Ep 310: What Makes And Breaks Most Online Businesses Acquisitions with Flippa M&A Advisor Fiona Laidlaw

What is it that kills most online business acquisitions? Hi, I'm Jaryd Krauss. I'm the host of the Buying Online Businesses podcast and today I'm speaking with Fiona Laidlaw, who is a senior &A broker with over six years experience in account management and online business brokerage.

As a certified &A advisor at Flipper.com, she excels in helping clients on both the buy side and the sell side navigate the complexities of the sale process, including valuation, negotiation, and closing. Now in her role as a senior broker, Fiona specializes in high-value transactions involving SaaS, app businesses, and e-commerce businesses, exceeding the million-dollar seven-figure range.

Now with over 100 deals successfully closed, she leverages her deep understandings of technology and entrepreneurship in working with clients across the APAC region for Flippa. Now in this pod, Fiona and I specifically talk about what people get wrong through transactions. What kills most deals, which you may not actually guess. We also talk about where sellers go wrong when they're trying to sell a deal.

We talk about where buyers go wrong when they're trying to buy a deal, how to become an attractive buyer, how to be an attractive seller, how to be open to possibilities and different deal structures and price ranges as a seller. We always talk about relationship building and how critical it is to have a great relationship or to build a relationship with the buyer and the seller when you're going through a deal.

And we reverse engineer even to the micro level of some questions that you can ask to engineer and manufacture a great relationship in a short period of time with a buyer or a seller to build trust to ensure that you're selling to the right person or you're buying a business from the right person.

Now there's so much value in this podcast episode. you've done over hundred deals, I've done thousands, looked at thousands and thousands of businesses and us being on the buy side and the sell side, helping people transact, there's so much that we get to share. If you're looking at buying or selling an online business, this podcast is for you.

Also, if you're looking at buying and you want to take the guesswork out of buying, make sure you get my due diligence framework. It takes the guesswork out of the acquisition. It's free, buyingonlinebusiness.com, four slash free resources. See you on the inside.

Fiona, hello, welcome to the podcast. Thanks for your time.

Yeah, thanks for having me. Glad to be here.

So Flippa, Flippa Broker, &A, how did you get to &A? Yeah, so I guess I fell into it a little bit. I'm probably not the most typical story of going to university for finance or anything like that. I was originally a business owner myself and I sold my business after four years of that. And at the time, I kind of had no idea what I was doing.

I just had it. was relocating and I had a friend who said, I will take that over for you and we'll profit share. It's funny. I took a deal that I would never advise someone to take now. That was a bit of a learning lesson. And yeah, my background was very much sales, both from a personal brand when I did have that business all the way through to working in the corporate world in the U.S.; eventually I was introduced to Flippa through a friend and my sales background aligned really well with what we were wanting to do at that time.

Build out the office in the US and expand the territory there. And then I moved into Australia and am now in further reach into APAC and have sold lots, like many, many businesses. That background in sales has obviously come in handy and just the experience of selling my own business as well. It's definitely come in handy.

Yeah, for sure. What was the first? What was his business? So it was your first business; did you start it? What was it and why did you decide to sell? Yep. So it was a personal training business. So service-based business, like in person, wasn't online. I had a bunch of really loyal, quality clients and I wanted to get out of the fitness industry and move into something that had a little bit more longevity, or what I thought did. And at the time, one of my friends basically said, I will take over your clients for you.

I will pay you a portion of revenue for a certain amount of time. I didn't many similar to many of the people I work with. didn't know that you could sell a business or I was just like, yeah, that's a pretty good deal. I get paid for him working. And yeah, I took it and packed up my bags and moved to the U.S. and did what many Aussies do—just take off somewhere else for a while. Traveling?

It sounds like you worked in the States as well for a bit. Yeah, a little bit of traveling, just kind of, hey, like let's explore what's out there in the rest of the world. And I traveled around; I bought a car that was an old Jeep Cherokee in 1992; I bought that in California. And I just drove it around until I found somewhere that felt comfortable, which was Austin, Texas. I don't know if you've been there, Jaryd, but it's pretty cool city. I've been in Austin. Yeah. Yeah. Fell in love with it there and then decided to stick around for what ended up being six and a half years.

