How to Sell Your 7-Figure Newsletter
June 12, 2022
Digital newsletters form a daily part of many people’s lives.
Readers use them to stay informed about their hobbies and interests, and entrepreneurs use them to advertise their businesses.
But did you know that newsletters are more than just a digital marketing tool? They are valuable assets that can be sold for a healthy sum of money.
That’s right, you can sell your newsletter in the same way you would sell any other online business model.
In this article, we’ll dive into why newsletters are so valuable and provide a step-by-step process for how to sell your newsletter business for maximum profit.
Is There a Market for Newsletters?
Newsletters have seen a big rise in popularity over the last few years. Not only do they provide consumers with a source of information and news, but they allow businesses to engage with their customers on a deeper level.
Newsletters form a core part of email marketing, an industry that is projected to grow to 18 billion dollars in value by 2027.
Recent high-profile acquisitions of newsletters such as Morning Brew and The Hustle, which both sold for over 8-figures, show that there is serious money to be made from selling an established newsletter business.
The question is, what value do newsletters provide that makes them worth so much money?
As competition between online businesses grows, capturing customer attention by humanizing your brand and offering real value becomes more and more important.
Speaking in regards to their acquisition of The Hustle newsletter, Hubspot stated, “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 need to deepen customer relationships makes newsletters, with their large pool of engaged consumers, an incredibly valuable asset for a business. The growth of paid content has also given newsletters an extra injection of value, greatly boosting the income you can earn from them.
Who Buys Newsletters?
As you’ve already seen, big corporations and industry leaders are actively acquiring newsletters to help increase their market share.
While your newsletter may not be big enough to attract the attention of these industry giants, there are still plenty of interested parties who will benefit from buying your newsletter.
Most of these interested parties would likely purchase your newsletter via a bolt-on acquisition. This means they would use the newsletter by leveraging its audience to boost their existing business.
Content Site and Amazon KDP Business Owners
There’s a lot of money to be made from running content sites and Amazon KDP businesses, as long as people read your content.
The biggest struggle for these business owners is making consumers aware of new content that has been published. Newsletters allow these entrepreneurs to broadcast updates about their work to an interested audience and also help them to build a powerful community around their content.
After recognizing the value that communities provide to content creators, Twitter recently purchased Revue, a platform that helps users publish and monetize email newsletters. Twitter justified this purchase as a way to support writers and publishers who have built a following with their tweets – yet another example of the growing value of newsletters.
Ecommerce Sellers
Ecommerce sellers use newsletters to help integrate their products into their consumers’ daily lives. A regular reminder about their products helps guide subscribers further down the sales funnel, boosting brand recognition and turning one-off customers into repeat buyers.
Flippers
Much like home renovators who restore and sell derelict houses, some entrepreneurs make good money buying and flipping websites. A lesser-known opportunity is flipping newsletters for a profit.
In some cases, entrepreneurs start and build newsletters from scratch and then sell their creations. In other instances, entrepreneurs buy underoptimized or under-used newsletters and then focus on boosting the number of subscribers. They then sell the revamped newsletter at an increased price.
Brand Aggregators
These are investment-backed organizations with large portfolios of eCommerce (usually Amazon FBA) businesses. Similar to the eCommerce sellers mentioned above, Brand Aggregators will acquire newsletters to increase brand awareness and boost sales.
Why Should You Sell Your Newsletter?
As an online business broker, we’ve helped thousands of entrepreneurs sell their businesses. Each entrepreneur has their own reasons for wanting to exit their business.
Some entrepreneurs enjoy building and scaling businesses but have no interest in maintaining the business once it is up and running. Others discover new business opportunities that they would rather focus their time and capital on.
Newsletters are very content-heavy, so it’s easy for entrepreneurs to burn out from the pressure of having to research, write and construct each issue of the newsletter.
