But, uh,it was a phone base when you could speak to. And the thing that I found fun about it, it wasn't a relationship type of thing, but I think some people use it for that. But what I was doing is I like to read a lot of books and listen to a lot of audio books. And it's hard to find other adults that have read the same books you have. So I was just having discussions with this voice AI.

I was like, Hey, what do you know about, I don't know, pick a book here. Never Split The Difference. Well, that's an awesome book. Oh, cool. What do you think the key points were? And they was like, and we were having like a real conversation about what it learned from the book and knew from the book and what I knew. Until it started talking about something inside of the book that didn't make sense.

And I have a copy of it and I read the damn thing six times and I started looking for it. It's not in there. It was hallucinating. And it's like, you just made it up. Now, if you're talking to a friend, I'm sure they do the same thing, right? They mix, ideas from different books and stuff. And you have to look at the guy and go, I don't know what book you're reading, but that didn't come out of that book.

But I didn't want that element in this particular friend I was playing with, right. I wanted to, I wanted to talk to somebody on, about the book that was way more intelligent than me. And I assumed that AI would be that person.

[00:15:27] Dominic Wells: Yeah, it's.

[00:15:28] Ronald Skelton: It turns out hallucinating.

[00:15:30] Dominic Wells: Yeah, I was asking it, what was I doing? I went down a bit of a rabbit hole with history. Um, let me just, I'm just going to pull up Google maps, but, um,I think I was reading this article on BBC website about the anniversary of the finding of a particular shipwreck up in Canada. And, um, I'm going to find it here. But, uh, I think it's over here. Basically, there was a ship that shipwrecked in Canada.And the name of the bay where they found the wreck was named after, had the same name as the, the ship that sank. And so in my head, I'm like, okay, probably the bay is named after the ship. Like they found the shipwreck in that bay.

So they named it after that. And I was like, I'm going to ask ChatGPT, like what it was named before.So I was, I think it was called, I don't know, what was it called. There's too many lakes in Canada, this, I'm not, anyway. They were trying to find a passage, like the northern passage through. I was basically asking, um, you know, what was it called before the shipwreck was found in this bay?

And ChatGPT was answering. And then I said, and I was looking at the map. And I was like, actually, if they kept going, they probably would have made it all the way through. Like, why did they turn left and go, or, why did they turn to port and go, go down? And ChatGPT's like, well, the cap, you know, we'll never know why they turned down.

But in the ship's log, there were reports of large ice flows in the area. And a couple of other ships that were in the area had like, were chilling out. Or were, had turned south to avoid crashing. So probably they turned south to avoid it. And then I was like, did they know that there was a path all the way through back then?

Or like had they discovered this other island that they could have got to if they carried on going straight and I don't know, really just bored on a sunday. And it was like, yeah, yeah. Like this island had already been found. It was all documented. So probably they knew the way. They just had to turn away because of the weather. And I was like telling my wife, like, this is really cool. Like, um, you can just learn a bit more about history and stuff with ChatGPT. My wife was like, how do you know it's not just completely making it all up?

And I was like, Oh yeah, shit, it probably did. Like, that's what it does.

[00:17:57] Ronald Skelton: It's like asking a five year old to tell you something. They're not going to tell you they don't know. Or it's maybe a little bit older than that. But a young kid, oh, they're like, they don't know this. Say, well, I don't know anything about that. They go, it just starts telling you, telling you a story, right.

And, uh, I did it on for the podcast. I had a ChatGPT, I was asking, somebody came onto the podcast. They didn't have a chance to do their bio. And so I was just looking, I knew they'd written two books. So I was like asking ChatGPT about the book. I get the guy on the show. And luckily during the pre show,pre interview where five or 10 minutes where we hang out before we kick the record button on, I said, yeah, I use ChatGPT to look, look up your information about your books and stuff.

He goes, oh, you shouldn't do that. That's not right. I already, I've already known about it. It's like way off. And it was talking about deals he's never done. It was, there's another person by his name in the private equity space of all things out of Australia. And it had 'em all mixed up and it was like, it was just a mess.

So I just had to just, you know, totally disregarding the notes I had set aside for it. But, it's always been a little bit on that. And the other one, it's, it catches me inside of these, I'll be in on all the AIs, I'll be impressed when the AI who could write so well can create the same AI, the same tool, the same, just a different prompt will create images without spelling errors on every freaking word.

