We're Acquiring DDS Rank

Author

Dominic Wells
June 12, 2024

Hi everyone,

On Friday we announced that we’d entered into an agreement to acquire DDS Rank (ddsrank.com), which basically means once the transfer is complete and the funds are released to the seller, the deal is completed and we become the new owners.

This is the first acquisition that we’ve made via our Agency SPV, which I’m sure you’ve heard about by now…

DDS Rank is an seo agency for dentists, has great margins, and about 90% repeat revenue.

It’s smaller than our other acquisition targets (it posted about $200k profit in 2023) but we see a lot of upside with this one. The previous owner ran it very passively as he owns a much larger unrelated business.

This is good because it shows that:

1.) The business can already function without the exiting owner (the existing ops team will stay) and

2.) There’s plenty of opportunity to grow it.

The business hasn’t emailed it’s past clients and prospects for some time, it relies heavily on word of mouth referrals and repeat business, and essentially has been deliberarely kept small.

Now, its’ easy to say “Oh wow we just need to do better marketing and this thing will grow”, but most of the time that doesn’t work for one reason or another.

In this case though, we are very bullish on DDS rank’s upside potential.

Not only that, but the valuation was a 3x earnings (Total paid was $600k) and the deal structure was favorable. We paid $200k cash up front, which the SPV funded, gave the seller another $200k in Onfolio preferred shares, and the seller will hold a $200k promissory note at 6% interest.

So in total Onfolio paid $0 out of pocket and will receive 66% ownership.

The SPV paid $200k and will receive 33% ownership. With the acquisition multiple being a 3x, that means that just maintaining the revenues and margins will earn the SPV around a 30% ROI.

A great first acquisition.

And yes, there is still room for more investors in the SPV, and yes if you invest now you’ll still be a part owner in DDS Rank, as the SPV ownership is spread among all past and future acquisitions.

We also are only a matter of days away from closing on the next acquisition, which will be a similar structure, but a larger business ($4m revenue, $600k profit), so things are starting to get “real”.

Dom