E-commerce platforms have gained a significant boost in growth after the emergence of Covid-19. Amazon became the dominant e-Commerce market by reaching a net worth of 1.53 trillion US dollars.
Are you the one willing to sell an Amazon business? You are in the right place to find a suitable answer on how to sell an Amazon FBA business?
By witnessing the immense potential of sales on the Amazon platform, the trend of buying and selling Amazon businesses increased over the past three years. Many established Amazon brands have sold their online stores to Amazon aggregators as it’s a quick and easy source of income.
Amazon Business Worth
The first step is to calculate the monetary value of your Amazon business. By knowing the value of your Amazon business, you can figure out whether it’s the right time to sell an Amazon business or if there is a need to put more effort into increasing its valuation.
Trailing 12 months of profit and multiple applied to that number are the most crucial things to know. The willing buyers will use multiples of your annual net profits to formulate a proposal for your online store.
An essential metric for your business valuation, SDE calculates the net profits.
SDE = Revenue – Expenses + Add-backs
Sellers must figure out whether they should sell their business or not? There are free tools available on the internet that sellers can utilize to estimate their business worth based on revenue, net profits, business age, and the total number of hours spent to keep running the business.
How to Increase Value of Amazon Business?
Your monthly profits and revenues are the most crucial variables clients consider before buying your business. Still, there are other things to consider for increasing your Amazon business value.
- Maintaining your accounting books is crucial to showcase all the correct numbers to potential buyers. Those books prove your business profitability, and they represent the revenue streams that are fundamental for a transparent acquisition process.
- Optimizing listings are crucial to increasing the value of your Amazon business. Ensure to fill them with relevant keywords, high-quality pictures, and videos that make your products appealing. Generating great content and answering customer queries is a must to adhere to and follow.
- Maintaining supplier relationships is vital for your business’s success. Without the provision of essential products, your business will fail. Besides maintaining the relationship with suppliers, it’s also critical that you partner with a reliable and trustworthy supplier who provides high-quality products on time.
- Sell your products on different online leading e-commerce platforms like eBay or Walmart. Selling across multiple platforms increases the revenue and profitability of your business and helps to enhance your valuation.
Selling your Amazon Business Now or Later?
After knowing the worth of your business, you can decide whether you can sell an Amazon FBA business now or have to wait for the right time.
There are different things to consider before deciding to sell an Amazon business:
- Do you have any plans for future activities that can raise profits?
- Are you feeling stressed and overburdened in running the business?
- Can you transfer capital from a sale to a new venture?
If the answer is yes to one or more of these questions, it’s the right time to sell your Amazon business. Resolving every possible issue before the deal is imperative to get the best value for your business. If you are ready to exit, but the sales ratio of your business goes down, it’s better to maximize your sales.
Steps to Sell Your Amazon Business
Can you sell an amazon FBA business? Yes, you can legally sell your Amazon business. You need to follow the following steps to sell your business on Amazon.
Decide to sell
Before doing anything, ask yourself, “What do you want?”. Whether you want to enter a different business niche, make a career change, or take a payout of your hard work by selling business. If you decide that it’s not a good time to exit, then construct a productive exit strategy that can leave you with a reasonable valuation.
Choosing sales strategy
You have to work with a broker or connect with buyers directly to sell your business. Brokers will offer their expertise in preparing your business for sale and marketing it to buyers. You have to pay the desired fees to opt for their services.
Selling your business directly without the involvement of a middleman can speed up the business process significantly if you are working with an experienced buyer. Strategic buyers can close a deal within 30 days of signing the LOI.
When you have engaged with a potential buyer, signing a non-disclosure agreement (NDA) is fundamental to protecting your business information.
NDA will keep your secretive business information protected so that no one can use your business information for their personal gains.
Working on other details
When you have signed the NDA, the next step is proceeding to payment details. Buyers will submit a non-binding agreement for purchasing your business on the agreed payment. When you accept this valuation, you will be signing an LOI letter that provides them exclusivity to conduct a due diligence process that can go for around 30 days.
After signing the LOI, the countdown for closing the deal begins. Still, you have to follow the due diligence process. The buyer will thoroughly audit the critical metrics of your business-like previous earnings, growth, inventory update, and customer reviews. If there are no issues in the due diligence process, buyers will proceed toward the final decision.
Moving towards the last step
The final step involves the Asset Purchase Agreement (APA), a legal contract to close the deal. APA document involves all the terms and conditions, purchasing price, and other possible payment instructions linked with the transaction procedure.
Once all parties have signed the APA agreement, the deal is closed, and your business is sold. Cheers!
Now you know how to sell an Amazon business. In this article, you learned all the necessary things involved in the selling process. Whether you want to start a new business or want to receive the payout of your efforts, it’s up to you.
If your business is not ready for exit, implement constructive strategies to make it profitable so you receive a high valuation. For your convenience, you can contact the brokers who can provide you with their expertise to sell or buy Amazon business. At ScaleBrand, we have a team of the best broker to sell an Amazon business.
What is the sell an Amazon business?
It’s how you sell your established Amazon business to the buyer. Your business should be profitable enough to receive a reasonable valuation for the business.
How to sell an Amazon business?
To sell an Amazon business, you have to go through specific essential steps and procedures for finalizing a deal. You can contact brokers to know further about selling an Amazon business.
Do you need to have an established business to sell on amazon?
An unestablished idea could be sold. However, to sell an Amazon business, it is advisable to sell when its earnings get stable.