Introduction to Buying a Business.
This article, How to Leverage a Mergers and Acquisition Strategy for Email List Growth, was first featured and published on Only Influencers, the World’s Trusted Community for Email Marketers, on January 20, 2022.
Given the ongoing and growing debate around business acquisition as a marketing strategy, I felt it was time to revisit and update the post and post name to Buying A Business.
Since its original publication, this topic has gained even more relevance as new trends emerge, particularly with the rise of newsletter acquisitions and audience-first business models, such as the Email Newsletter Conference in New York.
Over the past few years, a whole new wave of marketers has recognized the opportunity to monetize email newsletters through advertising, with more and more newsletter writers realizing that a combination of quality content, good list hygiene, and proper segmentation can unlock a large pool of advertisers eager to invest.
The Untapped Strategy for Email List Growth
Q – What is your Superpower? A question I’ve asked a couple of hundred times to my podcast guests.
A – Email Marketing
There are countless discussions happening daily about email list growth and new opt-in subscriber acquisition. There’s no shortage of seminars, webinars, and self-proclaimed “experts” from every corner of the globe offering their solutions.
But let’s examine this challenge from a completely different angle:
Why not consider just buying a business that already has the email list you want to market to?
Think about it. As marketers, we routinely allocate budgets to Google, Facebook, and programmatic digital advertising platforms to build our email lists, generate leads, and drive sales.
What if, instead, you could own that asset outright? Rather than continuously paying for ads, what if you decided to purchase a cash-flow positive business that has already built a permission-based email list of your ideal customers?
Or perhaps there’s a digital property or website with massive traffic volume where the current owners simply lack the expertise to convert those web visitors into email subscribers?
Why Buying a Business Makes Strategic Sense
I’m currently evaluating several websites for acquisition that consistently generate millions of monthly visitors. Surprisingly, not a single one of these business owners has successfully implemented any sort of email marketing strategy or built a substantial email list.
As Roland Frasier, renowned business acquisition expert, often says: “Why spend years building what you can acquire in a day?”
The Battle for Attention
“THE BATTLE FOR CUSTOMER ATTENTION HAS NEVER BEEN SO FIERCE.”
We’ve seen an explosion in brands using online channels to promote their services and products to potential customers.
The problem with this model is that you’re not only battling other competitors for that attention; you’re competing against every site that publishes informative videos, the latest trends, and educational content that serves the needs of their audiences”
— Kieran Flanagan (@searchbrat)
Gary Vaynerchuk often speaks about the importance of attention in the context of digital marketing, especially with social media. A quote of his that relates to this theme might be something like:
“Day trading attention is the new currency of business.”
— Gary VaynerchukThis aligns with the idea that in today’s digital age, the battle for customer attention is relentless and ever-present, similar to how day trading requires swift decisions and constant monitoring. It also complements the quote you mentioned:
Case Study: HubSpot’s Acquisition of The Hustle
In February 2021, HubSpot acquired The Hustle, a business and tech newsletter with over 1.5 million subscribers, for $27 million. This strategic move exemplifies the growing trend of buying a businesses primarily for their audience.
“Newsletters, podcasts, premium content, and other media have exploded in popularity for startups and scaleups looking for best practices and tech news. So how can companies adapt to this change? We believe that the next generation of software companies will invest in media that earns the attention of their audience. Instead of the traditional model of having a software company embedded inside of a media company, we predict that the next generation of tech companies will have the opposite – a media company embedded inside a software company.”
This acquisition gave HubSpot immediate access to:
- 1.5 million highly engaged newsletter subscribers
- A dedicated audience of entrepreneurs and business professionals
- A proven content creation team
- Multiple established distribution channels
The Buy-Then-Build Approach
The concept of “Buy Then Build” was popularized by Walker Deibel in his groundbreaking book of the same name. This strategy turns the traditional entrepreneurial journey on its head: instead of starting from scratch, buying a business and then build upon that foundation.