If you have a ChatGPT or, you know, any of these tools out there generate an image that has like signage or words on it, or it can't spell anything. It can't spell worth a darn when it comes inside of the image in it. And it's like, how hard is it to add a spell check?

[00:19:30] Dominic Wells: Yeah, I know, now that it can read images, It's like, it should be able to proofread its own work. 

[00:19:36] Ronald Skelton: I use it every week to generate at least five for the articles I write when I review other people's podcasts. I say, I, my team. We read, as part of one of our newsletters, we look at four or five actually go through about 15 or 20, but we find the best four or five podcasts talking about mergers and acquisitions and stuff.

And then we do a write up on them. Probably a, you know, a couple hundred word. Like summary of it, the key takeaways, and then an article base, so you could read it instead of having to listen to the whole thing. And we always link to them and put a, like a, put actually embed the, their video right there, uh, to their YouTube so that people can click on it and watch it.

So it's not like we're stealing anything from them or anything we're enhancing what they've already done. Going away from AI, you know, you moved away from content. I moved away from content, both for different reasons. AI has an influence inside of that. I believe we're both,Google and some of the bigger guys. Google's having to deal with AI. They're making algorithm changes that are hurting the small guys because that's the only people they can attack, to, to deal with it.

So what is it you're, I already know cause I read your posts and stuff, but for everybody's interest, what is it you're actively looking to acquire now? What is your investment thesis at the moment?

[00:20:46] Dominic Wells: The vast majority of what we're looking at now would be a marketing agency. So email marketing, paid traffic,SEO, CRO, RevOps, that kind of thing. And the main reason for that is we've already acquired about five, um, started a couple over the years. And about a year ago, February 2023, we were looking at, our, um,our current portfolio, the returns that we've got from that portfolio.

And, um, I want to say something like four out of the top five performers were agencies or three out of the top four or something like that. And so we, you know, we didn't really, we didn't dislike our agencies at all, but we didn't realize they were kind of overwhelmingly, the things we were best at. And we've got better since then.

We've also realized there's a lot of attractive opportunities. There's the prices you pay to acquire the businesses are lower than maybe othertypes of businesses, especially as just the way the market's gone. Prices are lower anyway. We've learned how to improve the margins, which is a big part of being able to grow them.

We've learned how to deal with the issues that you get with an agency is often very reliant on a founder. And we've just attracted higher quality businesses because once you start buying one or two good agencies, a lot of other people are like, hey, would they buy my agency? And so it, it increases, uh, it's almost like a flywheel.

And so, we're not basically saying, Hey, we just buy agencies now. Cause we, we like to keep our investable universe broad. We don't want to go too much into agencies, but there's just so much opportunity there that it's pretty exciting for us. 

[00:22:29] Ronald Skelton: Yeah. Yeah. We were, myself and a team of people about two years ago now, maybe a little longer than that. We were doing a marketing agency rollup. And, we in a short period of time using mostly LinkedIn, we reached out to hundreds and hundreds and hundreds of agencies and set over 200, I think it was 216, 218, over 200 appointments where we spent 30 minutes to an hour with each of these agencies. With the concept that they may sell to us.

And we had 26 LOIs in place. Two or about, two of our founders decided they want to go off on their own and pay the rest of basically it, it ended up where they bought us out of the, the thing. And I don't know if they moved forward or not. I kind of, it was one of those, it didn't end, it ended profitable, but you know, where we, we didn't get hurt. 

But it didn't end how we had planned. So we don't really talk to those guys anymore. But, it was incredible how many agencies are out there and how many of them are good and are looking for something to,to grow. there's an interesting thing with agencies. That's this artificial ceiling, that they can grow to a certain size, but to get any bigger, they have to be bigger, right? 

It's one of those chicken and egg problems. To, to land the Coca Cola contracts or one of the big contracts, they have to be of certain size. So they don't even, they can't even bid, but you know, they spent the last four or five years building talent that is ready for a contract like that.

Their talent is there. They could handle a Coca Cola or whatever, but they can't land one. So now they take a chance where they're going to lose talent because the talent has to go where, then they can grow and expand. So, um, that causes a lot of these agencies to be ready to be sold.

