Acquisitions Anonymous - #1 for business buying, selling and operating - Recipe Website With 4.2 Million Page Views a Month For Sale!

Episode Date: September 13, 2024

In this week's episode of Acquisitions Anonymous, we’re looking at a content-based business listed on Quiet Light—a recipe site with six years of future content ready to go, pulling in over 50 million page views in the past year. Joining us today is Chelsea Wood from Acquisition Lab, who shares her expertise on the potential of this business. What We Thought:Strong Metrics but Lacks Clarity on Revenue SourcesHeather pointed out the lack of clarity about how the business earns its revenue. Is it primarily through ads, affiliate marketing, or a mix of both? Since the website is recipe-focused, it’s unclear if it relies on affiliate marketing tied to ingredients or if it’s purely ad-driven. This information would significantly influence how sustainable its income is, especially in a competitive content market.Why Sell Now?Chelsea voiced an unusual concern—why is the owner selling if the business is so profitable? With six years of content ready and such high margins, the site could continue to generate strong earnings without much effort. The skepticism here lies in whether there’s something beneath the surface that’s motivating the sale.Chelsea was also wary of the asking price. A nearly 5x multiple is steep for a content-based business, especially in an environment where many such businesses are struggling. That said, the evergreen nature of recipes makes it a little more reliable than other types of content, like travel blogs.Red FlagsUnclear Revenue Streams: We don’t have a solid breakdown of where the revenue comes from, which is crucial for evaluating long-term viability.Potential Personality Reliance: If the founder's identity is tied to the brand, there could be a drop in engagement after the transition.High Asking Multiple: At 4.91x, the multiple feels high, particularly given that content-based businesses are generally valued lower.Why Sell Now? The timing of the sale is suspicious, considering the potential for continued earnings.Green FlagsStrong Engagement Metrics: 50M page views, a 44% email open rate, and massive social media following all point to a loyal audience.Evergreen Content: Recipes don’t go out of style, giving the site a steady, long-term value proposition.Six Years of Content: With 2,000 recipes ready to publish, a new owner has a major asset in pre-produced content.Owner’s Low Time Commitment: The current owner only works 4-5 hours per week, making it a semi-passive income opportunity.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

The backlog, it's like, I almost view the backlog as like a little bit of a missed opportunity. I guess it's just to maintain engagement. Yeah. I think if you sign the NDA on this one and you go to the website, you're going to know in five minutes if this is for you. Correct, but it sounds like it's a cooking site that provides recipe. Hello, another episode of Acquisitions Anonymous. We don't have 100% here. Hey, everybody.

Welcome back to another episode of Acquisitions Anonymous. I'm Mills Snow, one of your co-host. Me and Heather have a really fun conversation today with Chelsea from Acquisition Lab. She joined us again. And we talk about a fascinating content site. It's a recipe content site that's been around for 10 years, which is a long time for content these days. And they are doing $3 million in revenue, two and a half million in SDE. It's ridiculously high margins. And they have a six-year backlog of recipes stored up. We're scratching our heads the whole episode going, why is this person selling this business if they basically have this thing, just prints money?

They get into a lot of detail about their metrics, their email list, social media following, click through rate. It's a really compelling business. And we're dying to know more about what is their niche. How have they maintained so much relevance when there's so much competition for content and eyeballs and attention? We talk through, is it even financeable? Heather has some reasons to believe that it's in that no man's land of too big,

what not big enough. And so if you've looked at anything like this, would love to get your feedback. We'd love to get your input. It's a really, really interesting segment of the market. It's hard to justify paying up for sometimes, but this one, I think, has some kind of secret sauce. Stick around for a quick word from our sponsor, and thanks for joining us. All right, taking a quick pause here, I have something to tell you. This is Michael.

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and now back to the episode. Hey, everybody. Welcome back. Another episode, Acquisitions Anonymous, Heather, Chelsea. So good to see you guys. Good morning. Good morning. Chelsea's a special guest with us today from Acquisition Lab and she has great input. So I'm completely outnumbered now. I've got a lender. and somebody who does serial acquisitions and assisting people who are looking for businesses to buy. So you guys can, you can show off your smarts. We have a fun episode today that is kind of unique. It's online.