Often, newsletter owners aren’t even aware that selling their business is an option. According to Inboxreads, 12.5% of newsletter submissions on their site became inactive in the same year they were submitted. Many of those newsletters could have been sold instead of being abandoned.
At the end of the day, selling your newsletter rewards all the hard work you put into building the business by giving you the freedom and capital to move on to bigger and better projects.
How Much Is Your Newsletter Worth?
In most cases, the true value of a newsletter lies in the audience that comes with it.
The power of a newsletter’s audience goes beyond the size of the subscriber list. The strength of engagement and the community that the newsletter has fostered is where the value lies. Building community and loyalty is a delicate dance that takes time and effort. Having this work done for you is what boosts a newsletter’s worth.
Therefore, during valuations, we focus on metrics that gives us insight into the newsletter’s audience engagement and behavior, such as open and click-through rates.
Each brokerage uses a slightly different formula to calculate the value of a newsletter. Here’s the formula we use:
Average Net Profit x Business Multiple = Valuation
The average net profit shows the income that the business brings in after expenses. Remember to include operational costs such as email service provider subscription fees, hosting fees, domain fees, etc.
The multiple is a much more mysterious figure consisting of several different factors. As I mentioned before, these factors revolve around the newsletter’s subscribers.
Here’s what we take into account when calculating the multiple:
- The number of subscribers
- Subscription model (recurring or one-off lifetime subscriptions)
- Niche/ Target audience
- Customer acquisition cost (CAC)
- Customer lifetime value (LTV)
- Click-through rate (CTR)
- Unsubscribe/ churn rate
- Revenue streams (subscription, affiliate, sponsorships, etc)
When it comes to niches, our vetting team takes into account the longevity of the niche, keeping an eye out for fads or passing trends.
There are certain niches you should steer clear of, such as betting tips, and multilevel marketing (MLM), as they are often viewed with suspicion. Instead, aim for a popular niche with a large or growing community.
How Can You Increase Your Newsletter Valuation?
You might have a specific figure in mind when it comes to selling your newsletter. If you have a subscription-based newsletter, you can use our valuation tool to get an idea of how much it’s worth.
If you’re coming up short on your desired asking price, here are a few ways to increase the value of your newsletter business.
Create Quality Content
Good copywriting is the key to drawing in and retaining a captive audience. If writing isn’t your strong suit, consider outsourcing this task to skilled copywriters or a content marketing agency. The benefits of quality newsletter content will outweigh the expense of hiring copywriters.
Don’t forget about visual content, like graphics, photos, and videos. Particularly in the case of paid newsletters, readers expect premium content. A freelance graphic designer will help you to create eye-catching graphics that encapsulate your newsletter’s brand.
In today’s world, you don’t need an expensive camera to take great photos, the camera on your smartphone will do. Consider taking an online course to boost your photography skills or purchase high-quality stock photos that will grab the reader’s attention.
Increase Your Subscribers
A newsletter is nothing without subscribers. The more subscribers you have, the more your newsletter is worth.
At this point, it’s important to note that you should focus on finding the right subscribers. You want to target people who have an interest in your content and who will stick around for the long haul. Advertising your newsletter to anyone and everyone will likely result in a very high unsubscribe rate.
First, identify your target audience, and then figure out where they hang out. If your newsletter is in the parenting niche, you might find a wealth of subscribers in Facebook groups for new moms and dads. If your newsletter is in the business niche, LinkedIn is a great social media channel to turn to. If you’re in a more visual niche, like fashion or food, consider channels like TikTok or Instagram.
Reduce Owner Involvement
If you’re building a newsletter with the intention to sell, make an effort to reduce your involvement in the business as much as possible.
Many of the potential buyers I mentioned earlier have existing businesses that they are already running. This means that they don’t have time to spend 20 hours a week researching and writing content for a newsletter. They are looking for a hands-off, streamlined business that can run largely on autopilot.
Outsource or hire skilled professionals to handle the labor-intensive tasks. Streamline your content creation process and create detailed SOPs that will enable the new owner of the business to easily take over operations.
