If you are thinking about buying a website, or improving the website you have, you’ll definitely want to listen to this interview.

Thomas Smale, CEO of FE International (leading mergers and acquisitions advisor for $10 Million to $50 Million Online businesses) is going to share his insights into why content websites have become so valuable and why you’ve not missed the boat if you’re just getting started today.

Some of what you’ll hear include:

  • 3 forces driving online businesses and how you can double the income of your website with just a few hours of work.
  • Why big corporate buyers with deep pockets are paying top price for simple content sites.
  • Who is buying websites for $1 Million in 2022?
  • Why simple content websites are the smartest choice for beginners and get the broadest range of buyers
  • And much more…

Read the transcript or watch the video below to hear his insights.

Hear why Thomas Smale believes it’s such an exciting time to own smaller content websites right now…

Matt Raad: Hi everyone. This is Matt Raad here from the eBusiness Institute, where we teach people how to buy and sell websites. If you want to buy an online business, today’s interview is absolutely perfect for you.

I’m excited to have one of the industry leaders in the buying and selling website space. Thomas Smale is the co-founder and CEO of FE International, one of the world’s leading mergers and acquisitions companies in this space.

They’ve been around since Liz and I have been online. They’re very well trusted, but more importantly, their niche is in full-on mergers and acquisitions of sites in the seven and eight-figure range.

Today, Thomas is going to cover some really interesting and unique insights. You’re hearing it from the CEO himself about what is happening in this space. And it relates to all of us. No matter what size website you have, Thomas has some amazing insights for us in this industry.

As I said, he’s one of the industry leaders here. And so, I’m excited to have Thomas on board. Thanks, Thomas, for coming along.

Thomas Smale: Thanks for inviting me on again, Matt. It’s good to see you.

Matt: It’s really good to see you again.

FE International Specialises in 7 & 8 Figure Website Sales

Matt: Prior to COVID, you came out live to one of our boot camps and made a significant impact. You inspired many of our students to go out there and build amazing content websites; some of them are now worth seven-figures.

So, it’s great to have you back doing this update. It’s been an exciting time in this industry.

For all our readers, Thomas is based in the US, even though he’s got an English accent. And you’ve got quite a big team, haven’t you? How big is your team now?

Thomas: We’re over 50 at the moment.

Matt: And you are operating out of real offices, not even virtual offices.

Thomas: No, real offices. We do have a few remote people, but our biggest office is in New York. That’s our head office.

We have an office in London, an office in Miami, and an office outside San Francisco. And then, we have a few remote people as well.

Matt: Awesome.

Thomas Smale shares why content websites have been growing in popularity

Matt: You are very much involved in that mergers and acquisitions in that seven and eight-figure range. How has that gone over the last few years?

Have you seen any major changes there? Because I know you are very consistent, and this has been your bread and butter for the last decade. But what have you seen happen over the previous two years?

Thomas: We’ve been in business since 2010, so nearly 12 years in the industry now. I guess we’ve seen a lot over that time.

3 driving forces for online businesses in the last 2 years

#1 – More people are working from home

Thomas: Over the last couple of years, the industry’s definitely been growing. More people are coming into the industry, more individuals. I think, particularly as many roles have either gone remote (or forced to be temporarily remote), people are more used to being online.

We’re currently using Zoom. I think almost everyone has figured out how to use Zoom over the last couple of years who previously never even would’ve thought about using Zoom. So, I think more and more people understand how online business works because they’re in the online world, which makes complete sense.

#2 – Bigger companies are acquiring online businesses

Thomas: From a bigger company perspective, large private equity firms have always been in the space, but more of them continue to come down in the market, looking at smaller deals. They might be looking at a $10 million deal where previously they might have only been looking at a $50 million deal, which is a lot of our business range.

Many of those guys have also put more of their strategies around buying online businesses. They might want to purchase content business, digital products business, software business, e-commerce business, etc. Whereas traditionally, they might have been buying gyms, restaurants, gas stations, whatever it might be. So, I guess more and more companies have become more focused in that space.

#3 – Individuals are looking to generate side income

Thomas: And then, from a seller perspective (or business owner perspective), particularly at the lower end, we’ve seen a lot of people who, through COVID, have almost been forced to spend more time on the side working on their online business. That’s because they’ve unfortunately lost their job, not been able to go to work or have more time because they’re working from home.

