How One Amazon FBA Select Listing Achieved a 49x Multiple in 45 Days
September 24, 2021
We set a long-term goal to produce over 1,000 millionaires who sold their business with us, and thanks to some new features only available using our marketplace, we’re making great progress.
Gone are the days of wishing you could become a millionaire from selling your online business. Thanks to capital flooding the market to buy digital assets, becoming a millionaire from selling your business is now more of a reality than ever before.
One of the biggest benefits of using a marketplace like ours is that you will have buyers coming to your table to compete for your business.
It sounds exciting to sell your business to a buzzing firm or brand aggregator through a private deal, but so many sellers fail to realize how much money they are missing out on by going private.
When sellers decide to exit their business privately by selling to a brand aggregator or private equity (PE), they can leave hundreds of thousands of dollars on the table compared to presenting their business in a more attractive manner to multiple buyers at the same time.
This is why we have established the select listing process, which is designed to streamline deals in the seven-figure and above listing range so that sellers can review all of their top offers at once and all buyers (e.g., most brand aggregators and PE groups) get a chance to compete equally for these highly desirable assets.
Since sellers that submit a business above the seven-figure listing price range often get tons of interest in a very short period of time, we decided to build the select listing process for sellers to review offers from multiple buyers at once. This allows them to gauge what the majority of investors are willing to pay for their business. Buyers also enjoy the select listing process because it gives them more time to perform due diligence on a business before another investor can move in and lock up the deal.
In this case study, we will go through the entire sales process for one select listing that ultimately led to the seller walking away with a 49x in less than 45 days.
Why this FBA Business Was A Prime Candidate for our Select Listing Process
To understand how this seller was able to walk away with $3.1M in 45 days from the business going live, we should start at the beginning.
The seller was looking to make a name for themselves in the growing pet niche industry and registered their domain in the middle of 2018. The domain was also the exact match of the brand’s trademark, which the seller would later register. Once it was set up and two of their products started flying off the shelves, the seller truly realized the potential of the growing pet industry.
The pet niche is extremely lucrative and expected to grow to $350 billion globally by 2027. This growth spike is especially eye catching for PEs and brand aggregators who’ve raised large amounts of working capital and are ready to deploy.
Many small pet niche brands acquired by these investors (often from our vetted marketplace) go on to become household names thanks to their dialed in operations and capital to fuel expansion.
After a few years of managing the business, the seller had built four SKUs and outsourced many of the business operations. The brand was generating just over $69k per month in net profits, was part of Amazon’s Brand Registry 2.0, and accumulated over three years’ worth of sales data. The seller, wanting to move on to other business opportunities, decided to list the business for sale with us.
Once our vetting team began their initial checks of the business, they immediately saw the opportunity to make this business a select listing since it was a prime match for the buying criteria of PE groups and aggregators.
With the right business lined up, it was time to put our select listing process to work and see what kind of results we’d get.
The Business Goes Live, and 20 Buyers Schedule Calls
Once the listing went live on our marketplace, 20 buyers made a move to schedule a call with the seller. This was the most buyer–seller calls we had ever scheduled on the first day that a select listing went live on our marketplace.
Considering the number of calls that came in so quickly, the buyers in our network were eager to obtain this seller’s business.
The buyers came with their own preferences for the business. Some were concerned about the limited number of SKUs that the business was operating, while others saw four SKUs as the perfect opportunity.
One particular buyer was concerned about Chinese competition entering the space and competing with the business, while other buyers were interested in learning more about a few sudden spikes in traffic and revenue that occurred just a few months prior to the business listing going live. All in all, the buyer–seller calls were very productive and answered the buyers’ concerns in a short amount of time.
Once the buyers had scheduled their meetings with the seller, they drafted their first-round interview offers to present to the seller at the end of the 10th day from the listing going live.
Fifteen offers were presented to the seller at the end of the first round. Ultimately, they decided to move on with six offers to the second round.
Six Buyers Move On to the Second Round
Down from 15 offers to six, the seller was now focusing on which buyers they wanted to work with and who they believed was capable of scaling the business. The second round is also when the seller comments on the buyers’ offers to help them make a final revision.
One thing to keep in mind about the select listing process is that the sellers have the opportunity to interview the buyers here as well.
The second round interview is an opportunity for the seller to get a better understanding of the buyer’s post-acquisition intentions and what they plan on doing to expand the business in the coming months and years.
At the end of the second round of interviews, the seller decides which final offer they would like to move forward with.
Once a buyer has submitted their offer at the end of the second round, they will have one opportunity to revise it based on the seller’s final remarks.
One Brand Aggregator Offers a Full Cash offer of $3.4 Million
On day 20 of the select listing process, the final offers are presented to the seller.
Based on the time spent with each buyer and having a better understanding of what their goals are with the acquisition, the seller will choose their favorite offer.
The seller in this case study was presented with an all-cash-upfront offer of $3.4 million. Considering the aggregator had a strong background in growing FBA assets, the seller knew they wanted to move forward with this offer and begin the exclusive due diligence process.
When the deal was settled, the seller walked away a multi-millionaire from their exit, and the brand aggregator received a pet niche product they could scale to new heights, unachievable by the original owner.
The select listing process is designed to avoid a chaotic sales process for seven-figure and above business owners and streamline winning offers for the seller. Thanks to the process, this seller was able to make their exit in less than two months. Not only that, they were also able to make sure that their business went to the right investor, one they were more than happy to work with post-sale during the migration and transition period.
This select listing case study only offers you one example of this process and how it benefits both buyers and sellers in getting the best possible deal completed. With more and more quality businesses coming to our marketplace than ever before, it won’t be long before we see more select listings that meet our stringent criteria based on where the online business M&A space is heading in the not so distant future.
Are You Ready to Make a Life-Changing Exit?
With 2021 soon coming to an end, now is the perfect time to begin your exit planning before the start of the new year.
Take this time to plan your holiday sales projections to increase profits and stabilize your earnings to get one step closer to qualifying as a select listing. Proper planning could also lead to a much larger ROI when you decide to list your business for sale.
As buyer demand continues to skyrocket, investors are on the lookout for new tools such as our select listing process to further vet potential investments, which in turn improves their deal-selection process. If you would like to see if your business qualifies to be a select listing, submit your business for sale on our marketplace, and one of our vetting analysts will determine if your business meets our criteria.
Not sure if you are ready to exit your business yet?
We can help you there too. When you schedule an exit planning call with one of our business advisors, they can provide you with actionable advice to move your business in the right direction to be considered by capital-backed buyers, possibly even putting your business in a position to be acquired for $3.4 million, just like the seller in this case study.