It's content-based. I'm going to share the screen for people who are following along online. And these businesses, they can go one of two ways. They can have, like, a lot of strength to them or they can be, like, very kind of weak. I think from a quality of revenue standpoint. This is on Quietlight, and it's a 10-year-old passive recipe site, six plus years of future content written and photographed. 50 million page views over trailing 12 months,

and they have 2.5 million in SDE, seller discretionary earnings, which is shockingly high margins, but it's a content site. So revenue of just over $3 million, They say their income, which they also say SDE up here. So I think they're just talking about SDE is just over 2.5 million. They're asking a 4.91 times multiple. The asking prices 12,550,000.

They say this site was launched in April of 2014. It's a recipe website that has built a massive following and database of recipes with over 50 million page views over the last 12 months. The owners have invested heavily in content. there's over 2,500 published recipes on the site, and they have another 2,000 recipes that have been created and photographs that are in the queue, which works out to about six years of content. A new owner will take over the business with 2,000 articles to use and build the site out further. The brand has a huge social media presence, 474,000 followers on Pinterest,

479,000 followers on Facebook, 61,000 on Instagram. They have a strong SEO profile, with a domain rating of 74 via AH refs, 92,000 backlinks and 8.7,000 websites linked. They also have a 90,000 email list via convert kit and a 44% open rate. These are pretty strong metrics. Yeah, for sure. Growth opportunities include creating short form videos,

improving SEO, which hasn't been to focus until recently, implementing an affiliate strategy, and building a robust Pinterest strategy. The owner has a team in place. they work around four to five hours a week, which has allowed them to take themselves out of the active management of the business. And they talk again about their backlog. And Ryan Condi is the broker on this. All right. What do you all think about this? Like you said, strong metrics on the website. My one question is, is the founder sort of the face of this business? Are they the person saying,

these are my recipes? They've got a team. They've got a huge backlog. I mean, a huge backlog. That's a lot of recipes and photographs. So that's all great. I just wonder if you ran out of those and that founder is no longer part of the business, is that it? You know, or you have to pivot to your face or to a different sort of branding away from an individual. A lot of these recipe sites are focused on somebody, a person. And that's my only question mark.

I think the clue that I think the clue that says that you're right, Heather, is the photograph. piece. So, you know, anybody could, you know, theoretically whip up a dish and take photos of the process and just, you know, the backlog is helpful, but it's not, you know, irreplaceable. But because they emphasize it being photographed, I wonder if this is a personality driven content site. Maybe, maybe it's like a celebrity or maybe it's somebody who kind of fell into celebrity status through social media and they're trying to remove themselves. Why else would you? spend all that time and energy building that backlog prior to a sale. Right.

Right. They could have been a winner of one of those cooking shows or something like that and kind of spun it off into this, which is great. And it's got great margins and great revenue. But I also want to know about the revenue. Is that all advertising? They didn't really give us much information about the nature of the revenue and how much it's grown recently.

But I just, when I look at recipes online, it's usually. you know, personality driven, you find somebody that you like and you end up kind of looking at what their recipes are all about. But I do like a lot of things I see here. What about you? If you got the SIM on this and you were like, I'm stopping everything and I am pursuing this. Like what have you seen that makes you go nuts over it? I don't necessarily worry about it being a personal brand. Because to me, Photographs is just, it depends. Is it a cooking site or is it a recipe site?

That's what I'm confused about. Correct, but it sounds like it's a cooking site that provides recipes, right? So photographs is typically on these sites where it's like step by step they're taking photographs as they explain how to do it. And so is this a cooking site or is it an actual like recipes.com where you Google chicken parmesan and it gives you the recipe, right? If it's a cooking one, then it's probably affiliate revenue, right, where they're linking to all. the products that they're using throughout the recipe. But if it's a cooking one that provides recipes, that's less of a concern because photographed is likely probably just the steps, right, of preparing the meals.