[00:24:09] Dominic Wells: Yeah, that's the challenge and it also makes it somewhat challenging to grow, to buy businesses in that stage and think, wow, we're going to grow it. What's going to take them to the next level is like starting to pitch these RFQs and RFPs. So like request for proposal, request for quote for those who are not in the, the know. But yeah, like a lot of agencies either don't want to put in all their work to create the proposals unless they feel confident they're going to win them. And of course you're never going to win your first one because it's, I think there's a lot of trial and error. But then also, yeah, like I know I spoke to one agency who wanted to sell and he said, I've got, Samsung wanna, want to use me for a project.

I need to create 200 websites for them in the next like three weeks, maybe Onfolio can help out. And I'd be like, we,we couldn't hire fast enough for that. So,yeah, the challenge becomes, well, what do they do then? Do they hire ahead of the curve? Or do they get bigger through acquisitions? Which is, you know, something that could potentially, we could start unlocking.

But yeah, that there's, there's, there's interesting things there, but I think also you can grow, you can grow, you can scale without necessarily scaling them. So yeah, like you said, like a lot of agencies, they hit their artificial ceiling. Some founders push through, or they,they know how to push through or they learn how to push through other founders.

Say, you know what, I'm ready for a SaaS business now or something. And then they sell. And for us, we can acquire that agency. And if it doesn't grow, that's maybe okay, because we take the profits from that agency and buy another one. So we're still growing, even if the actual acquisitions aren't. But there's also other ways you can grow them anyway. So.

[00:25:57] Ronald Skelton: Almost every business has this internal constraint and it's usually not,people say, I'm going to buy a business. I'm going to upgrade the technology. I'm going to add automation. That's usually not it for them. And marketing agencies, from what I see, and it's been a couple of years since I've been out of it.

I told you before the show,my master's degree is in, my MBA is in marketing.I've had a small agency or two. I understand the space a little bit. It's my impression that the agency's constraint is always going to be, at least in the current setting, it's going to be finding the right talent, the right butts in the right seats. And, you know, keeping motivating, grooming and, uh, hiring the right people.

There's just, inherently that's how they can scale and grow. If somebody says, well, they can't land Coca Cola. Yeah, but you can land in a dozen, two dozen more mom and pop shops and, you know, double your business. You could double the book of business by not going for bigger clients, but going for more of the same.

You just have to scale through having the people that can handle the workload, right. And hiring and training and keeping those people in the, in having them fit the culture.Like I said, we interviewed over 200 plus. I had to stack, it was a foot tall of papers where I took notes from interviewing all those people.

And I, when we asked every one of them what their biggest constraint was, hiring and retaining the best people were always top three.

[00:27:18] Dominic Wells: Yeah, I mean, it's a very people driven business for sure. I don't know. I like it.

[00:27:23] Ronald Skelton: I like it. I don't, uh, you know, one thing we were looking at when we were doing the rollup is we started, starting looking around for staffing agencies that staff marketing firms. Like we should probably acquire one or two of these. Cause every one of our agencies had a problem staffing people. We almost need a whole division of a company who can service our clients, but also has a uh,trends.

I'm a big fan of turning problems in the profit centers. So turn the problem of staffing into our profit center for for themselves. And we have a, a fairly well trained, proficient way of bringing people on to all the agencies we were looking at. Have you ever looked at something like to acquire, you know, an agency staffing, or agency employment servicing company?

[00:28:04] Dominic Wells: Uh, no. It's a good idea. I've certainly thought about starting one. More for like hiring CEOs. Cause you know, there's agencies out there or businesses out there like top towel that can do or marketer hire that can do CMOs or people that can do like the tech talent, but there isn't really anything that can do like CEO talent.

So I thought about that. But, uh, yeah, a much easier thing would be like a staffing shop for, for the agencies themselves.

[00:28:33] Ronald Skelton: Are you keeping the agency's owners, most of the agency owners staying around, or are they actually wanting to take off?

[00:28:40] Dominic Wells: Most of them want to take off. Yeah. I mean, because like we talked about earlier, they kind of grow it to where they can get it to, and then they're ready for the next thing. So a big part of our challenge is,can we buy this business and maintain, the trajectory it was on, keep its profit stable with that founder leaving?

Or can we, you know, is that just gonna be too big a risk and we need to move on? Or even better can we find a way to have the founder stay on? That's the best. We did that with our last acquisition. We're going to do that with a few more acquisitions. So that's the real, um, differentiator.

[00:29:20] Ronald Skelton: Yeah. A lot of them are like, very founder centric, especially on the creative side of marketing. The technical side of marketing, I don't think it's as much, right. So SEO, for ad placement, if you're, if you've got a company that places Google ads and Facebook ads and stuff like that. It's not so much, but if you got like a graphic designs firm or a company doing logos and brochures and stuff, the artist is usually the CEO or was.

