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“How to Sell My Amazon Business?” 4 Secret Ways to Skyrocket Valuation
Folks ask me: “How to Sell My Amazon Business?”Â
Ask and receive. Here are 4 secret ways to skyrocket your valuation. From someone who’s seen it all.Â
Your Trip to Hawaii
Question for you:Â
Want to sell your Amazon FBA business? Maybe one day?Â
I’m about to give you 4 things you can do now to increase your valuation. I hope that applying just 1 of these 4 makes you a TON more cash if you sell.Â
I just have one thing to ask of you…Â
When you’re on the beach in Hawaii post-sale, sunhat on, feet in the sand– sip a piña colada for me. That’s all I’m asking 😉Â
Onwards:Â
Let’s talk about it. The big payday!Â
My source of info? My company works on 100s of Amazon accounts every month. And occasionally, one of them gets acquired. The major buyers are Amazon aggregators (most commonly) or strategic acquirers, like other brands in their same space. And I’ll often speak to the new owners.Â
I’ve also had the pleasure of working with aggregators directly. Because we’re so specialized, we step in to manage Amazon PPC Ads for their portfolio companies post-acquisition. So I’ve seen FBA businesses get bought/sold.Â
The first thing to know is that Amazon businesses are valued on monthly PROFIT.Â
Not revenue!Â
Because this is the case, to increase your valuation you must increase monthly profit.Â
Here are the 4 things that get you a bigger payday:
The 4 Things 🚀🚀🚀🚀
(1) CONSISTENT MONTHLY PROFIT, LAST 12. You should have made monthly profit of a minimum of $1000 per month for the last 12 months. If there was a month where you lost money, that’s a red flag for buyers. The more profit, the higher your valuation. But the lowest acceptable “floor” I’ve seen is $1k/mo.
(2) PROFIT GROWTH, LAST 12. Show an upward trend in terms of monthly profit. The best monthly profit trend line would be something like: $1k, $1.5k, $2k, $2.5k, etc. Being flat (e.g. $1.5k, $1.5k, $1.5k) incurs a lower multiple. And trending down (e.g. $1.5k, $1.25k, $1k) incurs the lowest multiple of all.
(3) REASONABLE STORY. You need a well-articulated, logical story for why you, personally, want to sell the business. “I’m burnt out”, “I want to buy a house”, “I want to send my kids to college”. Whatever the story is, it should be genuine and make sense to buyers. If you can’t articulate it, buyers may think that there’s something wrong with the business itself. Bonus points if you can articulate what growth opportunities remain in the business for the new owners (e.g. international expansion, Shopify, more products, etc.).
(4) NO EXTREME REVENUE CONCENTRATION. What if you made $100k/mo but 100% of that revenue came from 1 superstar SKU? Well then, your revenue would be considered highly “concentrated”. This brings down your valuation because your business has a single point of failure. If that same $100k was evenly distributed across 5 SKUs, buyers can rest easier. Valuation up. At a certain point, though, more SKUs isn’t better (e.g. $100k coming from 1000 SKUs) because it’s more to manage. So, find a balance.
Those are 4 things to maximize your wealth during an Amazon FBA business sale.
Reframe:
It’s not really about “how to sell my Amazon FBA business?” it’s actually more like “how do I increase my monthly profit?” and the sale will take care of itself.
I put together another post on recession-proofing your business, which will also help you increase profit if you ever want to sell.
I hope this was helpful.
If you want a team to increase your profit, we can help.
Amazon is literally all we do. We have dedicated teams to scale your ads, listings, and handle Seller Central issues large and small.
Book a free consultation below to see if we’re a good fit:
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