It’s one of the most important questions to ask if you’re an Amazon FBA seller, about to put a business up for sale. Should you complete a direct sale, or hire a professional broker?
There’s a lot of information out there on the internet, speaking for and against an Amazon business broker, or a direct sale. We will give you the pros and cons of each option, so you can make an informed decision.
What is a broker?
A broker is an individual or company, specializing in mediating a sale.
If you use a broker, find one that specializes in Amazon FBA business sales, as they will have the right tools to work with you.
When you approach an Amazon business broker, they’ll usually have some free tools to quickly value your Amazon FBA brand. They can present you with ways in which they can help sell your business.
Brokers also have accountants on their team – or they can recommend an accountant to help sort your financials and calculate your profit and your SDE. They can also assist with preparing your profit loss statement, and help you clear up any confusion that might arise.
They will have an established relationship with Amazon FBA aggregators and will reach out to them with an offer regarding your business.
The downside of working with an Amazon business broker is that they charge an 8-15% cut from the final sale, in some cases even asking for an initial payment to start the process. Occasionally, the broker will charge a fee for their services even if the buyer backs out of the sale. Also, brokers may be biased towards particular buyers, directing you to them instead of others.
In the case of a direct sale, you’ll be in direct negotiation with the Amazon roll-up firm, and responsible for sorting out all your paperwork.
You can negotiate your terms and conditions, raise any concerns about issues, and keep the entire payment for yourself after your Amazon FBA exit.
If you use our free resources you can properly prepare the business for sale without needing a broker, as all of your financials will be ready – and you will have a good representation of how to calculate your SDE.
However, if you are inexperienced in negotiating a deal or you don’t know how to clean up and sort out your finances – a buyer might take advantage of that. They could then calculate a lower price than your business is worth.
Private equity firms are the best option for people who want to stay involved in the business after the sale. These firms buy and sell the business, and they’ll assist in growing your business and scaling it further. These companies have their private equity brokers who will work exclusively with you, making the sale fast and easy.
Private equity firms also pay 4-5 times the SDE – and they pay upfront. So you will receive a payment, stay in charge of operations for your business, and receive a further payment when they sell the business to someone else.
The downside of selling to a private equity firm is that you’ll have to stay and operate your business – you can’t make a clean break and move on to a new venture for a while.
Now that you know your options and the positives and negatives of each choice, it’s easier to make a calculated decision.
If you’d like to know the value of your business – contact us and ask for a free valuation!