How2Exit Episode 65: Yury Byalik - Head of Strategy and Acquisitions at Onfolio.com

Ronald Skelton  0:06  
Hello and welcome to the how to exit podcast where we introduce you to a world of small to medium business acquisitions and mergers. We interview business owners, industry leaders, authors, mentors and other influencers with the sole intent to share with you what it looks like to buy or sell a business. Let's get rolling.

And now a moment for our sponsors. I want to highly recommend you get acquisition Aficionado magazine every month acquisition officiate auto magazine brings you tactics for business buying and selling you won't find anywhere else learn firsthand from industry leaders who share their success stories featuring in depth interviews and stories from leading figures in the business acquisition industry. This multi platform mobile magazine speaks to acquisition entrepreneurs wherever they are in the journey. And I want you to visit acquisition aficionado.com today. Hello, and welcome to the how to exit podcast today. I'm here with Yury Byalik.  And Yury is the head of strategy and acquisitions for onfolio. Man appreciate having you here today. There's some cool stuff we got to talk about you guys buy digital assets at online companies, right?

Yury Byalik  1:23  
Yeah, that's right. Thanks for having me and yeah, you know, happy to jump in and kind of talk about everything.

Ronald Skelton  1:29  
Well, let's just start off with kinda like what is onfolio? And, and let's go there. And then we'll kind of we'll go from that. And we'll kind of get into how did you come into this space? But let's start off with who, who is the company? What, what do they do?

Yury Byalik  1:42  
Sure. So onfolio is a soon to be a publicly traded company starting about next week. And we're a holding company. So we acquire and run online businesses. We focus, we used to focus on the E-commerce and content and affiliate space. But now we prefer acquisitions in for like digital products productized services, SAS agencies,

Ronald Skelton  2:09  
okay, so pretty much anything online. It sounds like you're pretty broad, as far as you know, it's, it's an online business or something of some sort.

Yury Byalik  2:18  
Correct, right. We are looking to, to move more into the strategic acquisition space where that you know, they're based around a specific audience. And, you know, we, we find that as we go along, but generally it's, yeah, it's in kind of like the digital product and service space.

Ronald Skelton  2:37  
And I was looking at your website, you guys have had quite a few acquisitions already. Right? You have like, more than was it three websites has 38 current sites?

Yury Byalik  2:46  
Yeah. So when onfolio started, it had a, a bit of a different business model where we would help investors acquire online businesses. So some of the acquisitions in our portfolio might have been made on behalf of investors. And some of them are owned by onfolio.

Ronald Skelton  3:00  
Okay, awesome. And then how did you get into this space? How did I, I see that you have the Esquire thing on the into your name? So you went to law school, and now, now you're in mergers and acquisitions? So fill in the gap a little bit? How did you, how did you end up in this?

Yury Byalik  3:16  
Sure. So I graduated law school right around the time that I think was the housing market had crashed, and basically everybody was just laying people off. So there were no jobs for attorneys. You know, all the large law firms, they were laying off hundreds and hundreds of people. So my cousin and sister were both laid off from big firms. And I was just getting into the market. So there was just no jobs available. And I had a background in digital marketing, because I've been running ecommerce websites since I was about 13. And while I was in law school, I built a few websites in the legal content space, and actually ended up selling them to LexisNexis. So after graduating law school and not being able to find like a legal job, I went to go work in their SEO department. And I've actually spent about 10 to 15 years working in the SEO space for agencies in house and consulting companies. And I was kind of burned out, I was living in New York, and I decided to basically quit my SEO consulting gig and move to Bali, like a lot of the digital nomads do to get their start. And so I spent a couple of months living there. And eventually, I went to I did some SEO consulting for a company called shorts with capital. They're pretty similar to what we do, except they focus exclusively on the, on the SAS space. And so after a couple months there, I joined onfolio initially just sort of on the content team, but because I've had so much visibility into working at agencies working across portfolios in different industries verticals, I just had a big, you know, broad depth of knowledge and a lot of different spaces and eventually kind of transitioned in to helping onfolio to look for the businesses to buy, because it was easier for me to vet them having worked in a lot of different industries, so it kind of accidentally migrated, you know, from, from legal into SEO. And now sort of back into quasi quasi legal,

Ronald Skelton  5:16  
the experience and the legal background. Certainly, he's got to help you with a lot of the like, reviewing all the contracts, reviewing the due diligence, and, and all that type of stuff. So that, you know, that's a skill that most of us have to outsource.

Yury Byalik  5:31  
Yeah, I'm actually one of the best kinds of lawyers. I'm the nonpracticing guide. So, you know,

Ronald Skelton  5:38  
me jokingly calling recovering attorneys.

Yury Byalik  5:41  
You know, it's an interesting fact, something I, I heard like something like 50% of attorneys don't actually practice law. So I'm one of them.

Ronald Skelton  5:50  
started, I was going to go back and the law was going to go into his intellectual property. I had an opportunity, I was consulting at a company doing project management stuff for them. And I got to meet their IP lawyer. And I sat there with him a couple of days, because they didn't have a desk for me. Where else I just say how to sit in here with him. I want to see what he does. Anyway. His job looks so freakin boring. I'm glad I never wrote back. He just sat there all day reviewing contracts and paperwork and doing patent searches. And just I don't, yeah, so I learned really quick and was wasn't the path, I wanted to go back down and said, I got a master's degree in marketing. So let's jump into what onfolio like looking for whatever they're doing. Let's talk about the process of identifying companies. You know, one of the things that a lot of us have issues with is finding great companies to do to pull the trigger on. So can you, can you talk a little bit about their process you guys through go through to look for acquisition targets?

Yury Byalik  6:47  
Sure. So I mean, I'm basically on, on the mailing list of every, you know, broker marketplace out there. And I also spend time going through each one every single day. In addition to that, I also look for private deal flow, we have a few inbound leads coming in, hopefully, that that'll increase soon. And then also just outreach, identify the type of business I want, whether it's an industry or a category, and I just start kind of cold emailing them. But yeah, I mean, I think, you know, there's been a number of startups recently that have been aggregating listings, from brokers and marketplaces, and then also helping with private deal flow. So I, you know, I think most of us are doing something pretty similar.

