How to Sell Amazon FBA Business Assets to Investors for Cash
Let’s say that you’ve launched a successful private label product on Amazon, and now you want to sell Amazon FBA business assets to a buyer eager to take over the brand?
Just like selling any other business, selling an Amazon private label brand requires the same ingredients: you the seller, and an investor looking to buy. Buyers will often deal in more upfront cash buys than other types of acquisitions. Additionally, using a broker to sell Amazon FBA business assets comes highly suggested as it can make the process run a lot smoother.
To sell Amazon FBA business assets successfully, there are a number of factors to consider when striking a deal with the buyer (including making them buy your inventory).
Today’s question that focuses on how to sell Amazon FBA business assets is:
“What do negotiations look like for an FBA business?”
See the full Amazon Seller Secrets Revealed video here:
Here is a more in-depth look at the expert answers on how to sell Amazon FBA business assets:
Steps to sell Amazon FBA business assets include…
Coran Woodmass, Founder of the FBA Broker
“It really depends on the size of the business. Some quick facts from last year: there were 174 public FBA businesses sold last year. The total list price of those published available listings was over $329 million. And that’s up 400% from 2016--this market is growing fast.
However, 60% of those listings were under half a million dollars. So the bulk of the market, the bulk of the transactions that are happening are under that half a million dollar mark. So let’s talk about the bulk of the market. They sell faster and their structures are very simple. Even up to half a million dollars, you’re typically dealing with a private investor who is using [his/her] own cash.
For the most part, they are willing to move pretty quickly on a sale, and they are willing to put most of the cash upfront. But what you have to realize is that there is a lot of competition in the market. So there are around 175 or 174 businesses for sale online right now. So even when you go to list your business, a broker or a marketplace will give you a multiple or list price target that you’re going for.
But you won’t really know what your business is until we start talking to investors about your business and talk to buyers that are interested in buying a business. Then we will figure out what’s important to them, what they foresee as the risks, and what they are willing to pay. But under half a million dollars, most of those deals are 80%-90% cash upfront, and in a lot of cases, it’s 100% cash upfront. They just want you to do some handover in training--it depends how much experience the buyer has with Amazon as well.”
Gregory Elfrink, Director of Marketing with Empire Flippers
“Negotiations can come down to inventory pricing. So when we have an FBA business on our marketplace and say they have $30,000 worth of inventory already at the warehouse, that 30K is on top of what the buyer already has to buy. So a lot of negotiations will happen on the price of the inventory.
There are also “earn out” situations that can happen, so just be aware of the different deal structures that are out there. And if you do have one of these bigger businesses where it’s hard to get traditional financing and it’s harder to find someone who has $700,000 to give you. I would highly recommend if you do seller financing to charge interest to the buyer because you are basically giving them a loan.”
Seth Stevens, Co-Founder of Quick Fast Hurry
“We’ve used a broker in the past and buyers have loads of questions. They want to really understand the business inside and out before they lay out their hard-earned money for it. Every little detail is going to be turned up, so if you can have your books in order and show everything in a clean way, you’re going to eliminate tons of questions.
One thing that we did negotiate that was a little unique I think was when we valued the business, we valued it based on trailing 12-month earnings. But we added in the caveat of “Hey, we’re going to give you the inventory that we have in stock, and you guys are going to pay for that as well.” So we got the price plus our inventory costs, so that is one inventory tips I would take going forward.”
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