You’ve finally put your Amazon FBA business up 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 need 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 information you need before you begin negotiating your Amazon FBA exit.
Keep reading to find out how to make your exit a successful one.
There are many factors to consider when it comes to negotiating an Amazon FBA deal. As a seller, you’re responsible for a number of important tasks to ensure that the handover process goes as smoothly as possible.
This could mean a mountain of paperwork, getting your books together, and figuring out how to position your Amazon FBA business.
While you may be tempted to just pack up and leave, selling your business ensures you don’t exit FBA at a loss. Furthermore, it also helps to develop your business so all your hard work doesn’t go to waste.
Here’s what to keep in mind:
As a seller, the first thing you need to decide is whether 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 – you’ll rescind all of your input into the business. A partial exit, meanwhile, means you’ll stay involved.
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 within the next 2 years.
Negotiating Amazon FBA sales on your own doesn’t have to be a hard task if you make the right choices in time. However, you need to decide what you really want from the sale.
Making a complete exit is the most popular choice; many sellers prefer to cut their ties cleanly and start over. However, if you feel like you could still be of service to your brand, then it shouldn’t be too hard to find a willing buyer.
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 at a price; usually 10-15% of the final deal.
Working alone might seem more difficult, but it does give you the 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 statements are your biggest asset when selling an Amazon business. Having a clear profit-loss statement is your golden ticket to success.
If you don’t have all of your records straight, the best thing to do is hire an accountant before approaching an Amazon roll-up company. If you’re very familiar with how your money is earned and spent and are fully aware of your profits, it will be much easier to persuade the buyer to pay your asking price.
The general idea here is to make sure that the potential buyer knows exactly what they’re getting into. It’s hard to negotiate a deal without a clear definition of profitability. When it comes to crunching numbers, buyers may not be so inclined to just take your word for it.
Knowing how to calculate and present your SDE (Seller’s Discretionary Earnings) is another asset for your negotiation plan. We have a detailed guide to lead you through the steps of calculating this crucial number.
SDE calculations aren’t as complicated as they may seem. It’s important to make sure that you have the right number, otherwise, this may heavily impact how much your business goes for on the market.
Remember: when in doubt, ask an accountant.
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 that you’ve grown from the ground up.
Knowing your SDE is crucial, along with finding out the usual payment for businesses in your niche. Discovering how much of the SDE is usually paid in your niche usually requires some research, as well as a bit of networking with other sellers.
It’s very hard to decide how to negotiate an Amazon FBA exit when you don’t know how much the Amazon aggregators are usually paying, so a bit of context 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!
Depending on the price of your Amazon business, Amazon FBA buyers will pay you in one of three ways: upfront cash, a stability payment, or an earnout.
Have in mind your preferred method of payment before negotiating the deal, so you don’t get distracted by the myriad options your buyer might offer. This will make for a faster deal, a faster exit, and quicker payment.
The best time to sell an Amazon FBA? When your product is in demand.
Your niche may have a high or low season or gain popularity around a certain holiday, season, or event. These peak points are by far the best time to sell – the demand will create hype around your product. 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.
This is one of the most crucial stages of negotiation. One wrong move and your potential buyer might get a sense that you aren’t confident in what your company has to offer.
Remember, whatever reason you have for exiting is irrelevant. What matters is that you’re able to relay the importance and value of your brand.
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 sale 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, while 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 objective facts that back your business’ value. For example, you should explain why those followers bring you 90% of all final sales.
Keep a level head, and make sure your buyer understands exactly what your business has to offer. If you have your books right, you won’t even need to do much of the talking. Your sales will speak for themselves.
All in all, the entire process should go smoothly when you’re armed with the right information. Selling an Amazon FBA business is a roller coaster ride of emotions and responsibilities that may leave you questioning your decisions at the end of the day.
If anything else, the hardships make the triumph of successfully making an exit even more rewarding. The key is to stick to what you know about your business.
Focus on value and profitability above anything else. After all, numbers speak more loudly than you ever will.
Now that you know how to negotiate your Amazon FBA exit, click the “What is my Business Worth” button and receive our estimate. Let the negotiation games begin!