Yeah. Wow. I was in Austin in 2011. So I think before it was cool, to be honest. I mean, it was coming up. It was definitely coming up, but what's that? That's a while ago now. So yeah, it's probably when it was not the real Austin. I'll probably get a bit of trouble for saying that, but it was real authentic, kind of keep Austin weird type. Yeah. The nightlife was great when we were there.

Younger version of myself. And so you did corporate over in Austin. So you lived in Austin and you just, what do you do corporatea bitise? Yep. So I was an account manager for a recruiting company. So large US business and very, I mean, I was telling someone today, like, very similar skill sets of matching a need with a service. So matching a company with the right person for that company.

And that essentially is what I do at Flipper: match the ideal buyer with a company that they're excited about; that makes sense for them. And we kind of make something work. yeah, similar sort of, most people wouldn't think the skill sets carry on, but yeah, similar type of sales, I guess.

Yeah, absolutely. mean, business is just relationships really at the end of the day. And the better you are at understanding people and creating and building relationships, the more successful you can become. you just want to confirm you work with Flipper; you're not because there are brokers that are on Flipper that are independent, right? And they have their own brokerage firms, but they also list on Flipper.

That's not what you do, right? You work with Flipper as a private broker for like seven; is it seven, mostly like seven-figure past deals? Yeah. So correct. So like I'm literally sitting in the Flipper office today in Melbourne, Australia, and I work for Flipper. So they hired me. I'm a senior broker for them.

And like Flippers, I explained that I come from a sales background. Flipper has given me the opportunity to get educated, to do online and then obviously, the experience of selling over a hundred deals has allowed me to gain the experience to continue to work with Flippa and/or for Flippa to make it less confusing.

But yes, I work and am employed for Flippa. We do have independent third-party brokers who will come to us because we do have that global network of buyers and such an ability to reach those buyers. Yeah, absolutely. What are the over a hundred transactions? What are the two best transactions you've been a part of and why?

I think two of the best would say. So one of them was a business. It was based in the U.S. as a service-based business. He was educating people on how to sell or, sorry, how to buy day trades. So he would log on every day. It literally started from a passion project.

And I think that's why I love it—because he was doing it himself. He had a bunch of his friends that said, I need you to teach me how to do this. You're making a lot of money out of it. And over 16 years, it became this business with him and his son and he didn't know you could exit. So he was ready to retire fully. And someone referred to Flipper and said, Why don't you try exiting?

And the seller would tell you the same story in the same words. He had a conversation with me and I was like, All right, I think we can sell it for seven figures, close to $2 million. And he was like, yeah, good luck. Like, okay, Fiona, you're just kind of pumping me off or something. And we didn't; we got exactly what he wanted. We had a strategic buyer who was actually looking to build the exact platform that he'd developed over 16 years.

And they saw that real value and we were able to get the asking price. He still interacts with those buyers today. And I think that's given him a seven-figure exit, him and his son, a seven-figure exit and the ability to retire and do what you should when you retire, know, travel and just do whatever you want. So seven figures is pretty impactful, that one.

And then I think a smaller one is again, just a family that wanted to offload some responsibility after a pretty hard time, illness, things like that, and was able to get them a deal that moved nice and quickly. A buyer, a cross-border Australian business, sold to a US-based buyer. The buyer was experienced. We had worked with them multiple times. So it was kind of, we could sit down and tell them, This is exactly what the process is going to look like because we've worked with these guys before, and take that heavy load off that family so that they could just go, Okay, we can concentrate on my family.

So I think it hasn't necessarily, and that one, sorry, was a six-figure exit. So it hasn't always been the biggest. Yeah. But it has been probably the most impactful for someone's life. Yeah. And that is more valuable than any figure. Really. This is my philosophy anyway. What I've noticed in those two transactions is that the buyers seem sophisticated in both those examples. Would you say most of the easier deals are when you have somebody who is a more sophisticated buyer?

I would say the short answer to that is yes. The most sophisticated buyer doesn't necessarily mean the one that's done the most transactions or has the most money or anything like that. I really think when a deal goes well, it's because the buyer has learned that they need to understand what the seller's selling for, what's going on in their business, what's their motivation behind building the business, and what do they want out of this acquisition?

Not everyone wants cash hard and fast upfront. I mean, most people do, right? But I've got one at the moment and they're just at a point where they want to hand the business off to someone to see it grow. Like they've built this beautiful brand, Australian SaaS business, they have kind of hit the threshold of where their skill sets go. They're willing to stay in.