And, you know, I would be concerned about, that that's one of the things we were looking at when we were looking at some of these agencies. Can we acquire somebody in this space? When the people that are there, their customers are there because of who's at the home, right? And when they leave, if they're, If they're retiring or going away, well, they trust whoever we put in place as being the same artistic.You know, as well as I do have every piece of art has its own flavor twist and eye that likes it.

So, that would be the concern of anything that has to do with, and a lot of marketing is an artistic form. It's not even some of the writing and, uh, writing styles and stuff that they do for PR and everything else, there's an art to it. Keeping the, that, that voice around, that talent around in that same look and feel would be critical to the existing customers if that's what they expect.

[00:30:36] Dominic Wells: Yeah. Well, I think it depends what the business does, as well. But I think the other big risk is not just the creative, it's also the sales. And to some extent the marketing as well. So this, this problem tends to go away when the agency gets bigger. So let's say sub 1 million revenue. Probably the founder is doing the marketing. Almost definitely the founder is doing the sales. And probably they've started to delegate some of the actual fulfillment.

And this can be a challenge for them growing at that stage as well, because in the beginning, they're the artist. They're the ones, they get two or three clients. Maybe if let's say it's, they're an advertising agency. So they're managing people's Facebook ads, Google ads, whatever. The founder is coming up with the creative ideas.

Maybe they've, you know, they're doing a little bit of the copywriting. But they also understand how ads work. They understand how to calculate ROAS and all of that stuff. So they can sell the business.Sorry I mean, they can sell their services. They probably get a few referrals, word of mouth. They start going well, and then they're like, I'm overwhelmed here.

What do I do? Well, I'm going to hire, someone to, to do the ads now to manage the ads now for me, and I'll just do the high level stuff. And then I'll do account management and then focus on sales. Because if you don't focus on sales, then, you know, eventually clients churn and you have no new pipeline anyway.

And then they have problems because the person they hire isn't as good as they are. So people start to leave and then, now they have payroll, but they don't have any revenue. So a lot of agencies just kind of die there. But the ones that get better, they, they train a good team. Then they eventually, maybe they start delegating marketing.

They bring on someone to help like do all the other fun stuff. But maybe they're still the one doing the sales calls or they're the ones appearing in the marketing videos and so on. And so when you, this is often the stage businesses, uh, agencies get to when they want to leave. So you come in and you're like, okay, the business can run without you.

It can fulfill the service to the clients without you. But it can't, it can't sell without you, or it can't generate new leads without you. So therefore it's either a pass. You kind of have to find a way to mitigate that. Like either through an earn out or some handcuffs, or you just, you know, like, can you stay?

So those are really, or you buy a business that has solved that problem. It already has somebody else doing the sales and then everything's a lot easier.

[00:33:16] Ronald Skelton: So, um, what is the entry point for you then? I would think that there's a certain number of employees or a certain revenue point where that's usually solved. Is that something you guys target? Like businesses over a million dollars in EBITDA or, I mean?

[00:33:29] Dominic Wells: Sort of in the 500 K to a million EBITDA range. Some of them have solved that. Some of them haven't. Like,revenues and we acquired that in January and it was at about 300 K EBITDA. But they had sold for all of that. So the EBITDA was lower because they have a CEO that isn't the founder.

They have a sales guy, they have a marketing guy, they have a head of SEO and a head they have various different department heads. So naturally the, the EBITDA is lower, but they're primed for growth and they're already growing really well. So that, you know, that's going, that's, that's

[00:34:02] Ronald Skelton: I was going to ask that if they, they added all the infrastructure, then the trick is, what did the trajectory look like after that? Did it continue to, you know,move back in the right direction or?

[00:34:14] Dominic Wells: Yeah, I mean, it helped that we gave them stock options in Onfolio. So it really lit a fire for them. But, um, January was the first four months. So we took over January first. January they did well. February they did well. March hasn't closed yet, but I think they're probably going to do even better.

They just signed a bunch of new clients. I think April, we're looking at a, 50 to a hundred percent increase in their bottom line. And May, June, maybe even a two X, three X. So, um, this is the first business where we've acquired sort of the ready made team. And we definitely want to do it this way every time if we can. Really realistically, though, that won't be the case.