For email marketers, this approach offers several distinct advantages:
- Immediate Access to an Audience: Acquire an existing permission-based email list overnight
- Revenue from Day One: Take over a cash-flowing business while you implement your email marketing strategy
- Established Trust and Authority: Benefit from the seller’s years of audience relationship-building
- Existing Systems and Processes: Leverage operational infrastructure that’s already in place
- Content Archives: Gain access to years of content that can be repurposed for email campaigns
If you’ve documented your customer avatar and customer value journey for your current customers, you have a solid starting point to explore acquisition opportunities that can scale and grow your brand.
While I’m not offering financial or investment advice, my current project experience has revealed several attractive target companies. Many are financeable at 80% to 90% with sufficient cash flow to easily cover borrowing costs, operations, and business growth.
The potential benefits are compelling:
- Accelerated market entry
- Market disruption potential (like the Intuit/Mailchimp acquisition)
- New revenue streams
- Increased budget allocation for your email marketing team
Identifying Target Businesses Worth Buying
Who Makes an Ideal Acquisition Target?
The Small and Midsize Business (SMB) market offers abundant opportunities. Gartner defines SMBs by employee count and annual revenue:
- Small businesses: Organizations with fewer than 100 employees
- Midsize enterprises: Organizations with 100 to 999 employees
By revenue:
- Small businesses: Organizations with less than $50 million in annual revenue
- Midsize enterprises: Organizations with $50 million to $1 billion in annual revenue
Where to Find Businesses for Sale
As Codie Sanchez, founder of Contrarian Thinking and advocate for buying a businesses, often points out: “The best deals are rarely found on the open market.”
She recommends:
- Direct outreach to businesses in your target market
- Networking with business brokers specializing in your industry
- Joining business owner groups and forums
- Leveraging LinkedIn for proprietor research and outreach
- Exploring dedicated acquisition marketplaces like BizBuySell, Empire Flippers, and Flippa
https://www.gartner.com/en/information-technology/glossary/smbs-small-and-midsize-businesses
The Scale of the Business a Buying Opportunity
Approximately 595,000 businesses close each year (according to SBA estimates as of 2018).
How many of these businesses have an email list in your niche?
These businesses possess valuable assets including:
- Customer lists
- Email subscriber lists
- Original content libraries
- Website traffic you can monetize
- Established systems and processes
- Trained teams
Top Reasons Businesses Become Available for Purchase
- Financial challenges: Unprofitable or cash flow issues
- Retirement: Baby boomer business owners reaching retirement age
- Relocation: Owners moving to new locations
- Burnout: Owner fatigue and decreased motivation
- Health concerns: Personal or family health issues
- New opportunities: “Shiny object syndrome” pulling owners elsewhere
- Business lifecycle completion: Natural conclusion of business purpose
- Partnership disputes: Disagreements between business partners
- Death of owner: Unexpected passing of the business leader
- Divorce: Dissolution of marriage requiring business liquidation
Buying a Business – A $10 Trillion Dollar Opportunity
The statistics paint a compelling picture:
- 4.5 million businesses worth $10 trillion will transition over the next decade
- Only 20% of businesses that go to market end up selling (BizBuySell Insights 2019)
- SME EBITDA sale multiple averages 2.8x (DealStats Value Brief)
- 50 million Baby Boomers will retire over the next 10 years (Insured Retirement Institute)
- 96% of businesses fail to continue for 10 years or more (Inc. Magazine Report)
- PE EBITDA buy multiples average 12X (Pitchbook US PE Report 2019)
- 12 million Baby Boomers own businesses (Wealth Management Report)
- 420,000 Boomer Businesses per year will transition for the next decade (GenEquity Insights)
- 15,000 US & 30,000 Global M&A deals closed in 2019, a decline of 15%/12% (IMAA Report)
- 50 Million Baby Boomers will retire over the next 10 years – Insured Retirement Inst.
- 96% of businesses fail to continue for 10 years or more – Inc. Magazine Report
- PE EBITDA buy multiples average 12X – Pitchbook US PE Report 2019
- 12 Million Baby boomers own businesses – Wealth Management Report
- 420k Boomers Businesses/Yr. Will Transition for the next 10 years – GenEquity Sights
- 15k US & 30k Global M&A deals closed in 2019. Decline 15%/12% – IMAA Report.
