Sell your Amazon FBA Business in 2021

How to sell my Amazon business?

If you consider selling your Amazon FBA Business this episode is a must for you to listen to. And we will have a chance to talk to both sides because our guests today are Nate Jackson, who’s VP of Acquisitions at Perch — a company that acquires and operates Amazon FBA businesses and Idan Barzilay – who is one of the entrepreneurs who has sold his business to Perch.

Timestamps

0:00 Intro
01:00 When you get the idea of selling your Amazon business?
03:00 How to find the right buyer?
06:00 Roadmap of Purchasing Process
10:15 What Does Buyer Look for When Buying a Business?
13:00 What is the best way to prepare your business for sale?
18:41 Advice for Those Who Consider Selling Their Business

How to contact Nate Jackson?

nate@perchhq.com

https://www.linkedin.com/in/nate-jackson-6560095/

Or find us at https://www.perchhq.com/

How to contact Idan Barzilay?

barzilay@comtrig.com

https://www.facebook.com/barzilx

01:00 When you get the idea of selling your Amazon business?

When I first started the e-commerce thing, really, and something years ago,

I didn’t think about selling, or actually creating a basic that can be sold, it wasn’t even something that happened, it was very hard to understand to speculate it could happen in the future. So three years ago I started without the intention of selling it. And I started with a business partner, the partner, and the first year so we worked together. And after that, we decided that we saw things a bit differently. So we decided to split up. And let’s say around two years ago, I started my own name, I restarted my own Amazon business. And then a year ago, I started hearing about businesses being sold. And I understood it’s, it’s a possibility, it’s something that happens. I mean, at the beginning of this year, I thought I should sell my business to regional partners. I’m gonna elaborate about the next question, but basically, then when I decided to do it, and I just, you know, found the right people to work with and proceed with this process. 

 

03:00 How to find the right buyer?

Okay, I’m going to start with a small explanation of why, when to sell, because I know every business wants to sell. A lot of businesses want to sell for different reasons. Some of them want to do something like cash out, some of them want to mitigate it away, some of them want to relaunch, and then reboot or something. In my specific case, I had a business opportunity, which, in a way, noticed them, one of them is to sell my business. But regardless of the reason, I think the selling process should be more or less the same. So what I did when I first thought about selling the business is to gather information, and gather the right people to work with. And I strongly recommend everyone who wants to sell the business do the same: talk to people who did it, find the right people, go to the lawyer that helps with the contract, the broker helps to find the right customer, the right acquiring company, and of course, the right acquiring company.

 

 And I think that the fact that it’s very as you said, it’s very rare to have both the buyer that sold the business and other parties that they bought the business on the same as Zoom thing on some conversations, you understand that we have a very good relationship. And I think this really helped throughout the process. And so it’s obviously another very important thing to find on the way to find the right company to purchase. 

 

In my case, I think I made the right choices and am very pleased with all the people that work with me and I’m still very in touch with them. Thank you, Perch. We still want to keep in touch in the future. So, and then I recommend everybody do more or less. 

 

06:00 Roadmap of Purchasing Process 

 

Nate: So at Perch, overall, my role is Head of Acquisition, so I’m taking every conversation from the first meeting with someone like you done, from where we’re strangers through, through to negotiating the transaction to closing it, and then integrating it and switching over to Perch running the business from you not running the business. And then apparently, months later, chatting on WhatsApp and planning a visit to Tel Aviv at some point to visit, which we’re waiting on COVID. But I think it’ll happen in 2021 at some point. But yeah, you know, Perch we are a serial acquirer, an operator of Amazon brand. So, at this point, it was fairly early on with Idan, and it was probably just the third or fourth that I was involved in and at this point, this point, I, you know, would be that be significantly more than that, but, but with Idan, you know, we first heard about him from one of our partners, fortunate, brokerage, based in Israel. And, you know, basically, we see an initial overview of the business.

And there are a lot that we say, hey, great business, but we’re not a great fit for us, you know, purchase focused on brands that are of a certain scale. So generally seven figure brands that, you know, have hero products in general, so brands that found a leading spot within a niche, with strong reviews, and strong organic ranking and, you know, good profitable metrics, and a reason to compete long term. 