Ronald Skelton  7:28  
Yeah. So give me that. So if anybody's listening and they run, I, I have a lot of guys out there that listen, and they do run IT, not IT, but just ecommerce related businesses and stuff. What is the selection criteria? Is there a certain, like, size and revenue size or technology?

Yury Byalik  7:50  
Yeah. Well, we don't, we don't really buy ecommerce anymore. But as far as the acquisition size, I say we're looking for about one to 5 million

acquisition. 

Ronald Skelton  7:59  
So one to 5 million. And then, like, if you could buy that, if you could buy the perfect cup company next, what are you looking for right now? I mean, is there like a marketing company you're looking for? Or is there something out there like, man, if we have that that would help move us forward?

Yury Byalik  8:13  
Yeah, I definitely look like digital marketing companies, right? Especially when you start kind of putting them together, if you acquire an SEO agency, you know, what are your SEO clients you know looking for next, and then you're like, hey, they need paid marketing services. So then you could look at like a social media agency, and like a PPC agency. You know, there's a lot of these design services. And I like some of them, where they do like unlimited designs for a monthly fee. So I group them that bucket, it's it's kind of the productized service, something that used to be traditionally like an agency, where you'd have to contact them for a quote, they basically turn that into a product. So you get like, you know, a specific service for a set fee. So those are really interesting to us.

Ronald Skelton  8:56  
You know, it's interesting, because I actually spent the entire last year and a half working on a big marketing roll up. And we were able, we, we had a very interesting way we were doing it was very unique. But and we, in a matter of 200 I think it was 216 days, we talked almost right at about 200 marketing agencies that were interested. And we had three of us doing the sourcing and 100% out sourcing was from LinkedIn outreach, we were just reaching out to digital marketing companies and marketing companies that were active on LinkedIn and said, Hey, we're investors, we're looking to acquire marketing agencies, if you would like to, you know, grow with us for a couple years and have a bigger exit than you could have on your own. We should talk. And, you know, that was the, that was the total play. Now you've got an additional benefit, right? You guys are going public. So it's like, Hey, if you know if you'd be interested in being part of a publicly traded company, we should talk. Right that's, that's a there's a lot of these guys, there's a false ceiling in these marketing agencies if they're perceived it or not. enough, they can't go out and pitch certain clients. So there's a huge win for them to be a bigger company.

Yury Byalik  10:06  
Yeah, I mean, getting listed on NASDAQ is definitely going to be a big boost. You know, we're hoping that's going to increase the visibility and the deal flow that we have coming in. But yeah, it also makes, you know, pitches for us, I think a little bit easier, whether it's to get on a podcast, although, you know, that, that wasn't actually even part of it, but, or like deal flow, things like that. But you know, you always hear the expression like you want to be during the Gold Rush, you want to be selling shovels, right? So the kinds of businesses we like, are the ones that are selling shovels. So when we see a business, we look at it, we're like, Well, is this the business? Are they you know, they just digging for gold? And if they are, then we look at, like, what tools is this business? Using? And then we might be interested in the tools that are being used by this business, rather than the business itself.

Ronald Skelton  10:52  
That's brilliant. The, you know, one of the reasons I do the podcast, right is this is, you know, this is we're, we're helping the miners, right, we're, you know, we're selling picks and shovels, we're, we're offering information sharing back. And then, you know, as a result of that, there's leads that come in. So there's that side of it. So let's talk about like, just kind of the process you go through, you know, at the company, you know, somebody reaches out to you, they say, Hey, we're interested in, in what you do, we might be interested in being part of what you do. What's the process look like for a company that will, will want might want to integrate and be merged in or bought from by you guys?

Yury Byalik  11:35  
Yeah, so I mean, the first thing is, I kind of just jumped on the website, I take a look around, you know, I've run it through all my tools. I look at the market as a whole, where it's going, where it's trending. You know, I go through the prospectus. Hopefully, there's a, a solid prospectus behind the business. And then I just start compiling, like a very long list of questions as kind of like a first pass through. And then after that, the next step is basically jumping on a call with the sellers getting more information about their team, their operations, their finances. And this isn't even the due diligence. This is just to make sure like, this is a business that we want to go after. You know, and then if it's something we like, then we start kind of negotiating, looking at the numbers, and then ultimately making an offer and then that's where we go into kind of the more detailed do did due diligence.

Ronald Skelton  12:29  
What are some of the like, do you guys I don't see on your website, and kind of the reason I'm looking over here is I've got this huge 100 workstation. But uh, looking on here, I don't what are some of the cool companies you currently own right now kind of give us an example of what you, what you guys have acquired in the past?

Yury Byalik  12:45  
Sure. So for example, one website is mighty deals, which is like a, a deals website for design resources. So we have, you know, some big plans on that one, but basically, you know, think of what's the Noah Kagan, one at Sumo? Something like that. But for design deals. 

Ronald Skelton  13:08  
Okay.

Yury Byalik  13:09  
Another one is vital reaction, which is a supplement company. So we do make exceptions for E commerce. I know I said, we don't buy them there. There are always exceptions for good opportunities.

Ronald Skelton  13:20  
Right. I, so you said it was a, like a vitamin type of place. 

Yury Byalik  13:26  
Correct? Yes. 

Ronald Skelton  13:27  
Okay. 

Yury Byalik  13:28  
That hydrogen supplements? 

Ronald Skelton  13:29  
Yeah. So I mean, if you look at that, it's it's subscription page recurring revenue. Other than the fact you're shipping a physical product, it meets all the criteria that the only normal digital, like software as a service would say, if you gotta, you know, you got to stuff, stuff, you got to put stuff in a box and mail it. Right. So that's the kind of businesses

Yury Byalik  13:47  
yeah

Ronald Skelton  13:47  
 I'm always interested as, like, a private real estate investor. So I always pick up when there's recurring revenue that we could grow, right? Because that studies things out, it makes it a little more stable and stuff do you guys look for, you know, Software as a Service recurring revenue type of stuff, too, or? Is it just

Yury Byalik  14:04  
Yeah, so SAS is an interesting one, because SAS is definitely priced very differently than most other online businesses. So in SAS, they like to get a multiple on the annual recurring revenue, oftentimes going as high as 10x. That's just not something we're going to pay. But there's a, there's a lot of opportunities to find subscription or recurring revenue for where it might be like a much lower valuation, and that could be like WordPress, plugin, Shopify apps, things like that. So yeah, you know, everybody loves recurring revenue. It's just a matter of how much are you willing to pay for it?

