2020 Trends for Buying and Selling Online Businesses
At Empire Flippers, we are known for more than being the number one curated marketplace in the world. We also have a reputation for unparalleled transparency.
After completing hundreds of deals over the past several years, we willingly open our doors to share everything we’ve learned.
As our team grew from a handful of employees working out of an apartment to a company of about 70 people spanning the globe, we evolved our internal processes to increase efficiency and greatly enhanced our data collection and reporting. We went from tracking listings on Google Sheets to developing a proprietary software solution that will speed up all of our processes and increase deal flow.
We take data seriously. After all, this industry has a reputation for being shrouded in secrecy. We’ve read reports published from other brokers, and we found them lacking in a lot of areas. Their figures included businesses’ data on listing prices, and their numbers were inflated by the asking price, with no mention of what the business eventually sold for, how long it took, or the actual sales multiple.
We decided to take a different approach and share data on our marketplace from real-world completed transactions.
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It took us some time to compile the data for over $100M in deals, but we’re proud to announce the second annual State of the Industry Report for 2020. This report contains our actual historical figures over the past 3 years, an analysis of the industry, and predictions of where this industry is headed in the coming years.
Why Did We Create This Report?
We created this for both buyers and sellers. We believe sellers should understand which types of businesses command the highest multiples to make sure they are maximizing their profits on an exit. We want buyers to be familiar with industry trends so they can spot good deals and make successful decisions on their next acquisition.
Consider this analysis a road map for your entrepreneurial and digital investing career.
Our State of the Industry Report includes information about the actual sales details, along with the average selling price and multiples. We also share how many days they were on our marketplace, including a comparison of metrics from 2018–2019 and 2017–2019. These comparisons reveals how things have changed in the past few years.
Furthermore, this isn’t just a handful of deals. We’ve analyzed hundreds of transactions—745 to be exact.
Our State of the Industry Report also includes an in-depth analysis of 14 types of business models, from Amazon FBA to info products. We identify the opportunities buyers have to maximize profits after the acquisition and potential risks they should consider before pulling the trigger.
If you’re a current business owner thinking of selling, our analysis will reveal ideas you can implement to increase the value of your company before listing it on our marketplace.
While every business model is different, we’ve identified three universal levers you can pull that enhance the value of any enterprise:
- Branding: What makes you unique? Can you expand your brand?
- Diversify traffic channels: If your revenue is coming mostly from organic traffic, consider adding paid and social traffic.
- Diversify revenue: An e-commerce company selling through Amazon with AdSense is more valuable than a business selling through Amazon FBA alone. We call this concept “mixed monetization.”
Key Trends You’ll Discover in This Report
Here’s a teaser of critical statistics we’ve observed:
- Last year, we saw a shift in the size of the businesses we sold rather than that quantity of them. While we sold 1 less business in 2018 vs. 2019, total sales went up a whopping 54%.
- The average multiplier increased by just 1% from 2017 to 2018. In 2019, we saw that multiplier increase another 8%. This was due to bigger businesses wanting to list and increase interest in acquisition on our marketplace.
- About 29% of businesses on the marketplace were sold with an earn-out attached to the sale. In this year’s report we break down those deals by monetization and pricing tier so you can get an accurate picture of what’s happened.
A Framework for Growing Your Business
Whether you are buying a business and want to grow it, or you want to sell your business for maximum value, you’ll discover the lowest hanging fruit so you can achieve that goal. We include more details about the following tactics:
- Buyer guides
- On-page SEO
- List building
- Video creation
- A/B testing
- Conversion rate optimization (CRO)
No State of the Industry Report would be complete without a discussion of the future. We cover the following topics at the end of the guide:
- The Seller Market Continues with Higher Multiples
- More Investment Funds Succeeding and Failing in the Space
- More SaaS Businesses Listed and Sold
This over 20,000-word report is jam-packed with real-world figures and actionable data. If you’re ready to see what’s going on in the industry today, download the industry report right now.