How to negotiate your Amazon FBA exit with a buyer

three people negotiating a deal
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You have put your Amazon FBA for sale – Congratulations! It’s a tough decision to make, but the right one! The next adventure is just around the corner, but before moving on, you’ll have to negotiate your exit.

Working closely with business owners has given us the knowledge and experience of the most common pain points for a seller. We’ve created a helpful checklist, to arm you with all the useful information before you begin negotiating your Amazon FBA exit.

So how to negotiate Amazon FBA exit?

Table of сontents:

Complete or partial exit?

As a seller, the first thing you need to decide is if you seek a complete or a partial exit. A complete exit means that you will hand over control to the new owner and that’s it, rescinding any input into the business. A partial exit consists of staying involved in the business.

If you want to stay involved in the business, you’ll need to provide a list of all the benefits the buyer will have from your knowledge, expertise, and experience. Be prepared to decide on what you can agree with the buyer, and if anything is non-negotiable. For a complete exit, you are obliged to sign a document stating that you won’t be a direct competitor to the business in the next 2 years.

Negotiating Amazon FBA sale on your own doesn’t have to be a hard task if you make the right choices on time. However, you have to decide within yourself what do you want with this sale.

Broker or direct sale

When selling your Amazon FBA business to an Amazon rollup company, you can work with an Amazon business broker or negotiate your terms alone. 

Working with a broker might seem easier – they will have a checklist of all the things you need to provide, and you’ll have complete guidance. However, this service comes with a price of 10-15% of the final deal. 

Working alone might seem more difficult, but it does give you complete freedom to make your own decisions and keep the entire payment for yourself. 

Whichever option you choose, you’ll have to decide before approaching an Amazon FBA aggregator. Once you’re in conversation with a buyer, it’s best not to change your mind and drop the broker, because the Amazon buyer may see you as unreliable and walk away.


Financial documentation

Financial statements are your biggest asset when selling an Amazon business. Having a clean and easy-to-read profit loss statement is your golden ticket for success. If you don’t have all of your records straight, the best thing would be to hire an accountant before approaching an Amazon roll-up company. If you’re very familiar with how your money is earned and spent, and your profits, it will be much easier to persuade the Amazon buyer to pay your asking price.

SDE (Seller’s Discretionary Earnings)

Knowing how to calculate and present your SDE is another asset in your negotiation plan. We have a  detailed guide to lead you through the steps of calculating this crucial number.

Final price

Putting a price on an FBA business you’ve invested your precious time and money into can be a daunting task – it’s hard to put a price on something you’ve grown from the ground up. Knowing your SDE is crucial, and then finding out the usual payment for business in your niche. To find out how much of the SDE is usually paid in your niche requires some research, and talking with other sellers.

It is very hard to decide how to negotiate Amazon FBA exit when you don’t know how much the Amazon aggregators are usually paying. Therefore, a small research can give you a big advantage.

At Benitago, we pay an average of 4-4.5 times the SDE, and we have a unique Price Match Guarantee + $250,000. Contact us to find out more!

Payout

Depending on the price of your Amazon business, Amazon FBA buyers will pay you in one of three ways: upfront cash, stability payment, and earnout.

            – Upfront cash means that the buyer will pay the entire price on the day of the sale and take over the business.

            – Stability payment means that the Amazon seller will receive one payment on the day of the sale and a second payment in the future                    (usually one year) if the business stays the same in earnings.

             – Earn-out means that the seller will receive a portion of the future earnings of the business, with the amount and the time dependent                     on negotiation.

Have in mind your preferred method of payment before negotiating the deal, so you don’t get distracted by the myriad options the buyer might offer, and you can focus solely on your preferred option. This means a faster deal, faster exit, and quicker payment.

Know your niche’s demand

The best time to sell an Amazon FBA? – When your product is in demand. Your niche may have a high or low season or be very popular around a certain holiday, season, or event. This is by far the best time to sell because the demand will create a hype around the product and you’ll be able to cash out faster, attract a better Amazon buyer and make the most out of your deal.

If the moment isn’t right, you can explain to the buyer when the product will be in demand, using your experience to emphasize your product’s desirability.

Set emotions aside

It’s understandable to be emotional when dealing with something as personal as selling a business. However, as difficult as it may be, you have to set aside those feelings and look at negotiating your Amazon FBA exit through an objective lens. Everything revolves around that final price – if you go into the negotiation with a clear head, you’ll be able to think more clearly and even speak more coherently. 

Maybe the Amazon FBA buyer can’t understand that you spent $10k in marketing last year, and you think they should place more value on your brand’s hard-won 100k Instagram followers. Instead of responding defensively or comparing your brand to others, utilize your clear head and the objective facts – explain how, for example, those followers bring you 90% of all final sales. 

Now that you know how to negotiate Amazon FBA exit, click the What is my Business Worth button and receive our estimate. 

Let the negotiation game begin!

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