Ronald Skelton  14:38  
Yeah. Somebody asked me. I get asked regularly. And once you buy a SAS company, you've got a background in technology used to, like used to work for the government by you know, building computer systems like Yeah, but SAS is way overpriced right now. And it's not overpriced. If you've got the money and you're willing to wait 30 years to get your money back. I'm a small investor, I want my money back in a couple years. I want to be able to redeploy it again. So you know, I'm looking for companies, a lot of, you know, brick and mortar type of stuff, but you know, things that you're buying at 1.5x 3x 4x. You know, if, if you don't do anything, and you just run it, the way they run it, you get your money back in four years, if you in three years, or whatever the multiple is, or if you're doing your job, and you increase its value, you can get it back a lot quicker. So I get that. Let's talk about the I'm really I know a lot of people are like, the heritage and they're like, talk more about the IPO? I know, I know, there's some things you can and can't say, tell me about the process of what it took. How long did it take? You don't have to share the money? Because I know it's crazy high. But like, what, what's the process of taking a company public? And how do, you how do you hope? Let's just start there, and I'm gonna ask you, the next question to prepare for is how do you hope that changes? What you got going on? I think he alluded to it already.

Yury Byalik  15:58  
Yeah, I mean, so I wasn't like involved in a lot of the IPO process that was handled by Don welser, CEO, and SB who is our president, it's definitely been a long process going on, I think over a year now, like, like you mentioned, very, very expensive, I don't think most people understand not only the cost of going public, but then the associated costs with maintaining that status every single year. So you know, a lot of time that both of them have spent on the business has been, you know, preparing for this IPO, it's kind of similar when you know, somebody's running the business, and they're trying to raise like venture capitalists funding, like, they can't do both their job and raise money, right. It's like, kind of one or the other. So yeah, you know, a lot of things went into that. But I think what, you know, I saw somebody commented that, you know, this is great for our space. And I think it's true, you know, sort of this whole concept of buying online businesses and buying these, like niche content, websites, websites, flipping, you know, it's been happening for a couple of years, but now it's really going mainstream. And I think when people see that, like, you know, it's possible to, to whether it's have a big exit or IPO, you know, people are seeing bigger and bigger opportunities when, when they're getting involved in this. So I think it, it is really great for the, for the space, it's going to keep increasing, hopefully not the multiples, but, but you know, the, the revenues and, you know, the the investor interest, as you mentioned, you know, you're involved in real estate right. Before recently, real estate investors had no idea about, like, the opportunities of online businesses, you know, they didn't understand what kind of like returns they're able to get. But now, there's so much money flowing through it, because they, they understand the possibilities. So yeah, it's just an exciting time right now,

Ronald Skelton  17:47  
that's funny, as I brought on a performance coach, too, because I was kind of getting burned on the real estate burnout on the real estate thing, the very tight niche that I operated inside of, had kind of unregulated away. So we did what was referred to as investor back short sales. And that just the banking regulations and stuff worked to try it out on the market was just, they just didn't want to sell to investors, right, they wanted to maximize their profit, and not have us get in the middle of it. So I was looking for the next thing I heard performance coach, and, you know, this came, this came about because the returns are actually better than most of the real estate deals I've gotten. And that's, that's impressive, because, you know, most people think that the real estate is kind of the top of the game for I put effort in and I got money out, you know, for the same dollar for dollar investment, you know, especially using leverage and bank loans and stuff like that. You can make a lot more money in this face. And

Yury Byalik  18:44  
oh absolutely

Ronald Skelton  18:45  
 I think, yeah, there's, there's, it's gonna grow. And unfortunately for us, for you and me, I'm a big believer in the blue ocean strategy, there are so many businesses that need to change hands, and the next 10 to 15 years, it's not going to hurt you or me, we might run into a little competition and have to bid on something, especially for going to brokered listed deals, then there's going to be more competition for those. But if you can get good at sourcing, and knowing what you're looking for, and identifying your target market, I don't, and going direct to those people and saying, hey, you know, I'm looking for X, Y, and Z seem to fit that mold. Are you interested in selling or taking on an investor to work with you? And getting yes or knows if you're willing to do the cold outreach? I don't think there's a problem whatsoever with having the market flooded with new guys. There's gonna be some learning curve, they're gonna. The, the problem is, I've seen this happen in real estate, and real estate, when you get too many new people doing it. They go out and do things they shouldn't and cause new regulations because they hurt people. I think that there'll be there'll be some rules changed and some guidance has changed just because these new guys will come in and do things differently. They'll do things that you know hurt businesses, they're gonna hurt some senators daughter's business and the new law is gonna get passed right? happens in real estate all the time. Yeah, some states don't even allow certain strategies anymore because, you know, new guys got in there and, you know, hurt somebody. And the next thing, you know, you have to have a broker's license to, to wholesale a property. So I think that'll happen in this if you get too many newbies circling

Yury Byalik  20:19  
Well,

I Yeah, I mean, I don't know, if you remember the whole income store scandal, where they basically started with what I think was like a good initiative where they were, you know, buying these businesses, for investors. And eventually, it ended up being a Ponzi scheme where the guy is facing criminal charges. So that, you know, that actually put like, a really big dent in kind of like the community, because, you know, people were kind of scared at that point. But yeah, you know, there's always going to be new, new laws and regulations. You know, I think one thing that with when you have real estate, a lot of people see real estate as a passive investment with online businesses, right? Unless you have like a full team that's managing it, there's no such thing as like a passive investment. I think a lot of people are being sold the dream where they can just buy a site for a couple 100 grand and not do anything, and it'll continue to make money or grow, where if you're not actively running it or have a team, that's just not the case. And you know, what, if a, if a website crashes, right, you have nothing to fall back on. But with real estate, you still have the property, you can go live there, if you need to. You can go live, you know, in a website.