Small hobby content websites are now turning into full-time businesses

Thomas: Because people are saving two or three hours a day on their commuting, they can spend their time on their business. Many of what you would previously call “hobby” websites used to make a couple of thousand dollars a month, but these are now making $20,000+ a month. So, it’s gone from a hobby to like a full-time income. And we’ve seen lots of people do that.

At the higher end, I’d say the market is still quite similar. If you had a business making $1 million a year or two ago, you were probably already working on it full-time. You didn’t quit a job and then suddenly start spending more time during COVID etc.

So, while many of those businesses have grown over the last few years, I’d say many e-commerce businesses have had challenges such as logistics. We’ve mainly seen this in the US, where the costs of shipping from places like China, or wherever their suppliers might be, have definitely been difficult.

We’ve generally seen a lot of demand in the software space. The content space is always in demand, with many people coming into the industry. And I’m assuming Matt and Liz Raad have been seeing the same thing, where more and more people are coming in at the…I wouldn’t necessarily call it the lower end of the market…but what we would describe as a “smaller deal”.

Matt: Yes.

Thomas: We’re talking a six or a low seven-figure deal and turning it into a full-time thing, i.e., turning it into a real business.

More people are hiring staff to grow their online businesses

Thomas: Maybe some of the people in your network have started hiring employees. Whereas two years ago, when I was meeting people at your Bootcamp event, they might have been just starting out, maybe working with a freelancer, or doing it on weekends etc. But now they have a team of 2-5 people, making ten times more.

Matt: That’s exactly what’s happening in our community. You’ve hit the nail on the head there.

A lot of our students are 40+ years old and looking to create an extra passive side income with a view to quitting their jobs and working from home. Traditionally, while they are learning, they’ve made around $1000 to $2,000 a month from their content sites, or semi-passive sites. But we’re finding many of them, because of COVID, are now doing this full-time.

They are making up to $10,000 and $30,000 a month with the standard affiliate and AdSense related sites that you and I have known and loved over the last decade. That’s why it’s so awesome.

How a simple content site sold for $15 million

Matt: When you came out to Australia, Thomas, and you spoke to our audience, one of the people you inspired heavily was Mark, who’s now a coach with us.

Mark heard the story where you’d just sold a content site for $15 million. And it was just like what we teach here at e-business, a simple content strategy. And I remember you said at the time, “Wow. It was just very simply run on an Excel spreadsheet, and you were able to sell that site for $15 million.”

That’s the sort of thing that I think our community love hearing because the reality is most of us here are building content sites. We’re not doing the e-commerce thing. We don’t do SaaS really, because that’s not our expertise.

Are smaller content websites still profitable?

Matt: Thomas, have you seen any changes in the content site model? Are buyers happy to purchase smaller sites in the seven-figure space? Is it easier to sell a smaller site?

Thomas: I’d say there’s still demand. There’s always been a demand for small sites.

Regardless of the size, there’s someone out there to buy it. It wouldn’t necessarily be something that FE would be representing. But, if it’s a $20,000 website, there’s still a demand for those. So, we’re probably not representing it, but that doesn’t mean there are not people in the space willing to buy it.

A simple content site sold for $10 million by big corporate…

Thomas: We did a $10 million website deal recently. Not a small deal as such, but the firm that bought it is a company that every person reading this would know. They have a household investment bank behind them that everybody would know. And they told us they usually don’t even look at deals below $100 million. But because it was such a good strategic fit for them, they’ve worked it into their portfolio.

Out of all the businesses we work with, we find that content businesses are the least complex to run, so you often see a huge demand. If it’s a good strategic fit at all levels (small sites, large sites), there’s always demand to buy those businesses. And that hasn’t really changed. More and more people are coming into the space every day.

Matt: This is what I love about internet businesses. You can have what seems to be a really obscure, almost micro-niche content site. It might be a passion or hobby site, like knitting, and you’d think, “Well, this will only be of interest to other knitters.”

But some of these big corporates will look at those niche sites and go, “You know what? We might just acquire that because it’s got a highly targeted audience.”

Corporates are happy to buy smaller websites that fit their strategic model

Matt: Like you said, traditionally, big corporates would only spend at the $100 million mark. But now they’re prepared to come down to $10 million. And are you seeing that even down around the $1 million level too?

Thomas: Oh, for sure. Even lower than that.

I can’t disclose the $10 million example, but if you knew the name, everyone has heard of that company. They’re probably one of the top hundred biggest companies in the world.