They're willing to kind of continue working with that new owner, but they need someone who's got the experience and ability to scale it to New Zealand, the US and other regions. I think it doesn't always necessarily mean the person who's got the fastest, the most cash or anything like that. It's about someone who's willing to kind of sit down and say, Okay, does your motivation align with what we're looting for?

And we can work to get a deal done. In saying that, someone that is fairly new to buying a business, they're going to have challenges that someone that doesn't, that's been through it before, just like anything, of course. And a lot of buyers have actually sold businesses themselves.

o they have a really unique perspective as well. And that's one that I love to see because they can put themselves in the shoes of the seller, understand the emotional roller coaster, and understand they're letting go of their legacy, their baby as such. And yeah, just respect the seller, respect the business and respect the process. Yeah, absolutely. coaster, andeah.

It's a tricky one to navigate when you are at any level, like say somebody saves $50,000 and it's taken them five years or however long, maybe longer or maybe less to say $50,000 to go and put that money into acquiring something. It's scary when that time and the work that they dedicated to get to that point have been blood, sweat and tears. And then they want to make a transaction. They, of course, are going to be emotional about it. My job is to actually help them become less emotional about it by looking at the data. Now, what would you say kills deals most? More than anything. Time. It's that old saying.

Yeah, time kills all deals. Unfortunately, that is the case. I think when you start to see people not communicating and not responding within a reasonable time, it really does kind of push out the interest and people lose interest. So from a sales perspective, it's always important to get the data requested and answers to the questions in a timely manner.

From a buyer's perspective, I think it's really important for them to provide feedback, not leave sellers hanging. I think that it unfortunately does happen quite a bit, but to be able to say to the seller, right, we're not interested because of this reason is again respecting that process and respecting the business and the owner. And I think if you've got a deal and you just slow that communication down, it just slows everything down and time kills all deals. you noticed the larger the acquisition, the more people involved, which slows the deal down more?

Yeah. Yeah. Once you start getting different decision-makers, investors funding, like banks for funding lawyers and accountants, will come in almost all the deals that I work with. But yes, once you start getting those third parties or even partners involved and investors, that's going to slow the deal down. One of the things as a buyer, if you want to buy a business, it's always really good to get yourself pre-qualified.

If you're working, if you come up and meet a broker like myself on a listing, I'm going to ask you, Where are you getting your funds from? And it's not a broker being rude. It's not them saying, Do you have the money or show me the money or anything like that? It's just like, we need to know because, at the end of the day, the expectation is that you have the money or some way to get that money and we just need to know the timeline and what that looks like.

Yeah. Funding definitely slows down deals as well, which is because of time. And then also, I've noticed that lawyers can really slow down deals when they're too aggressive on one side towards their client.

Which makes sense. So they should, but if you are, this is where a lot of people I find, and they're buying a business for the first time; they don't know what type of lawyer to get in the online space and they get a lawyer that is not privy to this space. really is causing some drama, right?

Yeah. mean, lawyers, they're just doing their job, which is to highlight all the risks. Yeah. Which is necessary. Is necessary but there's no way to avoid risk in this. It's a risk for a seller. It's a risk for a buyer. What we've got as brokers, what we need to do is come understand both sides and figure out where everyone is comfortable to make a deal happen.

Because I think sometimes buyers and sellers get a little bit defensive and think someone's trying to take advantage that buyer is asking for seller financing because they're trying to take advantage of me or the seller's not willing to give seller financing because they're trying to escape and sell me a dying asset.

And it's like, no, it's just understanding the comfortability and understanding why someone is doing that. And that's again, putting yourself in each other's shoes because at the end of the day, the buyer likes the business and the seller wants to sell. We just need to figure out how that is and sometimes lawyers and accountants are pretty quick to say that's too much of a high risk for you because you're my client.

They're not kind of looking at the full picture of everyone and the market and everything like that. So they are doing their job, but unfortunately, sometimes it can really slow down deals or just throw a curve ball in them. are some of the things that have happened through a bunch of the deals that you've done that have just wrecked the deal outside of time?

