Don’t Rush Your Deal: Why Sellers Still Have the Upper Hand
March 3, 2022
The shipping crisis rages on. Inflation is causing the price of goods around us to soar. Competition on Amazon grows fiercer by the day.
As an Amazon FBA owner, you may feel like the waters are choppier than ever right now.
The fear that the good times are almost over is causing an alarming number of FBA sellers to sell assets on less-than-favorable terms.
Stress over what can feel like a mass exodus of FBA sellers makes quick offers increasingly attractive. Getting someone with cash upfront offering to buy your business immediately can be a huge incentive to sell.
After all, it’s easy to understand why a seemingly huge chunk of cash would seem preferable to waiting out the supply chain crisis.
While it may feel like the Season of the Seller we first began to talk about in 2020 is over, that is far from the truth. As a seller, you still have the upper hand in the market, and there are plenty of solid options available to you for a lucrative exit.
So when someone offers you a quick exit, that should be a clear signal that you need to take a closer look at exactly what they’re offering.
Before you rush into a deal, what are you really agreeing to?
Let’s take a look at some of the ways a rushed deal could put you at a disadvantage and what you can do about it.
How Scarcity and Urgency Are Being Used Against Sellers
Both scarcity and urgency are common psychological tactics used to push one party into believing that a deal is now or never.
So, how do they work exactly?
They both involve creating an element of fear. Primarily, the fear of missing out (FOMO). When people are consumed by FOMO, they don’t tend to make the best decisions. This fear-driven reaction makes them easier to control.
Let’s say, for example, that you’ve built an extremely profitable Amazon FBA business and want to exit. An experienced buyer offers you $1.4M for your business, but only gives you three days to take it or leave it.
Here, we see the single offer creates a sense of scarcity, and the three-day time limit creates urgency.
Combined, they create fear and anxiety, pushing you to rush into a decision without the clear-headed rationality to see if it’s actually the best deal for you.
When you let FOMO take over, you might tell yourself either that you won’t get another offer or that another buyer might not show up for months or years.
Adding to the fear (or even sometimes creating it) could be well-intentioned people in your personal or professional circles offering horror stories of sales gone wrong and/or drawn-out processes. That means that when you get an immediate deal that seems great on the surface, your anxiety response might kick in, making you want to lock down the deal ASAP.
But what are the consequences of not stopping, taking a deep breath, and really digging in to vet the offer?
The Consequences of a Rush Deal
If you let scarcity and urgency drive a deal, you’ll almost always miss out. Missing out can mean leaving capital on the table or being tied to a deal for much longer than you had wanted or anticipated.
Allowing fear and anxiety to take over can easily blind you to the inherent worth of your business, as well as make you rule out other buyers who may have come in later and offered a much better deal.
Let’s go back to the $1.4M FBA example we used earlier. It’s possible your hypothetical business was worth a lot more money had you taken some time to evaluate what you had.
Jumping at the first offer means that you miss out on what the rest of the market feels your business is worth. High-quality FBA businesses often spark fierce competition among buyers. If you’ve got a strong-performing asset, you need to leverage it to maximize your exit.
Taking a quick sale could also lock you into an exclusive letter of intent (LOI) that could drag out the process for months. Although having an LOI in place may make you feel more secure, it’s not a guarantee that the buyer will go through with the sale.
During this time, you won’t be allowed to show your business to other potential buyers.
That means you could be “locked” into a deal that could easily fall through for various reasons months down the road, potentially costing you time and money.
This makes your “quick exit” anything but.
In short, it doesn’t pay to rush on one of the most important financial milestones of your life.
Why the Market Still Favors Sellers
Despite what feels like turmoil in the space, it’s still a strong market, and more capital-backed buyers are entering every day. With more strong buyers than strong businesses to feed them, there is really no reason to rush into a deal.
If you’ve got a high-performing business that would qualify for aggregator acquisition, you need to recognize the incredible worth of what you have to make sure you don’t get cornered into a deal that isn’t on your terms.
There may be problems in the market, but if you’ve made it this far, you’ve likely already weathered plenty of storms. There is a unique advantage to knowing your business, product, and niche better than anyone else.
A buyer who comes in with an offer knows you have something special and will want to get it for the cheapest amount possible while profiting from all of your knowledge. You have experience in your business that even aggregators won’t have. That is your superpower.
How Sellers Can Still Exit for the Most Money Possible
The best way to exit your business for the most money possible is by tapping into the largest possible buyer pool. By getting your business in front of the eyes of multiple potential buyers, you drastically reduce the risk of offer scarcity.
With over $5.8B in verified liquidity from our registered buyers, we have a significant buyer pool looking for high-quality businesses like yours.
We also reduce urgency by handing you the reins to set the speed of your exit. You stay in control by interviewing buyers and deciding who moves ahead to the next round of negotiations.
We know you want a quick sale, and you’re probably wondering how long it will take to get attractive offers.
Because every business is different, it’s impossible to predict how long it will take to sell yours. But our data shows that 78% of businesses listed with us sell within two months.
In 2021, it took an average of 39 days for a business to sell once it was listed on our marketplace. Not only were we able to help secure quick exits for our sellers, but on average, we also helped them secure 94% of the list price.
How are we able to do it?
One of the biggest reasons is that we have a dedicated sales team in place who can advise you on deal structures to help you secure a significantly increased amount of capital compared to selling your business directly to an aggregator or private individual.
Having a team on your side gives you back your power and agency and allows you, not FOMO, to control your fate.
If you’re ready to make the most of your exit, schedule a call with one of our team members today.