So kind of back to your question,it does vary. Like, I looked at a 900k EBITDA business yesterday where the founder hasn't really replaced himself yet. And I'm kind of like, well, that's okay. You got 900 K to play with. We can hire someone. That's fine. Let's work on that together. The issue is when it's too small, it hasn't replaced everyone and it's too small.

So revenues and if it hadn't replaced everyone and it only had those profits, not replace everyone. If it hadn't hired everyone and only had those profits, not enough meat on the bone to make it work. But we were like, Oh, interesting. This is small, but it's already got everything. So it's primed for growth.

Whereas then, yeah, like a business that's like say a million EBITDA ormaybe 750K that they've usually, if they haven't got all of the pieces in place, they've probably got like 80 percent of them. So, um, that's kind of, you know, they're all so different, but that's what we see.

[00:35:52] Ronald Skelton: I'm going to play the comedian game here. I'm going to ask you a question and we're going to circle back around to the, to the end of the punchline here. Which is going to be like, how does this play in role in the current acquisitions? But earlier before, I told you, I wanted to ask you. I talked to you before you went public, I'm sure before you went public, you had certain expectations of the process and certain expectations of what it looked like before going public and after. How did those play out? Is it what you expected?

[00:36:18] Dominic Wells: The actual process of going public or life as a public company?

[00:36:22] Ronald Skelton: Life as a public company. A lot of, a lot of our listeners out there really want to end up in that. They want to be the CEO of a publicly traded company. And I'm one of probably the minority who says, I don't want anything to do with that. And there's, I have my own reasons why, right? The constant need to constantly grow. Whether you're profitable or not, you got to grow, you got to grow, or you're going to grow, or you're going to be punished by the market.

I think our stock market and our capitalistic system in the stock market is a little flawed. We can go into depth in that if you want. But in the, it's flawed in this spec. If I had a company churning out a hundred million dollars a year, every year, hands down, but I couldn't make 101, would it be punished in the stock market or not?

And the answer is it would be, if it's not growing. Anyway, that buys the stock today, never sees an increase. So it's going to be punished. So it's just constantly grow or getting replaced as a CEO. Causing a lot of CEOs to make, I want to say marginal, if not questionable decisions, because they have to grow. To where if you're a company, so you're a, or Hershey's, you've been around for multiple generations. And you're just churning out, a billion dollars a year.

Why do you have to grow? You're just a money machine. So that's the one reason I don't know, if I'd ever want to be the CEO of a public company. But how did it, let's go back to my question, I guess. And that is, you had certain expectations you went into, it's like, then you get married, right? Like the same thing as marriage. You have these expectations, you think, this big idealistic view of what it's going to look like to be married. You get this big idealistic view of what it's going to look like to be a CEO of a publicly traded company. How did reality set in? What does it look like now? What does it feel like as opposed to what you expected?

[00:37:56] Dominic Wells: Yeah, to be honest, I didn't really know what to expect. Um, I think, I think being a micro cap company as well has a lot different from being maybe like a big blue chip company. Micro caps have different things to deal with as people, there's like hedge funds that short your stock and then use the warrants to cover themselves.

So they don't really care what you do, how profitable you are, how much you're growing. They're like, most microcaps fail. So we're just going to short everything. And so that scares away other buyers because they just see the stock going down and assume that something must be wrong. And there's a little bit of like sort of economic terrorism going on there and they bad mouth you on the, on the message boards and stuff.

So that's kind of par for the course now, and I just ignore it, but that was, that kind of surprised me, I guess. I expected people to criticize us if we had bad performance and reward us if we had good performance. I didn't expect people to just be quite so,I wasn't expecting that to be so many sharks. Which maybe I was naive, but there's a lot.

[00:39:00] Ronald Skelton: That sounds horrible to me.

[00:39:02] Dominic Wells: Yeah, no, it's,

[00:39:05] Dominic Wells: But that's not all it is. Like there's more to it. All revenues gone up six times since we went public. So we've gone from 1 million to 6 million. And with our latest acquisition, maybe 7 million. So we've been able to grow the company because we raised money, but then we've been able to attract the right acquisition targets because of the sort of prestige and credibility of being a public company.

Now, could we have done that as a private company? Could we have raised money as a private company? Sure. Could we attract sellers as a private company? Sure. The private equity proves that, but for what we're trying to do, and let's remember way back to the beginning of this conversation, I'm just some dude in Taiwan, but I also have a NASDAQ listed company.