Is there anything that you have been able to do? Like, are there examples where you haven't been able to salvage it? And then, if you were able to salvage some, what were some of the things that you've done? So there's multiple questions in there. Apologies for just like fire-horizoning you. That's okay. Yeah, I think a deal that was, it's based out of Australia. It was a marketplace and we had to sell it quite quickly.

We were selling to a Hong Kong buyer. kind of bought it as a bit of a passion project, actually, his family office, and he loved the platform. So there was a lot of pressure from the sales side to sell it quickly. They were just putting on that pressure and then on the buy side, he was moving at a pretty good pace for a seven-figure business. These things do take time.

And then he got to a point and he was like, Hold on. just need to. Dot my eyes across all my T's here and the sell side. There was a little bit of friction because of that. Then it kind of turned around to this particular business having a bunch of shareholders involved. So multiple people needed to sign off on all the documentation and agree on it and stuff like that.

And then when it got to them to do that, that really slowed it down. And this was all happening over, think, like a Christmas period, New Year's period. So a little bit of obviously time slowing the deal down, but a lot of like just expectations and everyone running as fast as they can.

Then needing to slow down and really check everything. And then obviously multiple parties in the decision-making process. So you combine all that and it rocks the boat a little bit and the emotions are high. We were able to kind of get everyone. We ended up just getting as many people that needed to be on a phone call, lawyers and accountants, and everyone on one phone call and saying, All right, we've got an hour here; let's achieve this and then we can move to the next step.

And just by kind of that open communication, nobody relaying what an accountant or a lawyer said that miscommunicates and just gets everyone on that same page. were able to move that process forward and successfully get the deal done. So that was just very complex on that one. Well done. Congrats on that. I noticed that when you have accountants and lawyers, so you've got the buyers and the sellers, then you've got accountants and lawyers and the DDE team and all that sort of stuff.

What I have realized is it's very valuable to just have the buyer, the buyers and the sellers get on a call and have constant communication regularly without the external parties. both can keep, because the most important thing in the deal is the relationship that the buyers and the sellers have, right?

Yeah. And so the more trust in that relation, or how do you build trust, right? It's like you typically build trust by, or who do you have the most trust in with in your life as people that you're most closest to? Why? Because you've spent so much time with them and done a lot of experiences with them. So if you reverse engineer the trust, how do you build trust in that relationship with the buyer and the seller? Spend time together on the phone; spend time together communicating without all the other people in your head.

That's especially through a Christmas period, like, let's just get the buyers and sellers on the phone before Christmas and the new year. So we know that people aren't sitting down at the Christmas table talking about, No, I don't know how this is going to go. And all that sort of stuff, like having good communication and knowing that each party wants to make the deal happen before Christmas time happens. So everybody's happy and you've got trust and faith that once that Christmas period finishes, it's all off to the races and we're going to finish the closing of it.

Yeah, for sure. And I think too, like when you've got the ability to have a buyer and a seller on a phone call, they can be real with each other, right?

So I had an example the other day where a seller had their revenue decline quite a bit in 2024. She was; we had established some trust. I think this was the second call with the potential buyer and she got on and said, Look, my husband was really sick. Like I just like the business was just but least of my priorities, we put it on autopilot mode. I didn't care what happened to it.

My priorities were my family. And so I think when you've got lawyers involved and when you and she were very emotional when you had lawyers involved, when you had accounts on the phone, she's not going to explain that. And that seller, that's sorry, that buyer can kind of really understand it doesn't change the fact that the business had declined.

Right. But it does create that trust, give a legitimate reason why the business had declined and continue to really give him the confidence that she is giving him the real reasons. I like that. A lot of people in my community are buying businesses in the seven-figure range and it can be tricky.

Like even under this mid-six figure range, it can be tricky where sellers don't want to have too many calls with too many buyers. People do ask me, like, you just do due diligence and really not like to contact the seller for much? I'm like, look, at the end of the day, the number one thing in the deal that's going to make it happen is the relationship you have with the person you're purchasing from.

Even if you're buying a $50,000 business, like, you need to get on the phone with them and sort of reestablish like, you, and maybe you're just looking at data, right? Like say on Flip It Marketplace, you've got like the analytics and you've got know, figures and then you get a P and L, and you can do a bunch of DD with just data. But without getting on the phone and knowing what the dynamic and the chemistry are like between you and the possible seller are like, that's going to help you sort of iron out kinks and make sense of what the data is telling you, right?