Ronald Skelton  20:19  
 Yeah

Yury Byalik  20:20  
 yeah. Like you mentioned, there's a lot of, you know, a lot of people are going to be retiring and looking to sell businesses. I always joke, right? If you want to find like, somebody who's retiring, go, just Google like, powered by Yahoo stores to see running ecommerce stores on Yahoo, and there's a good chance they'll be retiring soon.

Ronald Skelton  21:46  
That's not a bad idea. Like there's, there's a, there's a market or market acquisition strategy in itself, go look at all the older, you know, stuff and like, are they? Are they not on Shopify? Are they not on Amazon? Are they you know, they using one of the older, you know, shopping basket software tools, Magneto is one of them, right? Or something like that?

Yury Byalik  22:08  
Magento

Ronald Skelton  22:09  
Magento? Yeah. 

Yury Byalik  22:11  
Or for content sites, it could be on Joomla, or Drupal, which are like super old content management systems that nobody uses anymore.

Ronald Skelton  22:17  
I just looked at a $9 million marketing firm, they were doing $9 million in profit. Last year, we were looking at them, and they're running Drupal, and that they actually help others run Drupal, but it's still around. But uh, they think it's more secure than WordPress. But anyway, I didn't think about that's a great idea for those you guys listening, look for older technologies, those guys might be ready to retire or move on. So that's a, that's a great approach. So it's funny as we were talking about a little bit i dont feel like if you looked at my background and stuff for running big websites, back in the day, when Yahoo and excite.com was head to head, I was the technical director, the director of technical operations for all at site. So I ran the site portal. So

Yury Byalik  23:01  
yeah, I remember, I remember that those Yeah, I remember the good old days, but like, you know, the Internet was much simpler.

Ronald Skelton  23:09  
You know, I remember our one of our engineering guys pitched that we should probably put ads in our search listings, and they got shut down. And I'm pretty sure he went to Google. Right. And he's one of the product development guys over there, and they did it right away and just kill it. Right. But, uh, 

Yury Byalik  23:25  
yeah,

one of my first online projects, which got shut down very quickly is this was when Google AdSense was just getting started by Google. Right? So I created a website called swap comm where people agreed to join and just click on each other's website. And it went from like, you know, I had, like, so one mistake I made was, I was just advertising it publicly everywhere, and went from like making zero to like, $300 a day within like, two weeks, right. And then like, a month later, I guess, Google found out and they shut down the AdSense account of every single one of my members.

Ronald Skelton  24:00  
I lost one of mine like that. It wasn't exactly like that. But uh, I would, I had a way to track if people clicked on any ads inside of one of my tools. So in order to have a free account, they had to click on three ads, and ads AdSense found out so I mentioned earlier that I had a, a website out there that was featured by TechCrunch. And everything like he was, you know, pay its own bills, and then all sudden AdSense changed the rules and, and I lost my, my income source from it and had to shut it down because it just didn't make sense to it just didn't pay enough to even pay the guys to moderate it. It was called a shared confession. Basically, it was kind of a pre read about the same time there was a company out there called post slit or something like that. But we basically people go on and they would confess to things and two things happen. One, I got in trouble for like saying, hey, you know, to maintain a free account, you got to click on three ads. And I had a way inside of that. I clicked path traffic tracking inside of the, the tools I could see what you clicked on and what pages you visited and stuff, and I can see that you clicked on ads. And anyway So that, that, that cut that off, and then somebody posted something on the site that was actually illegal and, and I shut it down because it was supposed to be anonymous. And there was no way I was, I wasn't getting mixed up in this it was it was a bad, it was something bad. And they, they confessed to doing something horrible on the site, I took it down, but I got a call from law enforcement. Like, hey, we need we need that. I was like, all I can give you is the IP address, and you know, their carrier, and you know, times they logged in from it, we did everything we could to keep it anonymous. But yeah, so I learned my lesson inside of that tech space, too. Let's jump back to your kind of the process you guys go through there. So you've we talked about how you find no, you have different sourcing mechanisms, you talked about kind of that you go through the due diligence and stuff, once they're on boarded, especially now that these guys are gonna come on. Are you looking for companies where the founders want to stay? Or are you looking for companies where they can transition out? And you guys take it over? Totally? Or how does, how does that play?

Yury Byalik  26:04  
Yeah, I, I mean, we definitely leave the, the, the door open if a founder wants to stay on in some capacity. But almost every acquisition or opportunity, I see the founder selling because they want to leave and work on their own projects, or retire or family. So they rarely want to actually stay on. Ideally, though, every business would have an entire team in place. And the founder is just like overseeing the team only spending a couple of hours on it. Unfortunately, often, that's not really the case. And the founder, still involved in the business working 20, 30 hours a week. So then we'd have to fire like hire a CEO or operator to replace him, or maybe promote somebody internally from the team.

Ronald Skelton  26:47  
So you guys, you know, is there a tech stack that you just that you're that you're kind of looking forward that that you want them to be used in certain types of? I know, you look, you know, you guys are really I see a lot of article on there that you being specifically good at SEO, be a good at certain things and certain things you're looking for inside of these companies. There's any red, I guess the better question is, is there any red flags? If they're running? You know, they're running on Microsoft servers? And they haven't done any SEO? They're all 100% paid ads? Are you interested? Or is there, is there some selection criteria of quality of site?

Yury Byalik  27:19  
Well, one of the reasons we actually bought stopped buying content sites was just over reliance on a on Google. And I kind of see where Google is heading. They're trying to get rid of a lot of the content affiliate sites. And so every update, you see is now kind of just hammering them more and more. So I have one rule where basically, if I can't make the, the business work with paid traffic, I don't want to buy it. So if it's completely reliant on SEO, that's not necessarily a deal breaker. But if it relies on SEO, and it won't work with paid traffic, there's absolutely not interested in that. And we just look for businesses where there's opportunities. You know, a lot of the businesses we see especially agencies, most of their business is from word of mouth and inbound, which means they haven't done any SEO and PPC. So there's a lot of opportunities there. Yeah, we are definitely stronger on the SEO side, which means we might be able to improve their existing SEO, or if it doesn't exist, because they're, you know, doing purely like Facebook ads, we can then come in, and then, you know, build out the SEO department there.