And so, I don't want to say convincing because that sounds, kind of adversarial, but I was going to say persuading, which is even worse. But basically sellers are willing to sell their business to me because I'm, because we're a NASDAQ listed company. Whereas if I'm just some dude in Taiwan with some money, it's going to be a lot harder.

I'm going to have to pay more. I'm going to have to put more cash up front. I'm not even going to get as many opportunities. So fundamentally, when I think where are we going to be in three years or four years or five years, we'll be able to draw a straight line from, from there to the decision to go public.

So like, yeah, it's going to suck a bit for a couple of years or we're already in, in that stage. But you, you grow a thick skin and you get used to it and eventually that makes people go off and pick on some other poor company. So yeah, it, it's exhausting in many ways it's brutal and it's a little bit unfair.

But I decided to build a company that I can swing big and build for the rest of my life. And I'm, you know, I'm 38. So I've hopefully got a lot of that life ahead of me. And so I wanted to do something where the payoff would be worth it. So, that's part of the thing as well. So, you know, there's a lot of cliches I can say. You have to bend down if you want to jump high and so on.

That, that's kind of what it feels like at the moment. We're in the bend down stage. So.

[00:41:19] Ronald Skelton: Let's say the, it certainly opens a lot of doors, right? Like to, to be it's, there's a status symbol of be acquired by a publicly traded company. Is Onfolio a, uh, are you guys a,you call it Onfolio Holdings Company. Do you integrate everybody in and make it under one brand? Or is it they keep their brand and it's truly a holding style company?

[00:41:39] Dominic Wells: Yeah, it's the latter. Like we're decentralized. So, um, some things were centralized like HR and maybe some backend ops and stuff. But, yeah, the company stay, we're not trying to like Onfolio's businesses, not being an agency or being like this thing. Onfolio's businesses, being a holding company. And then the businesses we own have their own businesses that they specialize in.

[00:42:01] Ronald Skelton: So I seen you guys are doing a capital raise. You got a fund. Let's talk about that a little bit. So, um,I asked because you live in Taiwan before, I think it was before the show even started. Did you go the traditional route? Is it a U. S. based PPM, private placement memorandum and an SEC fund?

And you said, yeah. So tell us a little bit about that. What are you raising? What's the, uh, investment? I guess, same thing on investment thesis or what do you call it. What is it, what is it that people would be investing in? 

[00:42:28] Dominic Wells: Well, yeah. Structurally it's a Delaware, LLC. A reg D 506 C fund. So, we are doing a concurrent Reg S as well. So, US investors need to be accredited. Non US investors, they invest through the Reg S so they, they don't have that requirement. But the thesis is, well, you can probably tell from the way this conversation has gone, but we're buying more agencies.

And we've got a lot of deal flow. A lot of agency owners who would sell for three X and maybe they'd only take 40, 50 percent cash upfront.And we don't have enough cash to buy all of them. So we thought, well, what if we raise a couple of million dollars? So we're raising 2. 5. There's probably about 2 million left.

We've been raising for about, I don't know, 10 days. And the idea is, well, the SPV will put up the cash or most of the cash portion of the acquisition. And then they'll get say 20%, 30 percent ownership in each agency, because of the multiples we're paying, like 3X. Those investors are probably going to get like 25, 30%.

Well, I should be conservative. Let's say 20 percent returns, hopefully more. And they get like a diversified passive investment. And for us, we get to buy all the agencies we want to buy. Our cash goes a lot further. And you know, later if investors want to leave, they will, we'll buy them out. And that allows us to increase our stake and investors to have liquidity.

And then in between that, we'll, we'll dividend the cash flow out, out to investors every quarter. So. Yeah, that's the thesis there.

[00:44:05] Ronald Skelton: Awesome. Well, it sounds like you, uh, you've got some work ahead of you. I've seen on LinkedIn that you've been, you personally been part of, I think it said 40acquisitions? Onfolio done what? Half a dozen or so of them?

[00:44:21] Dominic Wells: Since we went public, we've done five. Before we went public, we did, yeah, probably about five. Yeah, we've probably done about somewhere between eight and ten of our own acquisitions. And then I did a few personally with my own money over the years. And then I've advised or worked with investors for, yeah, about 40. But some of these were like 50 K.

So, you know, small acquisitions. Some of them were four and a half million dollars as our largest. So it's, it's a range.

