Sell Your eCommerce Business (Coran Woodmass 2 of 2)
British Amazon Seller · 28 minutes ·

Sell Your eCommerce Business (Coran Woodmass 2 of 2)

Today We learn more about how to sell your eCommerce business with Coran.

In Part 1 we spoke with Coran Woodmass from about how to make your FBA business worth buying in the first place. In this episode, we look at who the buyers are. Who are these people? Why are they buying Amazon businesses instead of investing in stocks and shares and bonds and other investments?
The Current Market
The bulk of the market right now is $100,000 - 500,000 businesses. That’s also where the bulk of the buyers are looking. Did you know that 70% of the buyers are 100% new to Amazon? And most are new to eCommerce as a whole. The attraction to FBA businesses is the same thing that got us all into it in the first place: they’re very easy to run and the return on capital for inventory is really good.

As a secondary investment getting access to that capital return on inventory itself is very appealing. Most buyers are high 6-figure executives, who have a lot of savings. They’re looking to either quit their job and start something with less time involved, or they’re looking at it as just an investment. The latter is the biggest buyer pool. The information from Part 1 about making your business saleable and attractive to a buyer is to attract this type of buyer. They’re more of an investor, they have less time to manage the investment but they’re looking for a better return than on stocks or bonds.
Positioning to Sell Your eCommerce Business
A small percentage of that market are strategic buyers, but they’re few and far between which is why you want to position your business for the wider investor audience.

Those high paid executive investors are going to have a very corporate mindset. If they’ve only just started looking at FBA businesses they’ll be most appealed to the history and clean books. For the most part the more research they’ve done into the industry, the looser they’ll be with their criteria and more understanding and less nervous.

They typically don’t buy very fast if they’re a very new buyer, there’s a lot of education that needs to come into play for them to feel comfortable to move forward, to understand what is a good business and what isn’t a good business.

A much smaller area than $100-500K are businesses that are selling the $1 - 5 million. As you would expect there are fewer buyers that have over a million to spend. In that range, you’ll see very sophisticated, strategic buyers. You won’t get past them if you’re dodgy. You’ve got to be very up-front and honest about the good and the bad if you want to sell your eCommerce business.

At this level, the buyer is commonly an operator that has raised capital or a couple of investors getting together. Also, it might be someone looking to consolidate some brands and sell them on to an equity fund down the track. At the top end of the 5 million range, and over $5-10 million, it is definitely the playground of private equity funds. The multiples can get quite interesting at that point!
The Selling Process
Every broker does it a little bit differently but there is a general overview.

Firstly, a buyer will start looking for a business and it will take them a while to figure out exactly what type of business they want. Typically there’s a very high funnel at the top, with lots of inquiries.

Most brokers don’t reveal your brand or links to anything personal at the top of that funnel.

In the second step, the buyer will say yes. They want info about the business. That’s when you can start engaging with the potential buyer. There will be some sort of call process, they’ll want to meet you. At this stage, it’s important to be very responsive and very upfront, because remember the buyer is also buying YOU as part of the deal. They need to trust not only that your business is doing what it says, but also to trust you enough to know that after the sale you’re not just going to disappear.

Step three is the offer stage, the fun part!

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