Ronald Skelton  28:19  
So I told you, we, we spoke to over 200 marketing agencies, in that the roll up that we were doing. And each of those calls for about an hour or so I spent 200 200. Furthermore, we had two calls, so 250 300 hours talking to agencies, you'd be surprised I was shocked on how many marketing agencies were at a loss on how to source new deals, because the way they'd always done it were trade shows rubbing elbows, and you know, and referrals in person referral type of things, and COVID Shut that down. Right. So

Yury Byalik  28:51  
yeah, 

Ronald Skelton  28:52  
having them

understand how their leads come in and how to do it is critical, but not, not a lot of the agencies did that. So the number of the top three problems with the marketing agents, we said we seen was sourcing new customers like they had they were good at keeping the ones they had, they could get referrals from the comfort customers they have for other customers. But there was not any real kind of lead funnel or a way to generate new business. For most of them. They, they go to trade shows and stuff and they're waiting for that to open back up. The second one was sourcing great employees, it was really hard for the smaller agencies to get the great guys. So but

Yury Byalik  29:35  
yeah

Ronald Skelton  29:36  
 carried across all of them that way.

Yury Byalik  29:38  
Yeah, it's definitely a challenge. Another issue is a lot of them especially could be on the agencies is like you mentioned trade shows is everything revolves around the person personality of the CEO, right? So if you were to sell the business, a lot of clients might not stay, they might leave he might not get new business. So another business like type of business we don't want is where there's like a personality. behind a business that we can't easily replace, or especially if he's not willing to stay on board, right? So we need, we need something like, continue, where they will continue to work in some capacity, we can continue using their name and likeness until we ultimately off board them and onboard somebody else to take over, like the personality of the business.

Ronald Skelton  30:21  
Okay, I got it. So, so you're looking for, you know, that mid level company where they've already the CEO has already kind of started removing themselves out of the limelight, right. We, we ran into quite a few of those. But then again, we, you know, we were at that same stage where, if you were, our play was pretty unique in the fact that we were allowing them that we wanted them to keep their brands alive. And then also hold the brand we recreating so they basically had a two sided business card, when they needed to be small, local, and be known by their local community for all the stuff they've ever done. They could continue using that. But if they wanted to go pitch something big, they could say, Hey, we're a wholly owned subsidiary of, you know, I can't say it right now, because we still have some legal stuff going on. So XYZ Corporation, right. And, you know, the interesting thing was that these agencies really liked it, whose ability to do that they got to keep their own brand and keep operating. And even the ones where the owners and stuff were leaving, the legacy of what they created was extremely important to them.

Yury Byalik  31:24  
Yes, I definitely noticed that especially with the team that they have, right. So one thing we don't do when we acquire a, a business as we, we don't start laying people go just, you know, to save a couple dollars here, we so that's one thing, we we kind of advocate, right, because if you're selling a business, you might have a couple interesting parties, right? So you, you have to pick it might You might even have a couple offers at the same amount. So that's where we try to kind of differentiate ourselves. And you know, we'd like to keep the team in place and the company culture in place when we make acquisitions.

Ronald Skelton  31:55  
So what's another good example? We talked a lot about the marketing genius us because I have relation and that I kind of know that space now. What else, what else are you looking for right now? What is what's another, like prime target?

Yury Byalik  32:07  
So I, I mean, I think courses, right, digital courses, you know, there's a lot of different niches to make money, niche and education space, of courses are great. You know, one of the problems with E commerce sites, and one of the reasons we don't like them is because they cause cashflow issues. The faster you grow, the more you needed to inventory and marketing to sustain that growth. And actually, a lot of ecommerce owners, they only see money when they make a big exit one day. But you know, they might not see a lot of that monthly revenue, because they have to reinvest that back into the company. When you have digital products or courses, then, you know, you make it once you pay to have it made once and then you keep selling it over and over again. So you at least get rid of the inventory expense that you would have with E commerce.

Ronald Skelton  32:53  
It's interesting it is there's actually a community of course, buyers, I'm almost one of them, right I have. Since I moved to California a couple of months ago, I'm living in the Redwood Forest out here in California, it's beautiful and white and right in Sonoma Valley Wine Country, got the ocean to one side of the wineries on the other and I'm in Redwood Forest. Prior to that, I had my office in Tulsa. And in that office, I had one bookshelf sitting beside me. And at its peak, that bookshelf probably had $180,000 worth of course material on it over the last 15 years. So of course buyers are course buyers. And the reason I bring that up is if you were I thought about this one very seriously, even in the real estate space. Because if you were to aggregate a bunch of courses, there are people who buy pretty much every course they go to. I know I know this because the reason I got all those courses is I used to raise money in the real estate space by attending seminars, telling people what we were doing that was different, and saying, Hey, if you don't want to do your own thing, invest with us, we will make money together. And we would I can walk into a three day seminar and walk out with two $300,000 worth of investors to buy a few more houses. And that said, you go to those events, and there's at least 10 people that they weren't there I call them see if they're okay. I, I, I mean, I'm talking, I'm traveling, I'm living in Tulsa to time, I'm going to Dallas, then I'm going to Atlanta. And then I'm going to different cities and stuff that I would show up in the same people at all these courses. There's, there's a crowd that goes to almost every (inaudible), I bet you that's the case, and every genre. So if you had a whole portfolio, and you could cross sell and upsell. How would it be tremendously valuable actually reached out? I know a few of my will say their names right now because I'm about to say something that I don't want to associate with them. But I reached out to about five or six of these guys in the real estate space that I know. And I paid their courses and stuff and said, Hey, why don't you give me a list of everybody that's ever paid for your course and attended one of your seminars, I'll get four or five of these other guys that do it and I'll spend the time correlating to data. And then what I'll do is I'll help you market to course buyers so I'll, I'll look at like who's bought which ones or which ones haven't bought yours and give you very hot leads to people to invite to Your course because they bought the other three guys and stuff. Right? There's a huge play on that. And, you know, to some extent it feels a little predatory. But there's a huge value inside of, hey, this guy, you, you get this guy into a seminar, he's buying the course, he's going to the back of the room. Right? And there are those