But yes, there are plenty of strategic buyers doing those kinds of deals even at the lower end as well.

Who is Buying $1 Million Websites in 2022?

Are there buyers for websites that are too small for big corporates?

Matt: So, you’re very experienced working with these big corporate buyers, investment banks, private equity firms, and big corporations. But I’m interested in the $1 million website sales for our clients’ sake.

You primarily deal with the US market and American buyers. Our clients build their websites with a view to exiting somewhere in two to five years. Have you seen a change in that range in terms of the buyers?

Are there individual buyers who have a million dollars to spend? Are they high net worth individuals? And what sort of backgrounds would they have?

Thomas: Firstly, we have clients all over the world. But I’d say at that level; you definitely get a lot more from the US acquire-wise.

Why small content sites have the broadest range of buyers

Thomas: I’d say a million dollars is probably somewhat unique in that you have almost all different types of buyers at that level:

  • Individuals: who have a high net worth, have a million dollars, and want to invest it.
  • Large Strategics: such as the public companies everyone has heard of, who want to buy something strategic that fits into their portfolio.
  • Private Equity Funds: again, probably not a financial fit, but a strategic fit for something else in their portfolio.
  • Partnerships and Groups: for example, you and I might say, “Hey, we want to buy a website about mountain biking because we both like mountain biking. Let’s buy this.”

So, at that level, you definitely get the broadest range of buyers. Whereas if you go to $10 million, you get fewer individuals. And if you go to say $100 million, you get way less and almost definitely going to get a public company.

So, a million dollars is a very diverse range of buyers for almost any site in the content space.

The valuations for these small websites are consistently increasing

Matt: As a result of having so many buyers in that space now, have the valuations gone up for content sites within the range of $1-5 million?

Thomas: Valuations have been gradually going up over the years, and that’s been quite consistent. What has changed is buyers’ willingness to pay for what I describe as a good business.

Multiples for good businesses have gone up. Whereas lower quality businesses (i.e., people who are not taking your coaching or connected to you, Matt), many of those businesses are not selling. We don’t take them on, and our competitors don’t either. They’re just not selling anymore.

Buyers have definitely become savvier, and they know what to look for. They understand what’s a good business and what’s a bad business. And then for those good businesses, terms have also improved.

What to consider when valuing a website for sale

The multiple is one part of an acquisition, but there are also the actual terms you get. For example,

  • How much cash do you get upfront for the business?
  • How much support do you have to do?
  • How quickly does the acquisition close?

There are pages and pages of different clauses I could give you. So, terms have improved as well. And serious buyers are willing to move quickly and do good deals for quality sites.

One of the things we’re really good at is getting sellers excellent terms. It’s not just maximizing valuation. It’s also getting the highest amount of cash on all those elements as well, which has definitely been improving.

Multiples haven’t doubled. So, if you’re coming into the space as a buyer, businesses are not suddenly completely unattainable, and multiples aren’t crazy. The market is still rational, at least at the level we operate in. We’re not seeing people paying 20 times revenue for a content site.

How Thomas went from flipping small websites to purchasing multi-million dollar online businesses

Matt: Thomas, you are not just a mergers and acquisitions expert and an advisor, but you still invest passively into online businesses yourself, don’t you?

Thomas: For sure. From day one of FE, I started out buying and selling websites myself. They were not very big. They were $100, and I’d sell them for $500. That was FE International 2010. That’s what we were.

I’m very fortunate that this business is substantially bigger now. And all I personally know about; all I’ve done since I graduated from university was do deals in this space – buying and selling websites. I don’t know anything about real estate, and I don’t know anything about stocks. I have a broad understanding, but it’s not what I know about. I know this space.

So, I’ve always invested in the space, usually not as a majority owner, but just partially into deals that already have operators. At FE International, I’m the CEO, so I’m already busy. I don’t have time to operate a side business.

Thomas now invests in a diverse range of online businesses

Thomas: Over the last couple of years, I’ve invested in an ad network called Newor Media. That was probably one of the largest deals we invested in and probably also one of the most relevant to your audience. I’ve also invested in a bunch of software businesses that most people would never have heard of. But I’d say the Newor Media business is quite interesting because it’s an ad network.

Since day one of FE, we’ve always encouraged people who own content sites to test different ad networks. And we came across them because one of our clients (who was selling content sites) sold about ten sites through us. He was running all his sites on this network, which is how we got connected and how the deal ended up happening.