SOPs are step-by-step instructions on how to complete certain tasks. Not only will they help the new owner understand how the business operates, but they will also make it easier for the new owner to hire and train employees.
Where Do I Find a Buyer for my Newsletter?
When it comes time to sell your newsletter, your options are to sell privately or through a brokerage.
Brokerages give sellers access to a large pool of qualified buyers. This includes entities like brand aggregators or private equity firms that you may not have access to as an individual.
Private sales allow you to leave out the middleman and deal directly with the buyer. It also means that you are responsible for managing every aspect of the deal, which includes calculating a valuation, finding a buyer, negotiating the sale, sourcing an escrow service to hold the funds, and migrating the business assets.
The main reason sellers choose to sell privately is to avoid paying brokerage commissions. While this may save sellers some cash upfront, not having access to a large buyer pool means sellers may miss out on a bigger offer on their business.
It’s important to note that many brokers will only consider selling monetized or paid newsletters as free newsletters have no recurring revenue. Private buyers may consider buying free newsletters as a lead generation tool or to bulk up an existing email list.
Selling your Newsletter
This is the exciting part. Marking your newsletter as “for sale”, and marketing it to interested buyers is the first big milestone in your journey as a seller.
Once you’ve committed to selling your newsletter, the next step is to create an exit strategy.
An exit strategy helps sellers make sure everything is in place to ensure a smooth exit from the business and an easy transition for the new owner.
First on the to-do list is to get your financial documents in order. The best way to do this is to create a profit and loss statement (P&L). A P&L is a summary of your business’ income, costs, and expenses. Ideally, you should prepare three years of accrual accounts.
These financial records will make it easier to get your newsletter valued.
Next, you need to organize your business operations. This includes creating SOPs outlining important operational tasks, outsourcing and automating as many tasks as possible, and gathering legal documents such as employee contracts and copyright agreements.
When you’ve gathered all of your important information, you’re ready to submit your business for sale. Once you’ve put your business up for sale, and closed it to the lucky buyer, you’re on to the next step–migrations.
Migrating the Assets
The migration process can be as important as the sale agreement itself, as transferring a newsletter incorrectly could cause the business to be suspended.
Protecting Yourself Legally
An important part of due diligence is to read through the terms and conditions of the various services and templates your business uses to ensure that the sale doesn’t violate any legal agreements.
Before you sell your newsletter, take a look through the Terms of Service of the email service provider you’re using. Some Terms of Service conditions include a promise not to sell the information of the users. This includes the email addresses that make up your email list.
If you operate within Europe, make sure you are compliant with the General Data Protection Regulation (GDPR) rules that came into effect in 2018. These rules apply to any personal information (like names, location data, etc) you have collected from your subscribers.
Receiving Funds After the Sale Is Complete
This is arguably the most important step in the process for the seller – receiving payment for the sale of your newsletter.
If you’re working with a broker, they will transfer the funds to you once the business has completed the migration process.
If you negotiated an earnout agreement with the buyer, you’ll receive the cash portion of the earnout once the migration has been completed, unless otherwise stated on the sales agreement. The outstanding amount will be paid to you over the set period laid out in the earnout agreement.
If you negotiated a private deal, you’ll need to work with a 3rd party escrow company. They will hold the funds for you until the negotiated terms have been met by both the buyer and seller.
You’ve Done the Hard Work, Now Reap the Rewards
Building a successful newsletter is a job well done, but you won’t truly experience the benefits of your success until you sell the business.
Businesses are volatile and require a lot of sacrifice from entrepreneurs. By selling your newsletter while it is performing well, you can enjoy the benefits of its success while avoiding future volatility and risks.
If you’re ready to take the next step and sell your newsletter, speak to one of our experienced sales advisors who will guide you through how to submit your business to our marketplace.
Parting with your business is a big decision but, based on feedback from our sellers, it will open you up to a whole new world of opportunities.