 

And so we saw a lot of that, and Idan business and wanted to chat with them. You know, it’s it’s funny to look at sort of conclusions, you can come from the end of a one-hour initial call, where you’re trying to gather a lot you’re trying to learn more about the business is trying to understand how it would be to work with somebody, sort of what your key questions would be going forward. But I think coming out of the call, felt like, boy, this is, in many ways, exactly what we would look for in a business. I think we knew that he’s very knowledgeable, and trusted that you’d be you could get to work with and, you know, we started the negotiation process around, you know, it’s not, it’s never, it’s never just about one big price. It’s not just one big number, there’s a bunch of components, you know, how do we think about the overall upside that Idan even have that you might send us a full price? How much does somebody care about cash at closing versus that trade-off? And I think what’s nice is, you can do that back and forth through a broker, or oftentimes, like, in our case, I think the call basically laid out the things that matter to Idan and Idan likewise from us. And then we basically had a conversation and said, let’s figure out what works sort of, here are the levers that we can pull together. And then from there, once we got to agreement, that’s where the real partnership begins. 

 

It does require a bunch of trust on both ends at different points along the way. And, yeah, I would say, you know, you get two points where you’re working together in good faith to get to the bottom of just really what, what the underlying business is and has done over time. And then, you know, how we can position ourselves to transition to a new owner, which is, you know, the migration process with Amazon itself is something that you need to take seriously. And then it’s not exactly over there because there will be things that come up with the supplier or things that come up with Amazon, where, you know, I’m very fortunate that Idan isn’t just saying “screw you guys, see you later”. You know, we’re on WhatsApp and able to coordinate on things and so that’s where for me, it matters a lot that, you know, I feel I just have a good feeling about somebody early on in the process. 

 

10:15 What Does Buyer Look for When Buying a Business?

 

It’s interesting. At this point, I can tell whether I’m interested in a business to acquire the first place just by looking at the storefront for the most part, I can get a rough estimate of revenue, I can get you know, if somebody has leadership review positions, I can have a decent sense for whether I’m interested in the business when you get to the point of an offer, and you’re actually doing the we call it the diligence. And really the goal there is either in the case of Idan, and if you have financial statements that have been prepared that say, you know, my revenue is x million, and my profit is y. 

 

Basically, the goal of the diligence process is to recreate that. The good news is that a lot of that and independently verified. The good news is a lot of that comes directly from Amazon, right? So transaction reports, revenue, sales histories, Amazon expenses, PPC. But then really, the review is a combination of our team collating and reviewing banking statements, and then also just reviewing, you know, supplier invoices, and then having some broader, more fun, operational discussions around how you actually run the business and making some transition planning there. And yeah, every business, there’s no, there’s a P&L that you start, sometimes you start with a P&L or profit and loss, sometimes, so it wasn’t the case with  Idan, but sometimes, you know, I’ll have somebody reach out that says, I’d like to sell my business, I actually don’t, I know, I know, the revenue I’m making, I know I’m making money, but I actually don’t know what my profit is. And in that situation, we just start agreeing on a multiple, and then what we do together is build a profit and loss statement together, you know, get to that collaboratively, get inputs, and listen to each other and, you know, rebuild something, and you’ve agreed on the multiple. And so it’s really just about building up to that last number, but I think you should ask Idan about what the experience was for him. But I think the heavy lifting is upfront and gathering the initial data. And then hopefully, for the most part, it’s thrown over the fence to our team to turn through it for a bit. And then and then, you know, we coordinate on our findings and go from there,

 

13:00 What is the best way to prepare your business for sale? 

 

Idan: Because I didn’t think I will sell the business in the beginning I wasn’t 100% prepared, so I had to do some adjustments on the way one of my recommendations to other people, when you want to sell your business you work so hard and put so much effort into it, you also want to make sure everything is going to work smoothly. So, I would definitely recommend now, if you separate everything and make it as organized as possible for example, my business activity was mainly the Amazon but some other businesses for small ones here in my country which I would recommend to separate to have just like one distance for the brand and one brand or if you have you can have more than one brand but with different brands, one company and only the accounts that are you want to sell is you know separated different domains so to be easy, easy to transfer and all these things should be easy to think about how to you can extract everything and just you know transfer without causing too much damage on your side. For example, I did use different domains. So now you have the experience where they land in my own email domain which is okay, you can always, you know, find a way to bypass all these things, but it’s very important to have your trademarks registered. And also if you have any conflicts with your suppliers, I know that Nate really insisted to do, which is good. 

 

And then I realized I should have probably placed an exclusivity contract with a supplier that’s more close saying I can transfer to the third party in the business. And I just did it in 24 hours because my suppliers were very cooperative. But again, those small things have to go through the process fairly quickly. 

 

When it comes to the entire email and the analyzes of the business, to be honest, I didn’t believe myself I use Walker as I mentioned, a company from Israel. And they did it for me. And when I saw the final results, it was a long process, I supplied them with more and more documents. And when I saw the result on a presentation, I was a bit surprised by how I will put this rather than I actually ended up learning new things about my business. 