Yury Byalik  35:21  
yeah

Ronald Skelton  35:21  
 guys. So,

Yury Byalik  35:22  
yeah, I mean, you know, I still think the best investment to make is to make in yourself, and that's one of the reasons a lot of people buy these courses. And then especially if you can make acquisitions where they're in different learning process of the stage, right? So it might be, for example, acquiring a new business, it might be then scaling your traffic, and, you know, they're all related, and they kind of start low and build up. It's kind of like when you see like department stores, right? When they see one of their customers is like pregnant, right? They know, they can keep marketing her because then they'll know exactly, or pretty closely when she's having the baby when that baby's 1,2,3. And they can keep marketing, you know, different age, age range products to this person. So it's a bit similar. I know Sam ovens, he did something similar, where he had like two or three different offerings, starting with like a $2,000 course, and then going up to like, a 5000. And then he had like, a larger tier of like, 20,000. And just kind of where you are in the lifecycle of, you know, learning and scaling your business,

Ronald Skelton  36:22  
the whole Russell Brunson model, right, the 

Yury Byalik  36:25  
Oh, I I I

Ronald Skelton  36:26  
I love his value letter, two of the best books ever. Now I have a master's degree in marketing. And I, I swear those two books are worth more to me than my entire master's degree in marketing. If they could just talk from those two books, I'd have been a lot better off right now than I would have been with everything they taught me in a marketing degree. So

Yury Byalik  36:43  
Yeah, Yeah

now I'm a big fan of Alex or Mozi. He runs acquisitions comm. And so I'm actually almost finished reading his $100 million offer book right now. And yeah, he's, he offers a lot of content for free on his website, he's got a little mini course there as well, which is great. And you know, it's funny, because all of this is basically like a very high end, lead magnet, because he wants, you know, businesses to grow. And then once they're in his, I think he looks for like one to five or three to $5 million revenue businesses, then he brings them on into his funnel and, you know, tries to become a partner for equity there.

Ronald Skelton  37:18  
Yeah, I think it's really what he's doing. Basically, if you're not at that, not at his level, here's some free stuff to help you get there. And when you get there, you know, you do me a favor, let me look at your company. It's absolutely brilliant. If you ever run into him in person, I want him on the show. I've actually reached out to him and and I think his wife to have him on here. And I haven't gotten a response yet. But they're really busy creating their own content. So that I'd love to have him on here just because just to, to learn from the from the guy. So let's talk about, you know, you, you go out and you've got now now you're looking at, say courses, it's our particular market and you're looking for currently or is it real estate? Is it online business, business acquisition, business growth? Is there a space that you're playing in already, or you're looking to play in?

Yury Byalik  38:03  
I mean, you know, I, I definitely love the Make Money Online industry. But if you you know, if you look at the three big markets, right health wealth, and when blacking them third one,

health, wealth and 

Ronald Skelton  38:18  
relationship,

Yury Byalik  38:19  
relationship, thank you. So you know, anything in those three markets, right? It's, it's an evergreen market. And there's always going to be people that So honestly, I'd be, I'd be happy with anything in those markets, just because I know, they're always going to have demand with no ceiling whatsoever.

Ronald Skelton  38:37  
It's funny is that relationship Mark, I just had Adam Lyons on here, while he while he does all kinds of stuff now. He's got his teeth cut in the hole online dating, advising type of space. So he knows everybody from Neil Patel, who wrote the like the pickup artist and some other books and stuff like that. He knows all those guys inside of that space. So if you're looking for relationship, information products, I can get you in contact with him. You know, that, that that health? It's health, relationships, and wealth, right? Those are very passionate, very loyal type of space. So I got that cool. All right. 

Yury Byalik  39:18  
Yeah. 

Ronald Skelton  39:19  
s there any type of business as you totally would avoid, right, and ideally, you're not interested don't want to touch it. Like, I know, there's some for me, like I don't like things that are highly regulated. So

Yury Byalik  39:29  
yeah, I mean, Amazon affiliate, definitely avoiding that, like the plague. You know, I see a lot of businesses where they're in like, either illegal industries or they are violating like a terms of service. So I've seen you know, some sites for sale like they violate, like the Facebook or LinkedIn Terms of Service. So we stay away from those just because you're kind of buying like a ticking time bomb at that point. And you know, the marketplace is the brokers. They don't really care for them. You know, as long as the seller sells they Get their commission, they don't really do anything to protect the buyer, because that's not their job. So that's something you have to look out for as the buyer and make sure you you know what you're getting?

Ronald Skelton  40:09  
Yeah, I avoid single disruptor businesses if one person could wreck your day. So if Google can wreck your day, like you said earlier that you're 100%, SEO and paid, paid ads, well, you don't have enough profit margin to cover customer acquisition costs through paid ads, then I'm not interested, right? Same way with if you're 100%. If you got your stores 100%. on Shopify, it wouldn't work in other places, I wouldn't even look at it. Just because you're one Shopify decision away are the same way with Amazon stores Amazon's worse, if you got 100% of your revenue, or even a high percentage, say 70% of your income comes from Amazon stores, I wouldn't be interested just because you're one decision of Amazon making that an Amazon product from losing the majority of your income. So

Yury Byalik  40:55  
yeah, and that's why pricing multiples are so closely related to the business having diversification of traffic and revenue. You know, sellers always asking how can I get the most amount of money from my business? Right? You know, just diversify both the, the revenue and the traffic, right? If you have a website that's getting traffic from, you know, from AdWords from paid Facebook, ads, and SEO, and then on there, you have digital products and physical products, you kind of have the best of everything. And that's going to demand a higher multiple than just relying on one source of each.

