What is On-Market Sourcing?
On-market sourcing is the process of acquiring digital assets through publicly available channels, e.g. marketplaces like Empire Flippers or FE International. This typically involves bidding on an asset in an online auction.
Pros of On-Market Sourcing 🌟
- Steady deal-flow and more opportunities for competitive bidding
- Transparency in the process as buyers can see the current bids for an asset
- Pre-vetted deals are possible
- No outreach efforts
- Sellers that are prepared to sell their assets
Cons of On-Market Sourcing 🤔
- More competition, which can drive up the price of assets
- Limited access to exclusive assets that are not publicly listed
- Higher risk of fraud and misrepresentation from shady sellers
What is Off-Market Sourcing?
Off-market sourcing is the process of acquiring digital assets through private channels, such as direct negotiations with sellers, referrals from industry contacts, or through specialized M&A firms.
Pros of Off-Market Sourcing 🌟
- Access to exclusive and off-market assets that are not publicly listed
- No overoptimized, trimmed for exit assets
- Hence more control over the negotiation process and terms of the deal
- Lower competition, which can (but not must, see below) result in lower prices for assets
- Reduced risk of fraud, as the sellers are often not prepared yet
Cons of Off-Market Sourcing 🤔
- Limited pool of potential sellers that are fitting your criteria
- Probably higher cost due to ‘off market premium’, as sellers have no need so exit their asset
- Unprepared sellers, e.g. no P&L ready
- Trust and industry reputation as an imperative factor, especially when switching to creative terms
- Takes time and manpower to compile, filter and approach a vast pool
Which Approach is Best? 🎉
Obviously, combining both. The more deal flow, the more opportunities at hand.