Interview with Thomas Smale of FE International

FE International is an award-winning global M&A advisor for SaaS, e-commerce, and content businesses. They have completed acquisitions for thousands of founders, owners and acquirers, totaling $1 billion since they were founded in 2010.

They are known for its extensive network of pre-qualified international investors. With headquarters in New York and regional offices in Miami, San Francisco and London, they are an international company serving clients worldwide. They were named one of The Americas’ Fastest Growing Companies in 2022, 2021 and 2020 by The Financial Times and are also a three-time Inc. 5000 company.

Today I got the opportunity to ask their founder Thomas Smale a few questions about buying and selling websites (internet businesses), and how he got involved with the industry and became one of it’s leaders.

Goran Duskic: Hello Thomas, and thank you for taking the time out of your busy schedule to do this interview with WhoAPI. Let’s start with a warm-up question we asked everybody in our recent interviews. Can you briefly introduce yourself to our readers? What skills, experiences, and connections (mentors, investors, books) helped you become the internet entrepreneur you are today?

Thomas Smale: When I was in college, like many college students, I was trying to find ways to make extra money. In 2008 I discovered the concept of buying and selling domains. I didn’t really have any money, so I would buy a small website for $100 and then look to resell it for $500 before my credit card was due by the end of the month. The year I graduated, in 2010, just coming out on the back of a recession, many of my peers were going into investment banking, but many companies were rescinding offers.
I’d always thought I would go into the corporate world, but somewhat out of necessity, I thought, why not try starting my own business?

In 2010 I still didn’t have that much money, but I wrote a book about what I was doing and was fortunate that it took off, and people started asking me to help them sell their businesses. At the time, there wasn’t really anyone doing what I was doing, and it grew through word of mouth. My business partner joined two years later, and our efforts compounded from there and we pivoted to only selling businesses.
We now have over 130 people on our team, and offices in several locations in the US and the UK.

A book I really like that I read a long time ago is “Tipping Point by Malcom Gladwell,” it’s a good and thought-provoking read. In business, I think a lot of people give up too early; the people who are successful are the ones that just keep going. I like to remind myself that you won’t always see the reward of something right away.

Goran Duskic: Can you share with our readers a highlight of your business career? Was there a story that significantly changed your path as an entrepreneur?

Thomas Smale: My first big sale was a $20,000 business, and I made 10% of that sale. The client posted about it and shared his experience working with me, and I earned business from word of mouth without any advertising. I just kept focusing on my customers and letting them share their experiences, which generated even more business. Once FE International gained traction, I started building out a small team and was joined by my business partner in 2012. Our efforts compounded from there, and we pivoted to only selling businesses and becoming really good at that, which is when FE started growing substantially.
We’ve now worked with over 1,200 founders and business owners to value, exit plan and ultimately sell their businesses. We use hundreds of thousands of internal data points accumulated from over a decade of successful exits to market and position businesses to the right buyers.

Goran Duskic: With the media screaming “recession” at the top of their lungs, do you see investors losing their appetite in purchasing revenue-generating websites? Or do they see it as an opportunity to get great returns? At the beginning of the year, you announced strong demand for high-quality businesses. Is that trend still present in the second quarter, and if yes, why?

Thomas Smale: The strong demand is a trend we believe will persist through the rest of the year. There is a substantial amount of dry powder available, which we discuss more in-depth in our recently published Mid-Year Reports covering the first half of 2022. We’re seeing that despite the current weaker macroeconomic landscape, there are a lot of opportunities on both sides of transactions. In our case, we have seen a 59% increase in the value of closed deals in the first half of 2022 compared to the first half of 2021.

Thomas Smale - Founder & CEO of FE International

Thomas Smale – Founder & CEO of FE International

Goran Duskic: In your Mid-Year Reports, you mention our investor’s ( announcement that funding for SaaS startups has increased by almost seven times and outpaced the growth of overall venture capital funding by almost six times. How do you see SaaS performing on FE International when it is put up for sale? How do multiples compare to other businesses, e-commerce in particular?

Thomas Smale: SaaS funding is growing at an exponential rate, and yes, in the last ten years, SaaS funding has increased by almost seven times and outpaced the growth of overall venture capital funding by almost six times. The increase in investor interest surrounding SaaS is primarily due to its growing use case, expansion into new industries, and accelerated tech adoption – all of these factors are likely to drive more acquisitions in 2022.