I have a member that this would be perfect for as well. I think my concern, which I never do, like I almost don't want to say it because it's going to contradict all of the stuff I've ever said to a member. Like, I'm actually kind of hung up on why they're selling, which I never worry about. founder, I'm in year five, I'm tired, I get why somebody would be tired and leave something really great, right? Like, I never worry about that because it's just not for us to know. They would make more money letting this ride out for the next couple of years than what

they're selling it for on that earnings level. And so, like, if I could just, like, skate on four hours a week and make, I just, this one is where I'm a little more, like, why are they selling? Is there a health issue? Is there some bigger issue, which again, there likely is a good reason for it. But it's the first time ever I've wondered why someone is selling because it's putting off so much money. And they have literally say they have six plus years of content. And so if they continue performing at this level, they would make more money than they're asking for.

Right. But I do like the business. But content as a whole, this is a really high multiple for content site. Right? There's a lot. If it is affiliate-based, which I have to, I guess it's either ad-based or affiliate-based. There's just so much, like, content is really hurting, right? Those businesses are all really hurting, at least in my network. Now, recipes, it's pretty evergreen, so I kind of like that. Like, we all use those sites when we don't know what to make with all the food that we have in our cupboard. So I do like, to me, it's an evergreen type of a site, better than like travel or something, right, that is going to get cut with discretionary earnings. I don't love the multiple.

I think the cool thing about businesses like this is like you could, you could get into the analytics and this is not my forte. But like they probably have some recipes that are just like viral and like evergreen, right? Like they have the, like you said, chicken parm, right? And there's certain things that just don't go away. Like I've heard of people who have monetized like how to tie a tie, which is like a very, very high frequency Google search. And like if you are the, if you are the YouTube video, right,

that is like top of the list, you're just continuing to print money. And so I wonder, you know, what I've seen people do is, you know, they build a social media following first. And then they try and figure out what is,

what are the ways that I monetize, you know, this social media following. And content, I feel like is the first step always because it's low cost and it's high margin. And then you go, okay, I feel like maybe I'm missing out on something. And so you start maybe selling merch that is not a consumable product. But then eventually I feel like all these sites aspire to or eventually mature to white labeling a product that they can then sell. And for a lot of food ones and like smoothies and things like that, it's like protein powder.

It's very, very high margin. And it's kind of a high average order value. And it's easy to transport and ship. But this isn't like this isn't a content site for workouts. You know, this is a recipe site. So it's hard to make one thing that is that kind of transferable or that universal across recipes. Like, because if you're if you're just generally giving recipes, there's only so many things that kind of appeal or universally. Yeah.

I think if you sign the NDA on this one and you go to the website, you're going to know, in five minutes if this is for you because it really depends on like what is their niche. Once you see it, you'll go, oh, yeah, I can do a lot of things with this or, ooh, you know, maybe not or maybe not at this multiple kind of thing. But that's, I think, really the tell on this one is you just got to know, you got to go to the website, sign the NDA and see what it is. But it looks good to me. Well, and the multiple doesn't seem high when you go back and think about the stats that

they shared, right? Like, it's a really high performing website. It's got like a, the stats are very impressive. which would make me then take the value levers this way, right? So I'll backpedal a little bit to say like the multiple actually seems, again, once I understand what the value, what number they're actually using, it doesn't feel that high for something performing at this level. Growth opportunities include creating short form videos, improving SEO,

implementing an affiliate. Oh, so it's not an affiliate strategy. Oh, yeah. And maybe, I feel like affiliate can be two different things in this case. like I think I think about the role of like ambassadors you know versus affiliate products and linking you know hey like use my almond milk right or silk is like and just click through for the affiliate link but then the ambassador side of this is you know are you using some are you leveraging somebody else's social media and you're treating them as an affiliate or you are an affiliate of theirs yeah I also like the presence that they have my mind I must be a creator because my mind always goes to diversifying products, but they have a pretty strong following. So I feel like a community would probably pretty easy to roll off of this or some kind of like personalized, you know, recipe planning or something, right?

