So, you’ve decided to sell your Amazon FBA business. It’s a huge step in your entrepreneurial journey, one that doesn’t come easily but can come with tremendous, potentially life-changing rewards. Now, of course, you have to actually sell it. That starts with finding the right partner, but it ends with the closing process. Getting the first part right helps the last part go faster, which is the best case for everyone.
Here’s why speed of close matters, as well as some tips on picking the right selling partner to make it happen.
Time = money
As is true of many things in business, time is money when closing, but time also costs money.
Time is money because when you’re selling, it doesn’t mean you get to stop running your business. Until ownership has officially transferred, you’re still in charge. Essentially, it means doing two intensive jobs at the same time, making it harder to focus on either.
Furthermore, time costs money because while selling a business takes as much time as a second job, it doesn’t generate income until the deal closes. In fact, there are lawyers and accountants to pay. And every day spent closing is a day being added to those invoices.
Both sides should want the brand to do well
If you’ve done a good job picking the right partner to sell to (more on that below), both of you will want the same thing for the brand: to see it grow and be profitable. That’s what you’ve done, and that’s what the company you sell to is going to want to do. Neither party can accomplish this while simultaneously working through diligence.
Brand acquisition companies are about more than just buying brands. At least, they should be. There’s not a lot to gain from just hoarding companies. Which means that, in reality, the goal is the same on both ends. It’s easy to get caught up in the transactional nature of a deal, but the reality is that it’s just a transition point to new ownership with the same end goal.
Furthermore, the faster a deal gets done, the faster you can get your earnout. Most acquisitions include this mechanism in some form or another. Remember: time is money, but time also costs money. For one, the longer it takes to get to the earnout phase (i.e. closing the sale), the longer it takes to get that additional payday. Also, the longer it takes to close, the more costs are accrued, which effectively eats from both your payout and your earnout.
How to pick the right partner
None of this happens without finding the right partner to continue growing the brand. While you want to sell your Amazon FBA business fast, for the reasons mentioned above, the actual leadup to the process should be measured. Selling to the right buyer is the most important decision. You will want to make sure that their expertise aligns with your brand and that they have a track record of maintaining other brands in your vertical. Are these the brands that they are proud of, that they feature prominently? Do these brands show signs of consistent investment and growth?
It’s also important to come to the table with a number in mind. If you have a target outcome, it will be much easier to act decisively when you receive offers. This can be either a multiple or a dollar amount, but it’s important to set that goal prior to receiving offers. This will also help you to assess whether you are being lowballed, or worse, given a number that’s too good to be true. An unfortunate industry practice is to offer a pie-in-the-sky multiple in order to gain exclusivity, then “revisit” that sum once negotiations begin. Knowing your value is a good way to know what numbers raise red flags.
Finally, when it comes to due diligence, you will need to think about what the buyer is going to uncover. If due diligence is revealing groundbreaking new information, that can put a deal at risk. Prior to signing an LOI, it is important to be forthright about the problem areas of your business so that nothing comes as a surprise during the diligence phase.
One of the easiest ways to save time during due diligence is to have your books in order ahead of time. If the financials are easy to audit and prepared appropriately, it will save time for both sides. When financials are messy or not prepared, the buyer will have to spend more time turning over every rock to make sure they haven't missed anything.
Get the most from selling your FBA business
Selling is a process that, while an important milestone, is not what you, or your selling partner, should want to spend your time on. Rather, the focus for both parties should be growing the business, with the goal of completing the handoff as quickly as possible to allow that growth to continue. Having a number prepared, organizing financials, and doing the proper research to know you’re entering exclusivity with the right partner are all steps to help make a fast sale a reality.
We pride ourselves on our process at Boosted Commerce because it allows us to complete a transaction quickly -- closing in as few as ten days. Through meticulous research, fair pricing offers, and finding out as much as possible ahead of time, our due diligence is completed more efficiently, and we can get down to the business of continuing to grow your brand. If you’re ready to explore an exit, reach out today.