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How to Sell Your Amazon Business or Brand
by: Rafelson Schick, PLLC M&A Team
Part 1: How to Find a Buyer
Last year, our firm (Rafelson Schick, PLLC) saw a record year in the M&A space with respect to helping our many Amazon seller clients exit their business, well in excess of a hundred million dollars in the aggregate. The reason for this sudden spike in demand for Amazon brands is attributable to the rise of what we general refer to as the “aggregator” companies, that are buying Amazon brands en masse in order to scale them and believe their efficiencies and process for managing brands on Amazon will lead to significant returns. These aggregators seem to have the private equity, banks and venture capital markets convinced, as there is no shortage of new aggregators popping up with significant funding behind them . The most famous aggregator, Thrasio, is now reported to be valued at over $1 Billion, but there are many many others not far behind. In fact the market is so hot right now, that it seems almost every week at least one of the deals that we get involved in is with a brand new, freshly funded aggregator, as there is no shortage of investors who are out to emulate the success of Thrasio.
What does this mean for you? It means that if your business is primarily Amazon, and you have your own branded products (sorry arbitrage and wholesale sellers, it doesn’t mean there aren’t buyers it’s just not something these aggregators appear to be interested in right now), there is a market for your product, and it is very much a Seller’s market.
Do You Need A Broker? With so many buyers out there, if you have a half-decent Amazon brand it shouldn’t be hard to locate a buyer on your own. Many of these aggregators are begging for you to contact them about selling them your brand. This often leads to a question we get asked a lot by our clients: ,”If it is so easy, why then would anyone use a broker?” That’s a fair question. Brokers are definitely useful in the negotiation process, but with these aggregators, and a general market price that they are willing to pay for brands, can a broker can really make a difference in these cases, at least a difference enough to justify their 10% to 15% commission. This is an open question in my opinion. The fact is, a good broker will look beyond the aggregator to see if your products fall within a “strategic” style investment where multiples could exceed well beyond what the typical aggregator pays. If your product falls within that category, it may be worthwhile to have a conversation with a broker about it. Or, a broker whose rolodex goes beyond the aggregator pool that is generally common knowledge at this point, might be able to find a buyer who is uniquely interested in your brand. However, if you are just one of many sellers of avocado slicers, it’s probably not likely that you’ll be in that category, unless there is something proprietary or some IP that can keep others from replicating your business, and such that a broker might then be worthwhile.
What’s the Alternative to Working With a Broker? Many of the deals that come across our desk were from Sellers who went out on their own and solicited offers from a number of aggregators. When it’s just that easy as making contact yourself, and it is from a functional perspective, it begs the question why would I need a broker. With that said, we don’t recommend that process for those who want to sell their Amazon businesses, because there are some additional considerations, mainly protecting your sensitive business information. There is a time and place during an M&A deal where certain sensitive information needs to be disclosed, and we know that process. Don’t put your business at risk by blindly responding to a request for a bunch of information.
Working with an Attorney who Knows the Process. By working with an attorney who knows the process, we can protect your key information, and help you navigate the process. Our hybrid model of coaching Amazon sellers looking to sell their business ensures you are protected through the process without the high commission. As lawyers, it is only our standard hourly rates which are considerably modest compared to broker fees of 10% to 15%. We can also help you evaluate whether a broker is necessary, what the state of your financials are, and other aspects to consider before putting your Amazon business up for sale. And, we can help you come up with a targeted strategy of which aggregators to approach, how to negotiate the best price and terms, all based on our experience working with numerous aggregators around the world.
Free Consultation For Selling Your Amazon Business. Before you go about putting your Amazon business up for sale don’t just blindly email Thrasio, Boosted, Recom GOJA (formerly 101 Commerce) or any other aggregators, reach out to us using this email link to schedule your Complimentary Amazon Exit Strategy Consultation with Paul Rafelson of Rafelson Schick, PLLC, so that Paul can review your situation in-depth and share with you with the market insight he’s obtained, having assisted clients with dozens of Amazon deals collectively worth over hundreds of millions of dollars.
We look forward to hearing from you.