Like they've got a pretty good market. And so I think there are ways that you could potentially pivot into other revenue streams so that you're not so relying on ads or affiliate revenue or whatever. I really like the idea of mills of having, if it is like a, a branded site, right? That I do kind of like the idea of white labeling products and creating your own product line because, again, you've got a strong market captured already, especially on Pinterest, right? I think a 44% open rate on the email push for 90,000.

That's impressive. That's what I mean. Like, this, while my initial reaction was the multiple feels high, it doesn't actually based on, we talk about value levers, right? Everybody always wants to know, how do I value a business? and it's like it's not a science right you you kind of look at the business and you decide which direction you want to go with the value levers at hand and this has really strong value levers like the content in general typically trades lower right because it's a content site

and so that's why my initial reaction to the um sorry Ryan to the multiple being kind of high but I think that um it's I don't know. It's got really cool things going working in its favor. So it does make me want to justify a higher multiple. The content does make me a little bit nervous in general. I think I think you're right. It's super crowded right now and everybody's competing for, you know, a limited amount of attention span. It's interesting to me that they don't do short firm videos because that's what I'm kind of most exposed to. I'm not on TikTok, but these kind of like ASMR, you know, food videos where, you know, people are just finding slightly unique creative ways to grab your attention and show you, you know, in 25 seconds

how to go start to finish on a recipe. And I'm amazed that they're doing this much revenue. However, they're, however they're capturing this much revenue and they've got this big of a social media following. And they're not doing any video. Like, that's awesome. And I'm really wondering if it's truly a recipe website or not. Like, right? Is it a cooking company or is it a website provider? I mean a recipe provider. Do you guys know, have you ever seen videos by Tasty? So there's short little clips about cooking, right? And it's exactly what you said, Mills.

Like, I will almost always, I guess I really like food. And I don't gain weight by watching the videos of the good looking food. And so, like, I could see this being huge if it's actually more of like a cooking brand than just a recipe provider. To your point, right? You watch these little fast videos. They're not branded in any way as far as like, you can't see it. anyone, right? It's just hands. And so it's very transferable. And so I think this business has a lot of potential, but those are all possibilities, right? Like there's no clear growth path for me

with this business unless I come from some kind of background that is productized or introduced communities or something and know that I can do it really well. Everything with this business in Chelsea's opinion is all possibilities. And so I get a little nervous buying on possible growth strategies when there's not a clear one. But there might be, there should be a clear one for the buyer, right? It's all it's also in the no man's land of finance. You know, is it somewhere over. Yeah, somewhere over two million, but below three million of EBITDA, or we're talking SDE here, but I always work in EBITDA in my mind. And, you know, that's too big for SBA. And often it's just too small for any conventional lending.

So it becomes, these are challenging to finance just because of the size. And then you add the fact that it's a content site and, you know, some lenders are just not going to like that period for the same risks that you've been talking about Chelsea. So it's it's also a little challenging from that perspective. Let's say you like it, you love it, you want to buy it. The financing won't be easy. It'll be a little bit tricky. It's interesting when you think about like if this content converts to revenue, which it arguably does very easy. the backlog it's like I almost view the backlog as like a little bit of a missed opportunity I guess it's just to maintain engagement right why like why not flood and put all this you know on your page so that you you know appear in more searches and convert to more revenue and it's probably because part of the way that they figured out how to stay engaged is emailing actually valuable content on a weekly monthly whatever it is basis and so you know

I'm amazed at that much of an open rate because like you subscribe to something like this. Because you Google, then, you know, they showed up organically in your search. And then you're like, oh, wow, this was good. Or, you know, I'm really impressed with their website or the simplicity of it or whatever the niche, you know, appeal is. But then like six months goes by. And I never keep opening emails, you know, from things I subscribe to that long into the future. So there must be something really unique or novel. And, you know, most of these sites find success in a niche.

