5 must read tips before you sell your FBA brand

5 Must Read Tips Before You Sell Your FBA Brand

David Mood, Head of Investments

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At Olsam, we believe that selling your business will be one of the most important financial, as well as personal, decisions you will make throughout your Amazon FBA journey. We also believe that a sales process should be easy to understand and follow along and doesn’t have to be the daunting prospect that many people make it out to be. Through a series of articles, we want to provide you with all the resources, tools, and right questions to put you into the very best position when evaluating the sale of your business.

Get mentally prepared.

We believe that meticulous preparation is key, and the sale journey begins with addressing the important questions that will allow you to get into the right mindset. This will ensure that you are able to make effective decisions throughout the sales process and be certain that you are on the right path to a successful exit. There are three important questions you should answer yourself to get prepared. First, do you want to sell your business? Second, is now a good time to sell your business? And third, how do you want to sell your business? All three questions are equally important and it’s a highly personal decision on what you want to do with your business. Head over to ECommerce Aggregators’ Definitive Guide for FBA Sellers to get more advice on these questions from sellers who have been through process previously.

Get on top of your financials.

At some point during the process and often during the first call you will be asked about your historical financials and key performance indicators (KPIs). There are two important reasons to have a good handle on your financials. Firstly, your operating profit or Seller Discretionary Earnings (SDE) will often set the baseline for any price negotiations and give you certainty on the offers that you receive. Secondly, any business experiences – great, good, or bad months- by understanding the underlying trends and walking the acquirer through these, you will reassure them and not detract from a potential offer.

Prepare your business for scalability.

Are there any areas that are not fully automated? Do you operate a local warehouse and sometimes move goods yourself? Particularly if you are speaking to a larger buyer, think about how a potential acquirer could automate the business and present options to transfer functions to the supplier or a 3PL. An acquirer can help you work through the options, but no one knows the business like you and what will be required in the early phases of an acquisition.

Work on your pitch.

What is the unique selling point of the brand? Why have you been successful and what will allow the brand to continue to be successful? What are the growth opportunities? And what are the five products you are planning to launch over the next twelve months? Most acquirers will want to grow your business and take it to the next level. Present the potential of the brand and the growth opportunities to allow you to receive the best offer possible.

Prepare your question list.

As an acquirer we expect questions, so don’t be afraid to ask them. Firstly, you want to qualify the buyer to ensure that they will be good stewards of your brand. Do they have a strong understanding of your category and can demonstrate their ability to scale your brand and hit your earn-out targets? Though you are looking to sell the business for the best price possible, it’s a long-term partnership which often involves some performance-based payment and support throughout the first few months, particularly on the migration. Think about working with a professional partner that you have a high comfort in and who can execute the transaction and manage the business post-migration.