Ronald Skelton  41:25  
Yeah, I have a I have a couple of friends that were killing it. Just last year, the year before on Facebook ads, and now they're just having a heck of a time because Facebook made them so expensive, so hard to just they're not getting the same results. Right. The ads are 

Yury Byalik  41:41  
oh yeah the IO,

yeah, the iOS update, I see so many businesses for sale, right? Where they're doing well, the iOS update kills them. And now they're trying to sell their business for like mid six figures. I'm like, you're losing money you haven't been able to make pay dad's work? How are you still asking for like pretty iOS, you know, multiples. So, 

Ronald Skelton  42:01  
you know,

they're, they're in a race because we look at the average of the last three years. So if, if, if gets the faster they get it sold, the lesser that average goes down. And, you know, I, I had to tell one guy, because he he's like, No, don't you look at the average the last three years? And I said, Yeah, unless there's a catastrophic event in the last year, which you've had, right? You got something that happened? It's not coming back. Right. So 

Yury Byalik  42:24  
yeah.

So yeah, I don't know if you've noticed this. One thing I just recently started seeing and it's increasing is, you know, how on the P&L you have the ad backs, right? So I'm starting to see ad backs for failed marketing campaigns. I'm like, No, you can't do that. You can't, you can't run. So I literally, I saw one business for sale, they had like 2.2 million in revenue, right. And they had a loss of like, 60,000. And then they added back, like 2.1 million and add backs of failed marketing campaigns. And like, you can't just throw a bunch of shit at the wall, whatever sticks is, you know, it's fine, you're responsible for you did a great job. If it doesn't work, you just, you know, try to get the money back as an add back and sell the business.

Ronald Skelton  43:08  
You're wondering, did they have an advisor telling them to do that? Or they just pulled that rabbit out of their own hat? Right. 

Yury Byalik  43:15  
Yeah, 

Ronald Skelton  43:16  
yeah. The Yeah. You doesn't surprise me. And, yeah, that doesn't work that way. So it's like, it's interesting, because, you know, I like to start off the conversation with the business owners when they say, you know, hey, you know, we start off, it's build a report the first two calls or so, and the conversation always comes up, they bring it up, most of the times, hey, I'm looking for XY and Z for my company, I'm looking for 1,000,000, 2 million, 3 million from a company. And I don't blink an eye. It's just okay. Let's see how we can get you there. Because I don't, I don't have the details to know where they should be at this point. Right. But often that number is like, you know, I have people that, thar recommend me. Oh, can you tell me how you came up with that number? I don't get into it yet. Because I've realized that all that does is set up a really awkward conversation, because most the time they come up with that number is like a rabbit out of the hat. They don't like that's what I need to retire or that's four times my revenue, like none. It's too early in the conversation to have well, that's not how this works, you know, conversations, right?

Yury Byalik  44:14  
Yeah. Yeah. I mean, a lot of people just have completely unrealistic expectations of what their business is worth. I think a lot of that is they look at SAS multiples, and they're like, hey, my ecommerce business, it does a million in sales. 100,000 EBITDA up, I'm gonna ask for a 10x of EBITDA is a million dollars, or there'll be like, it's only 1x of revenue. I'm like, I don't care. It's a drop shipping business with you know, 10% margins. It's not worth it.

Ronald Skelton  44:39  
So, right. You know, the whole, the whole multiple revenue and multiple EBITDA is kind of just like, I don't, I use it, and I use it for how fast we get the money back and I'm not stuck on price right? don't think anybody should be like, is it a great business is? Can we get a return on investment fairly quickly? Are there things we can do to it? Like, you know, does it have good bones and stuff? Like, you know, does it lend well to other types of marketing, if the kind of marketing they're doing now fails, all those things are more important than, like, he wants a million dollars for a company we should be wanting 800,000 for, right? Now, we can have that conversation later and do some type of you know, earn out or whatever. But when somebody comes in, says they want a million dollars for a company they went through should have what 300,000 for, you know, that's sometimes the realistic to you, you're not gonna get the business, you might be the guy that corrects the real, their expectations, right? You just like, this isn't going to work, this is what you're gonna get for it, but they're going to be mad enough, you're probably not going to be the guy they sell it to, they're going to sell it to the next guys. Somewhere close to what, what the market really will bear but you know, that's, that's, that's

Yury Byalik  45:54  
yeah

Ronald Skelton  45:54  
 my experience is that many of your experience, too, is when you set somebody straight, you don't end up getting it.

Yury Byalik  45:59  
Yeah, I mean, I think eventually, the market sets expectations for them. So when they list a business for sale, like on a marketplace, and they see they're not getting any interest, you know, they'll have an idea why, I think also some, you know, some brokers are setting unrealistic expectations for them, just to get them into like a contract. So they're, you know, they have the exclusive rights to sell the business. And then from there, you know, they started going lower and lower, just, you know, that's kind of part of their, like, sales methods. 

Ronald Skelton  46:26  
Yeah,

the broker, the broker, escalating model, I know what that is, is where you go to one broker and say, Hey, I'm thinking about selling my business. Okay, what what do you think you can get your knee to get out of it? Well, my, my retirement, you know, advisor says, I need a million dollars added to my retire. Okay, we could probably get you there. Right? So the first guy says that, I'm gonna get a second opinion, I have another appointment with a broker, right? So you go to the second broker and go, Hey, the last guy said, he can get me a million bucks. He goes, I can do 1.2. And next thing, you know, they got it listed for 1.5. Because he talked to a third guy, and it's worth 800k. Right? That happens a lot. And,

Yury Byalik  47:01  
yeah, but you'll, you'll never see those case studies published on the brokers website. It's more about, you know, this guy was about to sell for 800,000, we got to 1.5 million, you know,

Ronald Skelton  47:11  
yeah, you know, and businesses are worth what the market will pay for him. So if somebody's willing to pay that, and, you know, same thing with real estate, like, you know, I could take a house that I think, you know, the market should sell for 180, and sell it for 250. And leave it on the market for 90 days and see if it sells, you know, I know investors that do it, right, they will actually mark their house up by 20, 25%, put it on the market, and if it sells, that's great. If it doesn't, that's okay. They'll, they'll continue to use it for the other, you know, higher and best purposes they have. I get that. But when you're really needing to sell or wanting to sell, having a realistic expectation of what you're worth, is extremely valuable, because most serious buyers won't even look at you if you've got it listed right crazy high. I'm sure you've looked at the bids by sales and stuff and looked at something like I don't know how they came up that number, but I'm not even bothered to talk to these guys.