Case Study: Intuit’s Acquisition of Mailchimp
In September 2021, Intuit acquired Mailchimp for $12 billion, one of the largest marketing technology acquisitions in history.
Why would Intuit, a global financial technology platform with brands such as TurboTax, QuickBooks, Mint, and Credit Karma, buying a business like Mailchimp, an email marketing platform?
The strategic rationale was clear: to become the center of small business growth and to disrupt the small business mid-market.
This acquisition provided Intuit with:
- Global customer reach with 13 million total users
- 2.4 million monthly active users
- 800,000 paid customers (with 50% outside the U.S.)
- Access to 70 billion contacts
- 250+ rich partner integrations
While this example operates at a scale beyond most SMBs, growth through merger or acquisition isn’t exclusive to Fortune 100 companies. The principles apply at every level.
https://mailchimp.com/intuit-completes-mailchimp-acquisition/
To become the center of small business growth, and to disrupt the small business mid-market.
A global customer reach with 13 million total users globally, 2.4 million monthly active users, and 800,000 paid customers; with 50 percent of customers outside of the U.S. Data and technology in the form of 70 billion contacts, and 250+ rich partner integrations.
While this example is not where most SMBs play, growth by merger or acquisition and buying a business is not reserved for the Fortune 100 companies.
The Global Market for Buying a Business
United States
- 28.8 million Small And Mid-size businesses
- Approximately 2.59 million businesses for sale
- Only 431,670 will successfully sell
- 2.16 million SMBs that can be targeted for acquisition
Canada
- 1.1 million Small And Mid-size businesses
- Approximately 99,000 businesses for sale
- Only 16,500 will successfully sell
- 82,500 SMBs that can be targeted for acquisition
Europe
- 25.1 million Small And Mid-size businesses
- Approximately 1.5 million businesses for sale
- Only 250,000 will successfully sell
- 1.25 million SMBs that can be targeted for acquisition
Australia
- 2.1 million Small And Mid-size businesses
- Approximately 126,000 businesses for sale
- Only 21,000 will successfully sell
- 105,000 SMBs that can be targeted for acquisition
Global Totals:
- Total SMBs: 57.1 million
- For Sale: 4.32 million
- Will Successfully Sell: 719,170
- Available to Target for Acquisition: 3.6 million SMBs
Sources: Deloitte, Forbes, NY Times, DealStudio, Entrepreneur, BizBuySell.com, FSB.org.uk, DealStream.uk, ic.gc.ca, Statista
Buying a Business Case Study: The Morning Brew Success Story
The Morning Brew newsletter started as a simple college project by Alex Lieberman and Austin Rief. By focusing on delivering business news in an engaging, conversational format to young professionals, they built a subscriber base of over 3 million readers.
In October 2020, Business Insider acquired a majority stake (51%) in Morning Brew at a $75 million valuation. At the time of acquisition, Morning Brew was generating approximately $20 million in annual revenue, primarily through sponsored content.
Why did Business Insider make this acquisition?
- Immediate access to a younger demographic of business professionals
- A complementary content style that appealed to different readers
- A proven monetization model for newsletters
- A talented team with expertise in digital content creation
Buying a Business Case Study: The Morning Brew Success Story
The Morning Brew newsletter started as a simple college project by Alex Lieberman and Austin Rief. By focusing on delivering business news in an engaging, conversational format to young professionals, they built a subscriber base of over 3 million readers.
In October 2020, Business Insider acquired a majority stake (51%) in Morning Brew at a $75 million valuation. At the time of acquisition, Morning Brew was generating approximately $20 million in annual revenue, primarily through sponsored content.
Why did Business Insider make this acquisition?
