Dominic Wells is the CEO of Onfolio, a publicly traded US holding company that buys online businesses. While most investors make excuses about how hard it is to run a public company, Dom is running his from Taiwan and has acquired 20 businesses using his public company arbitrage strategy.

Most business buyers face the same problem: every acquisition requires giving up equity or taking on expensive debt.

Dom found a different way.

"I've acquired 20 businesses at Onfolio and I usually had to give up equity every time. Going public really unlocked some arbitrage opportunities that most investors don't even notice," he explains.

Before going public, Onfolio was doing $1.2 million a year. Now they're on course for about $12 million in 2025.

Here's how Dom's strategy works and what it really costs to execute

1. The Public Company Arbitrage Strategy

Dom's approach centers on preferred shares - a financing tool that acts like debt but is structured as equity.

Here's how it works:

Common stock represents ownership that grows with company value. Preferred shares have a fixed value and pay a 12% annual dividend (3% quarterly).

This creates two major benefits:

Benefit 1: Cheap Capital from Investors

Issue preferred shares to investors who want steady returns. They buy shares, you use that money to acquire businesses, and it only costs 12% annually.

The preferred shares are liquid - listed on public exchanges. If investors want to exit, they sell to someone else. You never have to pay back the principal unless you choose to.

Benefit 2: Currency for Acquisitions

Use preferred shares as payment to sellers. Dom shares an example:

"We needed $1.1 million. We borrowed $250K from friends, issued the seller $400K of our preferred shares, and the seller took a $300K note for the remainder. We bought that business without using any of our own money and didn't give away any equity."

Real Deal Examples

The $600K E-commerce Business

• Purchase price: $600K

• Business profit: Just under $200K (3x multiple)

• Structure:

  • $200K cash (raised from JV investors for 30% of this specific business)

  • $200K seller note (9% interest, 2-year balloon payment)

  • $200K preferred shares to seller

Result: Acquired the business without using company cash, though they gave up 30% of this specific asset to JV partners.

2. The Long-term Strategy

As Onfolio grows, Dom plans to transition to traditional debt financing:

Traditional Debt Structure (Future State)

When reaching larger scale, here's what traditional acquisition debt looks like:

Senior Debt: 6-8% interest, secured against company assets, typically 70-80% of purchase price Junior Debt: 12-15% interest, often interest-only with balloon payments

Key factors lenders consider:

• Company revenue vs. loan amount

• Business quality (recurring revenue, customer concentration, margins)

• Collateral available

• Track record of borrower

"If we're at 50 million in revenue and 5 million in EBITDA, and we want to borrow 10 million to buy another business that gives us 1 million extra in profit, lenders will say yes much more easily," Dom explains.

3. The Public Company Advantages

Going public created several unexpected benefits beyond capital access:

Credibility and Deal Flow

• "If I want to pitch somebody something, generally typing an email like 'I'm the CEO of a NASDAQ listed company,' they're going to read the email"

• Bankers proactively reach out with businesses for sale

• Corporate transparency reduces seller concerns about getting paid

Price Discovery

• Sellers can Google previous transactions to understand pricing

• "Five other people have accepted this structure, so it's an acceptable deal"

• Reduces negotiation friction and unrealistic expectations

Recruiting and Business Development

• Easier to attract talent and partners

• Opens doors that stay closed for private companies

4. The Hidden Costs and Risks

Annual Operating Costs

Running a public company costs Onfolio approximately $750K annually, including:

• Insurance (cheaper now than at IPO)

• Audits and compliance

• Legal and administrative costs

• Can range from $500K to over $1M depending on company size

Initial Setup Costs

Going public cost approximately $500K:

• Investment bank retainer: ~$50K

• Legal fees: $50-100K

• Audit costs: ~$200K (two years of audits required)

• Plus 8% of capital raised goes to investment bank

The Pressure

"You move slower because maybe you need to ask the board permission to make an acquisition. Sometimes you need to move quickly."

Dom notes the quarterly pressure was most intense in the first few quarters. Now, three years in, he's more focused on long-term results than stock price fluctuations.

5. Timings

Dom believes this strategy works best when you reach certain thresholds:

"Ideally you're going to be doing a million profit a year before you go public because then you can absorb the costs and you'll get all the benefits and few of the downsides."

His company went public while losing money, which created additional challenges they're still working through.

Thank you for reading Behind The Acquisition.