Matt: Oh, I see. You’ve seen it work so well.

Why it’s important to test monetization methods on your website

Matt: That’s one of the things we teach here is to change the monetization of your website or test new monetization methods. And if you’ve got lots of traffic to the site, say 50,000 unique impressions or more, you can go to something like Mediavine etc.

So, is Newor Media similar to Mediavine then?

Thomas: I’d say that’s probably a pretty similar comparison. Like I said, I’m not involved in the day-to-day, so I’m definitely not the best person to ask all the technical questions.

Anything above 30,000 monthly impressions (at least with what I’ve seen) should be monetized by Ads. I think a lot of people starting out sign up for AdSense because it’s easy. Everyone knows who Google is, so signing up for an account with them is easy.

But I’d say once you get your online income above $500 to $1,000 a month, you should definitely start testing ad networks. It could be Mediavine, Newer Media or AdThrive etc. There are loads of ad networks out there, but you should test them.

You shouldn’t just listen to what I say or what you say and only use one network. You should test everything and see what’s right for you because what works well for one person might not work well for you. And what works well for you might not work well for the next person. So, testing is an essential part of growth and success because you can, in some cases, double your income overnight just from using a better network.

Matt: All our readers should listen to Thomas here. You’ve just heard the type of deals that Thomas specializes in: seven and eight figure website sales, $10 million to $50 million websites.

And he’s saying exactly what we tell you. Test different monetization methods on your websites when you’re renovating them and fixing them up, because it can really be successful. Thomas loves it so much; he’s invested passively into one of these ad networks called Newor Media.

So, we’ll put a link there for our community to go and check that out, because that might be a really good alternative thing that they can be doing over these next few years as they build out their content sites. It can improve monetization of passive websites.

How different monetization methods can increase the value of your website

Matt: Obviously, you’ve seen the results for yourself behind the scenes. You’ve got the real data. You know how effective it can be bumping up that AdSense income.

Thomas: Yes, and it’s the same if you buy a business that sells a product. Usually, the easiest way to increase income is to change the pricing. So, it’s exactly the same with content business.

You want to test a different network, whether it’s an ad network or affiliate network, test different things. If you’re with an affiliate network, you can also negotiate commissions. It doesn’t work with all affiliates, but with some, you can.

Changing an affiliate offer can literally double your website income overnight

Thomas: I remember years ago when I was more actively buying sites myself. One of my best flips on paper back in 2012. I had a website, and I negotiated with the affiliate partner, and they doubled my commission within two weeks of owning the business. So, essentially the website was worth double overnight, and I didn’t do anything other than send three emails to an affiliate manager.

Matt: And that’s the key. Liz and I had very online similar success stories when we started with affiliate networks. And that’s one of the key strategies we teach here.

Don’t just rely on your standard Amazon affiliate commissions because they’re not that great these days. Sometimes they’re down as low as 2% to 4%. You can go to direct affiliate offers instead. And we’ve seen our students get massive uplift, particularly during COVID. It’s been really interesting.

There are many more direct affiliate offers out there now that will pay 10% to 20% on physical products. It’s pretty impressive. It’s a lot easier than it was ten years ago to find really good products to promote on websites now.

Thomas: For sure. And the best thing about a website is that it’s really easy to test. You don’t have to roll out ads on every single web page. Find your five most popular pages and test it on there. It might take you two hours. And if it doesn’t work, it takes you five minutes to remove it. And if it does work, you can then roll it out on every other page as well.

Matt: Awesome.

Thomas: So, that’s always a good way to make more money. You don’t necessarily have to work twice as hard to make twice as much. Sometimes you can literally just change one thing, and that’s all it takes.

Matt: It’s awesome to hear that message repeated. We teach that strategy and it is so unreal to hear it from you and listen to your story.

Why more online businesses could actually benefit everyone

Matt: For all our readers, Thomas knows the journey you’re going on. He started out with the same type of small sites, and the first deals you’re doing on FE International were in the tens of thousands and hundreds of thousands.

And now you must be pinching yourself. A decade later, you’re up to $50 million deals. It’s an interesting journey, isn’t it?

Thomas: It’s crazy from that perspective.

Ismael, my business partner, laughs at me. Ten years ago, if he asked me how big I think the industry could get, I would’ve thought the pinnacle may have been around a million revenue business and we would often be doing seven-figure deals. Going back to 2012, eight-figure deals in the industry were just not happening. I’d never seen one.