Yury Byalik  47:59  
Yeah, I mean, one thing is, I wish there was more transparency in our industry, right? Everything is behind NDAs, whether it's the broker, the marketplace, the actual transaction, so you don't get a lot of the data. I know you and I were talking about domain names before, right? I love I think called name bio, right, where you can look up, you know, most of the domain sales happening across the internet, there's obviously some larger sales that are behind NDAs. But for the most part, you know, you can easily see the domain, what keyword and how much it's all for. And I, I, I you know, I think that's great for the market. So I kind of wish more of that existed in the m&a space

Ronald Skelton  48:34  
should look at some of the European businesses they have all their publicly in private companies are all they have the something Clearing house is what they call it, it's a data clearinghouse of some sort. But if you're even if you're a privately listed company, you have to turn in your quarterly or yearly reports. And they have they're audited. And so all the financials are, are accurate, right, I, I have a lot of contacts and a lot of people listening to the show here. They're over in Europe and London and stuff. So if you guys are interested in buying things from other countries and stuff and bringing them here, but the numbers are a lot more accurate there. It's a little easier, and you can actually see who's close to being in insolvency, they actually have the rule that if you can't pay your bills, the government can come in and call you insolvent take it away from you. Right. So there's an insolvency type of quarter system and I will venture to say I know much more about it than that. But it's intrigued me that the fact that I can go just look through a database and see how well a company has done that's supposed to be a privately held company.

Yury Byalik  49:37  
Yeah, I mean, that definitely makes due diligence a lot easier, right?

Ronald Skelton  49:39  
Yeah. So we're getting close to the top our man I can't believe it's like Time flies when we're doing this. So kind of tell me a little bit about kind of what you guys you know, what's your next step? What do you what can we do for you? What is there something we can do to help onfolio? You know, succeed? Is there something we can, you know, tell the world you guys are looking for? What's your big guy? Ask.

Yury Byalik  50:00  
Yeah, you know, it's not so much an ask, you know, I, I like one of these podcasts and I'm trying to do a lot more, you know, thought leadership, it's about educating the market and growing the market, because I, I think ultimately, you know, that's what it's, you know, good for. And that's what I'm trying to, you know, benefit both sides, I have buyers and sellers, both emailing me asking me either how to get more for their business or what to look for things like that, you know, obviously, we're, we're looking for deal flow, right. So if somebody's looking to make an exit, you know, it'd be great if they could contact us. But ultimately, you know, just kind of getting our name out there. You know, Empire Flippers, one thing they do really well is, you know, they really have their name out there across the entire community, they sponsor events, they do their own podcasts, they're graded, you know, the content marketing they do. So that's really where, you know, we're starting to gain traction, and we're looking to do an expand.

Ronald Skelton  50:54  
Cool. And if, if somebody could remember one or two things from the show, what would you want them to remember of you? What would be the key takeaways?

Yury Byalik  51:03  
Oh, man, that's a difficult question. You didn't prepare me for that? Yeah, you know, I'd say that, you know, we try to be as transparent as it onfolio,  onfolios possible, you know, there's definitely, you know, some shady things happening in the background. And you'll kind of see those come up, like I mentioned, with, with income store before. So yeah, especially as a public company, right, we are forced to be as transparent as possible. And, you know, I'd like to see more of that in the industry, you know, less NDAs. And just, you know, I, I think it's all about helping each other. And, you know, growing the m&a market as a whole.

Ronald Skelton  51:44  
It's cool. I met a company yesterday, and I won't say for the archives are still are there a Y Combinator company and stuff. And I'll probably put him on the show here. But they're starting in brick and mortar type of companies, home services are starting in the plumbing and heating their company. But their whole goal is to create that transparency marketplace, to have like, basically just have a marketplace where you just log in, and you can see all that information. And and they're trying to change the industry to work more like what you're talking about. It's very open, it's very transparent, you can really see what you're looking at, and help both sides of the deal move forward faster that way. That's their end goal. Let's see. Let's see. I'm eager to see how they get there. But I want to appreciate you for being here today. Is there anything else we want to make sure if you don't, one thing I missed? Oh, my god, I almost forgot. How do people get a hold of you? If they, if they got something interesting? You know, what's the best way for people to reach out to you?

Yury Byalik  52:38  
Sure. So they can just email me my email is Yury at onfolio.com. They can go to our website onfolio.com Submit a contact form, you know, LinkedIn onfolio, Google, onfolio where you know, we're everywhere. So yeah, just email me directly or through our website.

Ronald Skelton  52:52  
Cool. And I thank you for being here today. And I think we'll call that a show, man.

Yury Byalik  52:57  
 All right. Thanks

a lot for having me go.

Ronald Skelton  52:59  
Hang out for just a second. Hey, it's your host, Ronald Skelton. I want to thank you personally for watching the show today and invite you to call our new hotline 918-641-4150. That's 918-641-4150 Call us and tell us about our show, ask questions, suggested guests or even tell me about a business you have for sale and we'll reach back out to you again, that number is 918-641-4150. call our hotline leave us some information. Thank you. I don't want to announce our new channel partners the ITX marketplace since 1998 ITX has created 5 billion in value by selling more than 225 it businesses in 20 countries. IDX works exclusively with it enabled businesses generating between 5 million and 30 million who are ready to be sold in m&a to decision makers who are ready to buy for over 25 years ITX has developed industry knowledge that helps determine whether a seller is a good fit for their buyers before making the match ITX mergers and acquisition marketplace we have partnered with has a proprietary database of 50,000 plus global buyers seeking it service firms managed service providers, Microsoft service providers software as a service platforms and channel partners with Microsoft Oracle ServiceNow itself and the Salesforce space. If you have an IP enabled business you're ready to sell. I want you to visit the I T exchange net.com/marketplace How to exit that link will be in the show notes visit them now. The investors and entrepreneurs professional mastermind the investors and entrepreneurs professional mastermind combines that or traditional peer to peer mastermind introduce first in Napoleon Hill's famous book Thinking grow rich with accountability partnering where your peers help you ensure that you set goals take action and get results if you want to scale blow past roadblocks and achieve success faster than you might think is possible I suggest you take a visit over to tiepm.com That's T i E p m.com and check out the investors and entrepreneurs professional mastermind