[00:44:46] Ronald Skelton: So how do people reach out to you? How do people get ahold of you? If they decide they want to, see what you're doing, do the investigation, do they want to invest with you or, just, you know, maybe they need some marketing services. Maybe you want to, they like, they like you here and they want to use one of your agencies. How do people reach out to you?

[00:45:01] Dominic Wells: Pick your poison, I guess. So onfolio. com is the website. If you use the contact form there, it'll find its way to me.You can follow me on Twitter. You can follow me on LinkedIn. I have a newsletter, which I'm trying to write more regularly, which is just onfolio. com slash newsletter. And you know, you reply to one of those newsletters, I'll read it and I'll reply to you and stuff.

So whatever, whatever people fancy, I'm not hard to find.

[00:45:26] Ronald Skelton: I've asked you a lot of questions today. If somebody can only walk away with say two or three things from this conversation, what would you want the key takeaways for people to, to remember?

[00:45:36] Dominic Wells: What agencies don't suck. That's one. Whether you invest with us or you start one or you buy one for yourself, just, pay attention to them.Haven't already talked about this, but a lot of my experience, you know, my experience and my successful acquisitions just come from getting reps in the game and, building a muscle and sticking around long enough to kind of run out of mistakes to make.

So I think if anyone's sort of interested in acquisition entrepreneurship, just get started with something. Sure you know, you're risking, you're risking money. You might lose it, probably lose some of it in the beginning, but that's the best way to learn. And then the third thing would be, depends when someone's listening to this or watching this video.

But I think, I think now's a great time to buy businesses. I think the prices are going to go up in the future. And there's a lot of fear in the market. There's a lot of people who are not buying businesses because they're afraid. So if you're willing to either take those risks or you just kind of know how to mitigate those risks, I think now's a great time. So yeah, that would be mine. My big three.

[00:46:44] Ronald Skelton: People ask me, what's the number one skill in this field? Like just acquisition entrepreneurship. And I said, I always say it's tenacity. The ability just to keep trying, keep trying, trying to figure it out, do something different. There's no, you know, you can be an accountant and you can be a marketing guy, you can be an attorney, but you still need the tenacity to go through dozens and dozens of deals and figure out what's right for you, right. 

And there's a, there's a buyer for almost every business. And most often, more often than not, it probably shouldn't be you, right? There's certain things that you're good at. There's certain things I'm good at. And I tell that to everybody tenacity is probably your strongest skill and that's who I see succeeding in it.

Like you, you learn from your bumps and bruises. I'm still going through my bumps and bruises and,I'm still learning. That's why I'm interviewing all you guys. But I think tenacity is probably the key theme that I picked up from your conversation about learning from your lumps there.

[00:47:35] Dominic Wells: Yeah, and I think that's probably true of all entrepreneurship. If you're starting a business from scratch, tenacity is one of the most important things as well. So, I mean, when is tenacity not good? Like, tell me somewhere in life where tenacity is not, not a good thing. But yeah, it's definitely a lot of tenacity, a little bit of creativity and, throw in a pinch of luck. You got yourself a nice recipe there.

[00:48:00] Ronald Skelton: Awesome. Well, I thank you for being here. I don't know, uh, what else to ask you there. Is there anything I missed or just anything I should have asked you?

[00:48:08] Dominic Wells: No, I mean, it's been a very wide ranging conversation. I think,I think we've managed to throw some value in there. I think we've covered a lot. So yeah, no, I'm good.

[00:48:17] Ronald Skelton: Awesome. Well, I look forward to seeing you succeed. I watch you closely in the content you stuff put out on your LinkedIn. If you guys are listening out there, follow him on LinkedIn. He's got some really good, things he evaluates companies occasionally has a great point of view. He's one of the contributors to this space on LinkedIn and on Twitter.

He puts stuff out there to help you move your game forward and you should be following Dominic here and making sure thatyou're connected with him and see what he's up to. I look forward to seeing you succeed. I'm, we'll probably follow back up in another year or so. And, uh,I want to hear you're at the 10 million mark or the 15 million mark. I love seeing success stories.

And if there's,any way we can help you out, anyway the audience can help you out, always reach out to me through LinkedIn and, and, I kind of sit on top of that more than I do my email. But reach out to us and, uh,we'll help you. We'll actually, uh, I'll put the word out to the listeners and stuff and tell them what you need and we'll see if we can't help you out. We'll call that a show.

[00:49:09] Dominic Wells: Nice. Yeah. Thank you.