Like, what sort of advice would you give to somebody who's thinking, Maybe I can just buy a business without speaking to the seller as much or building relationships? So first off, I want to preface something. I often talk about seven-figure deals or, you know, six-figure deals, even five-figure deals. It's a large amount of money, right?

Like if you're putting up $50,000 worth to buy a business, that's a lot of money. So data can tell you a bunch of stuff and data is amazing because it's proof, right? But it doesn't tell you the motivations behind why a seller is selling the challenges they have had; even if they type their answers in an email, you don't get to see that raw, that raw, I guess, emotion or that real person behind it.

So if you were buying a business off me, you can kind of see me when I say these were the challenges and this is how I overcame them or maybe I haven't overcome them and the conversation flows and you dive. You just get so many layers deeper when you have a conversation than if you just type an email back and forth because you can bounce off each other.

So yes, I think you will get DD done without meeting a seller, but do you really want to put a large amount of money on the fact that you're getting to layer five when you need to get to layer 10 to really take over that business? Because when someone says, I work 10 hours a day, sorry, 10 hours a week in a business, you're not going to be working 10 hours in that business.

You're going to need to work 20 hours in that business. You're going to really need to understand what they're doing and what challenges they face. Just by asking on an email, How many hours a day a week do you work? doesn't provide all that information.

Exactly. Exactly. And also, even if you do try and go deeper on an email, it's like, can you also split up the time work?Those tasks that you do, but like, how, what's the system that they're following for each of those tasks and all that? This gets very, very granular. you have?

Yeah, sorry. Jump in there. It takes so much more time. Like an hour call, you can get through so much information then back and forth you take your days to do on an email. And as we keep saying, time kills all deals. A conversation is the most superior form of communication. And then you've got audio and then you got email and then you got texts and then you got, like, maybe Morse code or something ridiculous. it's communication. The most superior form of communication is definitely verbal, like in person as well. It's better than it's obviously better than over the phone; we're dealing with online transactions here.

Is there anything certain? I have some things that I can add in here, but I want to ask you first. Is there certain question that you ask? Do you have buyers ask sellers or vice versa to establish more trust in the relationship, whether it's within the transaction or whatnot? Is there anything? Have you noticed anything? I definitely have certain things that I like to do and help people with.

Yeah. So I think spending a bit of time understanding someone's expertise and experience. I often like when I'm doing a discovery call, so that's the initial call with a buyer and seller to meet each other. So I've obviously gone in and I've met the buyer. I've qualified them. I'm the one asking, Hey, where are your funds coming from? What's your background?

Things like that. Have you bought, have you acquired before and whatnot? And then I pass that on to kind of establish a lower level of trust with the seller. I always have the buyer introduce themselves and share their background and things like that because they often share.

I've come from a marketing background or I started in tech and then I moved, figured out I've moved to marketing and now I'm here and I'm really good at marketing and I'm looking for a business that maybe has optimized their marketing and I can jump in and bring my expertise for that.

And that excites sellers; usually it gives credibility, which creates trust. It humanizes the buyer and just provides a little bit of a nicer introduction than just. All right. Here are my questions about a business, which you can get a bit defensive on if you're just firing off questions and it gives the seller the opportunity to go, hang on. His background would be really good for my business. I have no idea about marketing. It's where I struck.

So by sharing experiences and your expertise, it just helps kind of set the scene a little bit. And then straight after that, before we jump into questions about the businesses, we'll have the seller do the same. And it just provides a little bit of a softer introduction. It allows people to connect because people connect over experiences. And then we kind of fire off the, all right, what is going on in the P &L here?

Yeah. Give me, like, what do you do? I don't understand. What does this even mean? So rather than firing something like that off straight away and the seller going, hang on, you don't know my business. My business is perfect or my business is great. It just puts everyone down on the same level, humanizes them, connects them and we all move forward. I love that.

Thank you so much for sharing. Humanizing somebody is so valuable to actually be able to have something to like latch onto somebody sharing vulnerabilities and stuff like that. how like connection is formed through some level of vulnerability and that creates trust.

And so when you talk about experiences and showcasing credibility, I think they're two amazing ways to go about it. I typically tell people or I like to ask about the tough times in people's lives or in business and sort of say, Not the goal is for me to look for and see how they answer the question and what type of character that person has. Because when I'm investing in a business, I'm not just investing in the business. I'm investing in who that person was that created that business on that canvas at that certain time. So I want to understand their psychology a little bit.