It could be, you know, gluten-free. It could be paleo. It could be allergy-friendly or heart-healthy or whatever it is. And I'm just so curious, you know, how they've been able to do it. And they've been able to do it for 10 years. This is like some staying power for something that is usually very kind of fickle. Yeah. Well, and it says they have a database of recipes.

And so I still, in my mind, can't grasp exactly what this is. Is it like recipes.com? Because even though they say photography, it's like I kind of wonder if it's original photography. Like, did somebody actually do this or are they buying stock photos and, and provide, you know what I mean? Like, what exactly is the business? Because I don't quite have a handle on it yet. It's like I'm picturing like these instant pot companies right when Instapot came out and it's like a whole company around Instapot recipes or an entire one around keto or gluten-free. You know what I mean?

it's like a whole content company. But when they say it's a database of recipes and it's a recipe website, then my brain goes to recipes.com, which is type it in and they pulls up the recipe in directions. It's nothing. Not nothing, but you know what I mean. It's not a content site.

It's definitely got a niche of some kind. And like I said, I'm sure when you open, when you find out what this is, then, you know, your brain goes, ah,

you know, I see what I could do with this. It does seem like it has some growth levers. I think it's a little, I think it's still a little pricey, but, you know, it would depend on your diligence on all these metrics and, and, you know, and how much recent growth, you know, it's been 10 years. I would love to see the whole 10 years laid out on a beautiful spreadsheet like the lender that I am. And look at, you know, where it's all, what's been driving the revenue over all those years. So there's a lot to really dig into here that I don't think it would take you long to figure out, you know, to come up with your own value. and whether or not you wanted it. But I think it's, you know, I think it's a good one. I think that's potential.

Like I keep thinking cookbooks and like there's things you can do depending on what it is. But I'm with Heather. Like I would know as soon as I requested it if it was viable or not. I just Googled and like for reference all recipes.com. They're stated to have around 52 million views per month. So this is maybe somewhat niche in some way, right? whether it's, you know, diet specific or preference specific or maybe it's regional. Like you could click on this thing and get like, oh my gosh, this is like a, you know,

German food or all of a sudden you're like, oh, wow, like this is now you see why it has some staying power and appeal to a very specific audience. But I'm always so curious than I'm more. And like that's the great thing about looking at businesses. And Chelsea, you do this way more than we do. And Heather, you're still so active on the lending side. I don't get to like double click on that many deals anymore because I'm running a business, but just the cost of admission is very, very low.

It's almost nothing, right? And you learn through each iteration and your learning curve gets better and better. And I think this would be super interesting to dig into and just kind of nerd out on for a couple hours. I think it's interesting as our members become brokers and I start looking at their listings like this situation, I'm like, I don't know what I can say. I am not trying to offend anyone. But I like the business. I think it's interesting, right?

But as you said, Mills, everything business related is interesting to me. It's good that I start, you know, that I had the opportunity to start the lab, I guess. How many, how many members do you guys have right now, Chelsea? We have 750, like, members. That's not like partnerships are in their spouses are in there. So maybe 500 buyers. 600 buyers. That's a lot of different data points.

And then Heather, you're working on dozens of things at any given time. At any given time, our pipeline has, yes, dozens of deals in various stages all the way from just signed an LOI to in closing, you know, fingers crossed almost there. We just passed 100 million in funded loans in 12 months. That's amazing. Yeah. And so that was pretty exciting. And it's accelerating at this point.

We're heading into the busy season, Q4, and yeah, looking at lots of deals, lots of them. Yeah, one of a. I'm glad we got to look at this one together. Yeah, same. That's great. Thanks, everybody for sticking around and listening to us banter about something that we find super interesting. If you found this episode interesting, please like and subscribe and check out our website.

We tag all the episodes based on what we're looking at. So if it's e-commerce or manufacturing or construction or, you know, whatever niche you're looking at, we've got everything indexed now so that you can look and double-click on those things and learn more. And Chelsea, thanks a lot for joining us and being a fan of the podcast. My pleasure. Thanks for invite me. All right. You'll see you next time. Bye.