Do you own an Amazon FBA Private Label Brand that has strong sales on Amazon and believe it is the right time for you to flip it but not sure how to sell your Amazon business? If so, we may be able to help you in selling your Brand or FBA business. Read on for more info.
Who is EO?
At Ecommerce Outset, we’re all about Amazon. Our team manages Amazon businesses for our clients, who are established brands selling on Amazon. Most sell using Fulfillment by Amazon (FBA) in order to streamline operations, though in some cases Fulfillment by Merchant (FBM) makes more sense. Some are manufacturers, others develop private label brands, and others are distributors with unique advantages. We also sell our own products through Amazon as well. So we’re familiar with the idiosyncrasies associated with Amazon. Even better, we’re really well connected with tons of other business owners who sell on Amazon or plan on investing in Amazon businesses and are actively looking to acquire new accounts, new product lines, etc. within Amazon.
What are Buyers/Investors Looking for in a Possible Acquisition?
Ideal prospects will meet most of the following criteria:
- Average monthly sales on Amazon between $20,000/mo and $250,000/mo
- Gross margin (after all COGS and selling fees) of 25% to 50%
- Amazon account and listings in good standing
- All or most products being sold are private brands owned by the seller, preferably with applicable trademarks
- Established off-Amazon presence: website, social media presence, email list, sales on other marketplaces
How Much is My Amazon Listing/Brand/Business Worth?
This depends on many factors, but generally speaking we see multiples of between 10x and 20x the monthly net income for most Amazon businesses. This means 1 to 3 times the annual net income. So if you sell $100,000 in sales per month and your net income on that is $30,000 then you’d likely be looking at a valuation between $300,000 and $600,000.
KEY FACTORS determining where in this range the value is, include:
- Is it FBA vs. FBM,
- Is it a reseller vs. a private label,
- Sales volume,
- How many products/SKUs are being sold,
- How diversified is revenue by product,
- How long have the products been established,
- Are there any non-Amazon assets such as website, Email/Subscribers List that accompany the core business, etc.
- Also how the deal is structured – all cash up front vs. a payout over time or earn-out, etc.
Isn’t 10-20x Low Multiplier? I See Bigger Numbers on Other Websites?
Many brokers publish their best multiples in order to attract potential sellers. They may even list your business at a 20-25X monthly multiple but that doesn’t mean that is what you will get. Oftentimes they are showing the highest examples and those are examples where there are earn-outs, payment terms, etc. and not guaranteed cash up front. So in other words, we’re just trying to be “real” with you!
Would a Buyer Buy my Listing, Account, Brand or Business? And What is the Difference?
Typically Buyers/Investors are looking to acquire brands or single listings and thus likely would not purchase your business. This is commonly referred to as an asset acquisition. In some select cases, they might be interested in possibly buying the business itself. Usually there is not much difference from a valuation standpoint, its more about limiting liability and combining efficiencies. In no case would they be interested in buying an account though by itself (without purchasing the company itself) as that is against Amazon’s TOS.
Please do not contact us asking us to buy your reseller account. We’re not interested!
Do Buyers/Investors Buy Amazon Accounts?
No. They buy brands, and sometimes businesses. Please read the paragraph above for more information on this.
Why Should I Consider Selling through EO?
Buyers typically offer generous terms – most or all cash upfront, so there is no risk to you. If you sell your brand for 20% cash up front and then 80% on payment terms, you risk not getting that 80% if the new owner messes it up. That doesn’t happen with brands we help you sell. Also when you sell your business through an amateur broker you are typically giving up 10-15% of the selling price, whereas we charge a fraction of that fee so if you sell it through us you keep the most of that as well. Lastly, we make sure you sell to a knowledgeable buyer. Who knows what he’s buying and how Amazon works. So selling to through us is painless, whereas selling through another broker your business would likely be purchased by someone who knows very little about Amazon and either backs out at the last minute or hounds you with petty inquiries both before and after the sale is finalized.
Will I have to Sign a Non-Compete? Can I Start-up Another Amazon Business Later?
When you sell a business it is a deal that both parties negotiate, so everything is open for discussion. Most commonly, buyers are generally fine if you choose to sell on Amazon again after the transaction, so long as you are not competing with the product line(s) they just acquired.
What if the Buyer/Investor is Not Interested?
As is the nature of acquiring businesses, most of the ones sellers/investors look at or discuss they don’t actually end up purchasing. That said, we do have a large network of potential buyers and facilitators as well. In some cases, we may represent a client of ours who might be interested in acquiring your brand. In other cases, we may be able to refer you to a broker who has interested buyers. So even if some particular seller/investor doesn’t acquire your brand, we can likely still help you sell it.
What is the Process of Selling my Amazon FBA Private Label Brand through EO?
The first step is to fill out our intake form below. We’ll ask a few high-level questions about your business – top level sales, approximate gross margin, types of products sold, etc. We will keep this information confidential. All this information would be provided to prospective buyers. If they are interested, we’ll then ask for some more detailed information and at that time we’re happy to sign an NDA (Non-Disclosure Agreement) before you send us that information. That will include things like financials broken down by product, by month, etc. Then we’ll schedule a phone call to review this and ask any questions we might have. After that, we’ll help the buyer to make an informed decision by providing him all the information collected from you. If they are interested then we’ll make an offer on the brand via a Letter of Intent (LOI) from the buyer. This will outline the price the buyer is offering, the payment terms and other stipulations. This is typically a 1-2 page document so its an easy read. You can choose to accept the offer, reject it, or counter it. If and when the two parties can come to a mutual agreement then the buyer typically conducts a “Due Diligence”. It’s a period during which the buyer simply verify that the numbers you provided are accurate, and ask you to provide the information he’ll need to take over the brand at closing. This typically takes anywhere from 10 to 30 days. The last step is then closing – you’ll both sign a final sale agreement (this one will be a long document!) and the buyer will transfer the money to your account and you’ll give them the keys to the brand.
How do I get Started?
Want to take the first step and see how much your business is worth? Fill out our Amazon Business Evaluation Form to get started.