- Immediate access to a younger demographic of business professionals
- A complementary content style that appealed to different readers
- A proven monetization model for newsletters
- A talented team with expertise in digital content creation
How to Implement Buying a Business Strategy for Email List Growth
Step 1: Define Your Ideal Acquisition Target
Before beginning your search, clearly define what you’re looking for:
- What industry or niche should the business operate in?
- What size email list would make an acquisition worthwhile?
- What engagement metrics would you need to see (open rates, click rates)?
- What other assets would add value (website traffic, social media following)?
- What price range fits your budget or financing capabilities?
Step 2: Develop Your Acquisition Criteria for buying a business
As Walker Deibel recommends in “Buy Then Build,” create a specific set of criteria to evaluate potential acquisitions:
- Minimum revenue requirements
- Minimum profitability (expressed as EBITDA)
- Maximum purchase price (often expressed as a multiple of EBITDA)
- Geographic constraints
- Owner involvement requirements
- Growth potential indicators
Step 3: Source Potential Deals
Look for businesses through multiple channels:
- Business brokers and marketplaces
- Direct outreach to business owners in your target market
- Industry conferences and networking events
- Professional associations
- Online communities and forums
Step 4: Evaluate the Email Marketing Potential
When assessing a potential acquisition, pay special attention to these email-specific factors:
- List size and growth trends
- Engagement metrics (open rates, click rates, conversion rates)
- Email capture mechanisms on the website
- List segmentation practices
- Email monetization strategies
- Compliance with privacy regulations (GDPR, CCPA, etc.)
- Email platform and technology stack
Step 5: Structure the Deal
Work with legal and financial advisors to structure a deal that:
- Protects your interests through proper due diligence
- Ensures a smooth transition of the email list and related assets
- Maintains subscriber trust and engagement post-acquisition
- Potentially includes owner involvement during a transition period
- Considers earnouts based on list retention and performance
Strategic Considerations When Buying a Business for Its Email List
1. Audience Alignment
Ensure the acquired audience aligns with your existing customer avatar. Roland Frasier suggests looking for “parallel audiences” – subscribers who might not be your exact target market but have overlapping interests or needs.
2. List Quality vs. Quantity
A smaller, highly engaged list often provides more value than a larger, disengaged one. Look beyond raw subscriber numbers to metrics like:
- Open rate trends over time
- Click-through rates
- Conversion rates
- Unsubscribe rates
- Revenue per subscriber
3. Content Compatibility
Consider how well the existing content strategy aligns with your goals:
- Do subscribers expect a particular tone or content type?
- How frequently are they accustomed to receiving emails?
- What value proposition brought them to the list initially?
- How will you maintain continuity while introducing your brand?
4. Technical Integration
Plan for the technical aspects of the acquisition:
- Which email service provider (ESP) is currently used?
- How will you migrate subscribers if needed?
- What automation sequences are active?
- How are subscriber data and preferences stored?
- What compliance documentation exists?
Conclusion: Think Strategically About Audience Acquisition
“My prediction: More companies (SaaS in particular) will start acquiring niche newsletters and media companies to gain access to their ideal customers.” — Ross Simmonds, Founder of Foundation Marketing
Think strategically about where you’re currently spending hard cash for advertising to acquire new email subscribers and customers.
Is there and opportunity to buy a business that has already attracted your target audience?
With programmatic advertising, what websites and blogs are your ads currently being displayed on? Can you buy and own the website or blog and now actually own the media you were only renting?
One of my current target business acquisitions boasts monthly social media views of eight million, 657,000 website visitors, and currently NO email list… presenting an enormous opportunity for value creation through email marketing expertise.
By applying the principles shared in this article, you can potentially transform your email marketing strategy from a constant struggle for attention to owning valuable audience relationships outright.
Remember: Sometimes the fastest path to growing your email list isn’t building it yourself—it’s buying a business that’s already done the hard work for you.
This article expands on key concepts presented in my keynote presentation “HOW TO LEVERAGE A MERGERS AND ACQUISITION STRATEGY FOR EMAIL LIST GROWTH” delivered at the Email Innovation Summit in Las Vegas on April 5, 2022.
I thought you may enjoy the first couple slides …