And so I would like to ask what was the toughest thing that has ever happened to you in this business or in your career. And without asking for the answer of how they handled it, they're probably going to, because people want to be positive on these calls; they're probably going to share that anyway. But that's a great question, because that gives you so much insight, not only to them but to the business, to the way they handled it. Like it's a multifaceted question, just that one question.

Yeah, yeah. Thank you.

And this means we could go so much further into the relationship building, but at the end of the day, the deal happens because of the relationship. Outside of the relationship, what do sellers get wrong or buyers get wrong? I would say on the buyer side is not doing your due diligence.

Correct. Right? Like going, kind of going back to like, Hey, do I need to jump on a call with this person? You absolutely do. You need to really understand the business inside and out. Like I use, I often use the analogy of the initial due diligence when you're looking at the car and maybe you've had a test drive and you're like, Yeah, this is nice. I like it. It feels good.

And then the post-LOI due diligence, when yout accountants or due diligence experts that is where you're lifting the hood and you're looking at every single nut and bolt that makes that engine go to see if it's purring along nicely, to see if it's going to clunk out in a few kilometers. Like you're really trying to reverse engineer what's going on. And I think it's super important to do everything that makes sense so that you can stand there at the end of that due diligence period and go, yes.

I do want to go forward with this business. I'm excited about this business. If you are not excited about the business, if it doesn't ignite a passion in you or align with what you're already doing and get you very excited in some aspect, it's going to be hard to answer calls on a Sunday afternoon or to wake up at 3 a.m. to have a call with the U.S. and things like that. having a business is hard.

So I think you have to be excited by a business. So just going into it when you buy something, just making sure that you know the business in and out and that you're excited by it and you can see a future with it. think further buying is important. On the sell side, some mistakes.

Yeah, there's lots of things here. Just reporting. How long have we got? No, no, there's often, I think, sellers who maybe don't keep an open mind to different deal structures in the market for different buyers. So they might come in too late to speak with me and say, All right, I don't want a private equity partner to take this long because I don't want them to chop it up and sell it off later.

Well, not everyone, not every single private equity is like that, right? So just keeping an open mind to the type of seller and where the seller is located in the world to different deal structures and really seeking to understand why maybe someone's doing that deal structure. Are they doing seller financing or earning out because your business is actually quite high-risk?

Yeah. So just, yeah, keeping an open mind and seeking answers. And then obviously consulting a professional, whether it's a break like myself or a lawyer or accountant. Yeah. And what you mentioned around the market, knowing the market, having a price point higher than where the market's at really like, it's so bad for the seller because to come down, say for example, they want 1.5 mil for their business, but the market's like, this is worth a mil. For them to come down psychologically to sell for a mil, I feel like they're losing 500k versus if they'd be like, okay, maybe I could get 900 for it, but they end up getting 1.1; it's a very different ball game.

Yeah, yeah, that's right. I think a lot of sellers come in with a number in mind and look, there's nothing wrong with that, but you do need to be realistic or maybe you need to be open to different deal structures or you need to respect that the process is going to take a lot longer. And I'm a true believer that everything is negotiable, right?

So maybe you are open to a deal structure with a lot on the back end for a higher multiple, or if you do need the money, I have had a call on the weekend with a client who said, Fiona, we like, we want to exit. We're ready to move on to our next thing. We are willing to be negotiable.

Like quite significantly comfortable to reduce their asking price and we're waiting on an LOI. it's just, I think, being realistic on your expectations and flexible and keeping an open mind, yeah. Love that, love that.

Fiona, thank you so much for your time. Really appreciate you coming on.

Yeah, no worries. I appreciate it. And I'm excited to connect with your community and happy to answer any questions.

Yeah, absolutely. So how can people contact you if they do have questions?

Yep. So I am very active on LinkedIn. That's where I post a lot of my content and am always available for someone to shoot me across a message, jump on a call and just answer their questions. I love talking about what we do at Flipper. I love talking about the market and selling online businesses. So happy to chat with people.

Love it. Thank you again, Fiona. Really appreciate you.

Thanks, Jaryd.

Everybody who's listening, thank you for listening. I appreciate you too, and I'll see you in the next one.