So, I’m definitely going to be interested to see where the industry goes in the next 10 years, because you’ve only grown, we’ve only grown. Lots of other companies in the space have only grown. And the more people are doing good things, everybody makes more money. It’s not a zero-sum game.

If you and Liz are doing well, that’s good for us. If our competitors are doing well, that’s also indirectly good for us because more and more people are coming into the space, more people are selling websites, buying websites. That’s good for everybody in the industry.

Matt: That’s really good to hear.

Is it too late to make money online from building websites?

Matt: A common question we get asked by people who are totally new to this space, “Are we at the peak of the market?” And our answer is no.

I think this is like bricks and mortar world. Buying and selling of businesses have always been around, and now we’re reaching a really good level in the internet space. And obviously, you see the same. You’re playing a long game just like us.

So, thinking of our community reading this, they are the second group of people you talked about. They used to be hobbyists building websites as a side hustle, but now they see them as a real business and a great way to quit their jobs. They’re moving into this more and more full-time so they can quit their jobs.

Why it’s easier to double your income on smaller content websites

Matt: Where do you see the next two to five years for someone like that? Where are the opportunities?

Thomas: Firstly, there will always be more opportunities. There will always be new ad networks, affiliate programs, and new social networks to test for traffic. And this is what you’ll need, particularly if you have a relatively small business.

We’re fortunate to be an eight-figure revenue business with a team of over 50. So, I cannot do one thing in my business that doubles revenue overnight. At least not that I know of. And if someone does, feel free to email me and tell me, and I’ll do it!

But, in a smaller business, if you’re making $1,000 – $2000 month, even $200 from your site, you can do lots of small things to improve it. And those opportunities will continue to exist.

So, I think that you’ve not missed the boat if you’re starting today. I think a lot of people who are just getting in tend to think, “Well, Thomas has been doing this for 12 years. Matt and Liz have been in this for ages. They know everything. There’s no way I can catch up.”

I guess my underlying advice would be:

Do not worry about where the industry will be in five years. I can assure you; the industry will still be going.”

Don’t be afraid of competition – the market is not saturated…

Thomas: More and more people in the world will be coming online and have internet access, Amazon accounts, and credit cards. People from the UK, the US (where I live), and Australia (where you guys are) are all very fortunate to have access to credit cards and the internet. We take it for granted. Many people in the world do not, but more and more people are getting that access. So, there’s only going to be more people coming online.

And the opportunities are only going to grow. It’s not saturated, and there are not too many people in the space. And you doing well does not mean your neighbour, or someone else in your coaching group, or someone in your mentorship group, cannot do well. Everyone can do well together.

There are almost an unlimited number of opportunities online.

Matt: Awesome that is unreal. Thank you so much for that.

How to contact Thomas Smale at FE International

Matt: And so, Thomas, for anyone who wants to reach out to you, or have a confidential discussion about selling their online business, what’s the best way to reach you? We know there are people listening to this that have significantly sized websites. What’s the best way for them to contact you or your team?

Thomas: I’d say the best thing to do is go to the feinternational.com website. You can choose if you are buying websites and you want to just browse the businesses we have, go to that section. If you want to sell websites, I’m sure you’ll tag me once this goes up on social media.

If you want to reach out to me personally, I have a team that helps with my social media. So, don’t be worried about sending me a message. I’ll pick it up. And if I’m not the best person to help, I’ll make an introduction to the best person in my team.

But feel free to reach out, even if you’re not sure and you just have a question. I’ve been doing this a long time. This is what I enjoy. You don’t necessarily need to be a client for me to answer a question. No question is too small or too stupid, I’m more than happy to answer.

So, email me, social media, and reach out to the team. I will be happy to pick it up.

Matt: A big thank you, Thomas, for coming along today. We’re looking forward to an update again down the track.

Thomas: Thanks for inviting me. And hopefully, next time I see you, it’ll be in person rather than Zoom.

Matt: In person? Absolutely! All right, we’ll speak soon.

Thomas: Thanks, Matt.


Matt Raad
Matt Raad

Matt Raad is a website investor, Angel Investor and leading educator on Digital Asset Investments, and is recognised as the Australian expert in buying, renovating and selling profitable websites and businesses. Find him on Facebook, LinkedIn or follow him on Twitter.