So, you successfully launched an Amazon FBA business, scaled it – and now you’re ready to sell it.
As you’ll have sensed by now, selling on Amazon – while challenging in itself – is totally different to selling your actual business.
Now that it’s time to sell, you’re presented with new challenges. And if you’ve never sold a business before, these challenges can be super daunting – and they might mean that you don’t get the price you want, or deserve.
For many, this is where advisors come in. Advisors can help you get your sale over the line at the right price, as well as help out during the tough negotiation process.
But is working with an advisor the right thing for you? Is it your only option?
In this article, we’ll be taking a look at 5 reasons to sell your Amazon FBA business with an advisor. But before we begin, let’s see what options you’ve got …
Now that you’re ready to sell your Amazon FBA business, you’ve generally got two options:
If you decide to go it alone, you’ll be carrying out what’s known as a “direct sale.”
This means you’ll be in direct contact with buyers, and you’ll be responsible for everything, including your paperwork and financials (getting them all in order), as well as all the negotiations.
That might not seem like too much work at the moment, but if you have no experience with negotiating the sale of a business, or if you’re not sure where to begin with your finances, it can be a daunting, time-consuming task indeed.
You will also have to field any question from potential buyers yourself, as well as find potential buyers in the first place.
If, on the other hand, you’re super confident in your abilities to go it alone, a direct sale might be for you.
An advisor is almost like a coach.
And just like a coach – for example, a tennis coach – has to sort out their players budget, their game plan, their diet and so on, an advisor will do a lot of the heavy lifting for you.
An advisor will help you sort out your finances so that they’re organised, well-presented and free from errors, and they’ll also draw on their years of experience to help you out during the tough negotiation process.
Not just that, but an experienced advisor will be able to call on their network of contacts to help you find potential buyers who are ready and willing to purchase an FBA business just like yours right away.
In short, it’s an advisor’s job to make sure you get a sale over the line quickly, and at a price that suits both you and the seller.
We’ve outlined the difference between selling your business alone and working alongside an advisor. Let’s take a look at 5 reasons why it’s beneficial to partner up when selling your Amazon FBA business.
More buyers = more offers.
And more offers mean there’s a better chance that you’ll get the price and deal you want.
When selling an Amazon FBA business alone, it’s highly unlikely that you’ll be able to gain access to thousands of buyers, let alone qualified buyers.
But this is what an established advisor can help with: They can put your business in front of qualified buyers who have the cash and are already in the market for a business just like yours. These buyers have been vetted, which means you don’t need to waste time with tyre kickers.
And while it’s not unusual for a first-time seller to find one or two buyers who are willing to purchase their FBA business for a decent price, the plain fact of the matter is that by swerving an advisor, you’re missing out on the opportunity to listen to offers from those who have huge sums of cash in reserve for a business like yours.
In other words, you might get a decent price – but you could have got a better price had you opened negotiations with a pre-vetted buyer.
Buyers trust advisors.
Because advisors are able to instill trust.
An advisor essentially lends your sale a much-needed slice of credibility. They’re already worked on multiple business sales before. They know exactly what buyers are looking for, as well as the exact type of questions that buyers will ask.
Here’s another way to look at it.
An established advisor is so well-known that, whenever they attach their name to a business that’s for sale, investors automatically know that this business is worth their time.
The same thing can’t really be said when a first-time seller lists their FBA business for sale. Why? Because they simply don’t yet have the same levels of credibility. This is by no means their fault – it’s just that credibility is earned over time.
Naturally, you will still attract some buyers, and you may even attract large equity firms. But what you ideally want is competition – and this is what advisors are able to create.
What do you want to get out of selling your Amazon business?
A deal that’s right for you.
What does the buyer want to get out of buying your Amazon business?
A deal that’s right for them.
Happily, an advisor can get the deal that’s right for both parties so that everyone (including the advisor!) walks away satisfied.
If you as an individual work with a single buyer, it’s more than likely that you’ll receive a small monetary offer, along with poor terms.
If instead, you receive an offer from a private equity firm. And there’s every chance you won’t be paid the full sum at closing. It means that you’ll have to wait on a delayed earn-out before you can move on to your next project. It’s hardly ideal.
What you want – what any of us want – is a clean break. And this is what an advisor can help with.
We touched on the importance of competition a little earlier. Competition between buyers is important because it drums up interest in your business. It also helps to bump up the price.
Because advisors have a list of contacts they can turn to when they’re hawking a business around, they can raise the stakes.
In other words, if Buyer A sees that Buyer B is putting in an offer for a business listed by an advisor they trust, they’ll be more incited to make an offer themselves.
Before you know it, you’ve got a bidding war on your hands. Excellent.
It’s also worth mentioning that, if you’re a first-time seller, you’ll be at the mercy of experienced private equity firms who know how to play the game. They’ll know you’ve got something of great value, but if they’re the only ones bidding for it, they’re not very likely to offer you the amount that your business is really worth.
But if a couple of other potential buyers got involved, the game is changed.
Valuing your FBA business is an important first step on the road to selling it. Before determining the optimal multiple, you must consider your company’s overall financial situation and the factors that influence its value.
Problems arise for unskilled first-time sellers while calculating Seller Discretionary Earnings (SDE). SDE is the standard way for calculating an FBA business’s net income (or earnings).
Typically, sellers make the mistake of forgetting to include key items on the add-back schedule, as well as using the wrong date range when figuring out their SDE. Unfortunately, understanding your financial statements and cash flow isn’t enough to correctly gauge your SDE.
Advisors are on-hand to correctly price up your business, including all expenses that must be on your add back schedule, as well as ensuring that your financials follows the proper date range. This is especially key if your business has a high grower rate.
Moreover, SDE is impacted by multiple variables all the time. This is another reason why working alongside a trusted advisor is a smart idea.
Preparing your Amazon FBA business for sale can be a time-consuming, laborious process. Working with an expert advisor can relieve a lot of stress and help you achieve the deal you want faster.
Furthermore, advisors are often paid on commission. They only get paid if your company sells, so they have your best interest at heart.
Ready to sell your business for the best possible price? Start by clicking the link below! No obligation, no hard sell. Just solid, professional advice.