Selling Your Amazon Business
Preparing to Sell Your Amazon Business
Just like selling a house, a car, or any other asset, you want your business to be in the best shape possible in order to attract the most attention from buyers. For e-commerce businesses this means making sure your operating procedures are documented, you have automated as many operations as possible, you have documentation to show your current inventory and your financial statements are clean and orderly.
To get the best valuation for your Amazon business, you should have very clean and easy to understand financials. This is easiest if you have paid an accountant to clean up your books since inception. However, it is not impossible to consolidate your records and make financial statements looking back at your businesses performance. The steps to making an income statement for your FBA business are:
- From within Seller Central, navigate to Reports > Payment > Date Range Reports.
- From the “Date Range Reports” tab you should be able to export data a detailed report for the date ranges you are looking for.
- Once you have the Amazon revenue and expense line items documented in a spreadsheet, you will then need to add in any other expenses that your business accrues. These expenses will include product expenses, software expenses, employee expenses and potentially more.
- Once you have documented all of your income and expenses, we will be able to accurately represent your business to sellers.
- Here is a more encompassing guide to Income statements to double check your work.
Standard Operating Procedures
Painting a clear picture of how your business runs is an absolute necessity in appealing to buyers. This means that all procedures done by the owner AND done by all of them employees should be documented. This could be as simple as a screen recording of the procedure or list of steps it takes to execute the procedure. Anything to paint a clear picture of how the business is operated.
Listing Your Business For Sale
Sales Packet Creation
Once your books and records are consolidated, we’ll make a sales packet for your business. This sales packet, often called a prospectus or “CIM” (confidential information memorandum) will contain not just the business financial statements and operation documents but will include product summaries, SEO information, supply chain logistics, an interview with you, a summary of how a new owner could grow the business, who the business is a fit for and more.
Sample sales packet
Presenting the Business
Once a completed sales packet has been created and approved by you, we’ll email a teaser for the business to our buyer list. This teaser will only have the high level details such as category or products sold, number of employees, revenue and net profit. They will not have access to your exact listings at this stage.
If the business does not get any suitable offers from our current buyer list, we will put the business on our website, third party listing sites and advertise it to potential buyers to drum up more interest.
Before any buyer is able to access the sales packet, we ask that they complete a non-disclosure agreement, tell us a bit about themselves, the type of businesses they are interested in and their financial capabilities. This admittedly is not a perfect system, but it is the best process that we have found to weed out the tire kickers.
Offers, Negotiation and Close
We always do our best to give our clients a reasonable expectation of what they can expect to receive for their business. However, it is the buyers on the market that will ultimately determine how desirable the business is.
Sellers that have a strong bias for cash offers will typically have their business on the market for longer than sellers who are willing to help finance the business with an earnout of seller note.
Businesses based in the US with at least two years of clean tax returns may be able to get the business pre-approved for an SBA acquisition loan through one of our partners. Businesses that can be acquired through an SBA acquisition loan are more desirable to buyers and therefore typically close quicker, at higher valuations and with a higher level of cash paid at close.
Once a buyer comes forward with an acceptable offer, we will negotiate the exact terms of the deal with you and on your behalf. Business acquisitions have many moving pieces and are rarely as straight forward as 100% cash deals and the business trading hands.
The seller may request that you stay on for a period of time to train them, hold back the cost of inventory until it sells, help them finance the purchase of the business or even sign a contract to consult with them ongoing for a percentage of equity or a fixed fee. In all of these situations, it pays to know who the buyer is and get comfortable with what they are asking of you.
Close & Migration
Once final deal terms have agreed upon, it is time to transfer the capital and business assets. Being as though most business acquisitions are for assets and not equity, the corporate entity you used to run your business can typically stay with you, while all other business assets are typically purchased by the new buyer.
We will oversee the migration of the seller central account, trademarks, wholesale accounts, websites and any other purchased asset as well as migrating the capital to escrow. The funds stay in escrow for a 14 day due diligence period and are then disbursed to you, while we keep our fee.
Most sellers will chose to get legal council before accepting a final offer. This is not included in our fee and business sellers should allocate $2K – $5K for an attorney to advise them on the asset purchase agreement.
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