At FE, we’re seeing strong demand for high-quality SaaS businesses with solid growth trajectories, especially as more capital flows into strategic and private equity firms with investors seeking shelter from the stock markets and other vanilla investment classes. Buyers in FE’s network now represent nearly $41 billion in capital, which is a number that is consistently growing year-over-year (it was just under $39 billion at the end of 2021)

FE’s average SDE-based SaaS Multiples have gone up from:
4.0x-6.0x for businesses under $2M EBITDA and 6.0x-10.0x for businesses over $2M EBITDA, to 5.0x-7.0x for businesses under $2M EBITDA and 7.0x-10.0x for businesses over $2M EBITDA.

For more in-depth information on SaaS valuations, we have great resources on our website with everything you need to know about current SaaS valuations.

As for e-commerce, the total value of closed in the first half of 2022 is nearly triple that of 2021’s first half. We’re seeing e-commerce valuations holding firm, with an SDE multiple of 4.0x to 6.0x.
We have several resources on valuations relating to e-commerce and content/affiliate businesses, which discuss the factors that play into valuing a business and how the exit process works.

For more details on this, you can read our in-depth articles:

Goran Duskic: What’s the biggest mistake in acquiring a website or a company that nobody wants to talk about? Or a lite version of the question, a mistake that investors don’t like to talk about.

Thomas Smale: One of the most important things to consider as an acquirer is finding something that works with your skillset and personality, particularly if you’re an individual. I would not suggest acquiring something that you have zero understanding of, either conceptually or technically. That doesn’t mean you need to know how to do everything, but it’s essential to have a working understanding and a propensity to learn.

Something we’re developing, which is still in the planning phase, is working with buyers and offering a service to them. Currently, FE works with sellers, so we only offer buyers the actual businesses we sell. Many people are looking to acquire a business, and I’d love to provide a broader range of services to them. As we’ve grown as a business, with over 130 employees working on sell-side M&A, it feels like a good time to start offering this service to buyers.

Goran Duskic: This morning, I found a quote by Kwame Appiah in Tim Ferriss’ book Tribe of Mentors; “It’s not how well you play the game, it’s deciding what game you want to play.” It confirms my initial finding that picking the right niche is the most important step in building a successful business. If someone who reads this was looking for “the right niche,” what advice would you have for them? And why is purchasing a business that’s already generating revenue a good idea?

Thomas Smale: I think many people who are adjusting from years in the corporate world do much better at buying an established business rather than starting one from scratch.
Starting a business from zero requires a specific set of skills and a mindset that many people don’t have. If you’re used to managing a team of 50 people, trying to start a business from scratch is difficult. These people will do well taking over a business with an existing team because they have experience with management, delegating, setting the strategy, and formalizing processes. They can often take a $1 million business and turn it into a $10 million business.

Goran Duskic: How should an entrepreneur decide if it’s the right time to sell their company?

Thomas Smale: The reasons for selling a business will vary depending on the founder’s ultimate goal and what they want to achieve by exiting. For some, it’s about freeing up their time to focus on new ventures and financial independence, some just want more time with their families, or they feel like they’ve taken the business as far as they can.
There are many things to consider, but I’d say the two most important things for those thinking about an exit are:

  1. Keeping your financials clean – if you are going to sell, your books have to be in line at least for the past 12 months. Hire a good bookkeeper and accountant; this will save you money in the long run.
  2. Establish what you’re trying to achieve – usually, it’s a financial or time-based goal due to life scenarios. It’s key to have clear expectations so we can help you come up with a plan.

Getting a valuation is a great place to start if you’re considering an exit. Most serious firms will offer this for free. A valuation helps establish expectations, and you get a feel for where you’re at with the business and if it’s the right time to exit or if you should continue growing it to the next level. We have a good reputation for being direct and honest with our clients to set those expectations.


Goran Duskic has been the Founder and CEO of WhoAPI Inc. since 2011, a company that specializes in developing APIs, including the well-known Whois API. He started his career in internet entrepreneurship in 2006 and has co-founded several online businesses, including a web hosting company that he later sold. Goran's work primarily involves creating practical API solutions to meet technological needs.