Send all those nice charts. And, and then it made me in the process for me and for Perch, and much, much easier. 

 

And also, what I want to go back to what Nate said before about, if you agree on the multiple, if things change, it can, you can work with it. So it happened to us in our deals, there was a misunderstanding on my side. And we changed the profit. So instead of opening everything, and we already signed, and again, and thankfully, we will vote as you can see now very, and we’re very friendly and everything is very a lot faster. And besides all this and Okay, let’s recalculate the profit, leave the same, more or less perfect, and we just did it. And for again for some of the foods, so much time and effort into visits and watching the entire, you know, world going away from another party for good reasons. But still, you want to make sure you are as prepared as possible, and to work with people that you can trust. And because the process can take a couple of months, and you just want to make sure it was possible. 

 

18:41 Advice for Those Who Consider Selling Their Business 

 

I mean, I think the first piece of advice is to, I think a lot of people like Idan didn’t start their business planning to sell it. But my experience if I reflect on the millions of people that are Amazon sellers, very few of them want to be running an Amazon business 15 years from now. And they also probably don’t want to just wind up and close up shop with this thing that they’ve built and work so hard on and so if you think about that, the reality is that I think the vast majority of people who have built a successful brand on Amazon over time will probably decide to sell that will be the best thing for them. Because their life situation changes, or it grows to the point that they need to manage a team of eight people, and they, it’s not what they wanted to do. Or it’s just a life changing financial outcome or all of the above, right. 

 

And so the first piece of advice I would have is just, you know, think about that. And it doesn’t need to be anytime soon that you’re, that you’re going to want to do that. But think about what your goals are in your business. There’s so much to do in this business, you’ve got 21 jobs as an entrepreneur, but until it can be easy not to think about the long term, but I would say, first, start an internal dialogue, maybe after peak season right now, and thinking about, you know, when would I want to do that? What is my goal, do what I want to stay on and grow what I like to build a team, or what I rather sell something like this, and sort of free up some of my cash and go do something else. On Amazon, or outside of Amazon, my first piece of advice would be to, you know, start thinking, start thinking about when might be appropriate. 

 

The second piece would be, you know, include others in that thought process. So, you know,  everybody has a mastermind or a group of friends that they’re involved with, at this point, if you’ll many people probably know someone who sold and so have that conversation. Reach out to, you know, some buddy like, fortunate, for example, Idan his first conversation just to explore that, um, you can always reach out to me, I’m easy to find, you know, any, you know, they’re, you know, Thrasio, you, obviously, is a major player Perch, and there are people whose day whose job it is every day to talk to sellers about how they should think about selling their, their business. And so reaching out and having those conversations, have no hesitation in doing that. And I do it every day. And that can be helpful as you think about your long term plan. Somebody might say, my goal is to sell my business for $3 million, one day, and I can say like, Hey, here’s where I would need to see your business go to likely get there. And let’s stay in touch, right. And that’s a conversation you can have, all the way from that to “I am ready to sell now” I’m interested if the price is right, and going from there.

 

So the first part is to think about it. Second part is, don’t be afraid to ask questions of people in the market, who would be helpful to you. And then third is, you know, just, it’s really just a matter of like, the thing that you need to do every day to maximize your business success in a sale is the same thing you would do every day to maximize your business success as an owner. So I think Idan  went through a process where he tried to sell the business and it fell apart with the prior buyer. And so it’s really good that be done he’s still running his business every day and setting it up for success. So when we had a conversation, it wasn’t like he had just taken his hands off the wheel. And likewise, even 

 

Apart from that, you know, when you sell a business, your thing that’s going to drive value is always the multiple of the profit. And so the good news is that everything that you’re doing every day to run your own Amazon business is probably driving, you know, driving towards that profitability. To your point earlier, I think that I think that some might be focused only on top line and may not have the nuanced understanding of decisions they make in driving profitable growth. But you know, drive your business, as with your intuition and with your intellect to try to grow it. You know, focus on a core, I think a lot of acquirers people like me, don’t want to see a storefront that has 300 SKUs that are each $5,000 we’d love to see 30 SKUs that reach $100,000, it’s much more, you know, much better asset for us to control and to be able to grow in a focused way.

 

So that’s, the gist of my advice is, you know, think about it, realize that you’re going to probably sell it at some point or fold it up. And so you should probably plan on selling it at some point doesn’t have to be now. Two is don’t hesitate to reach out to someone like me, email me at Nate at nate@perchhq.com, or find us at https://www.perchhq.com/.

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