Selling your Amazon FBA business is never easy. There’s a lot to be done, from preparing financials to checking inventory and organizing your seller account. What can make the selling experience less than pleasant is being stuck with an untrustworthy aggregator. This is why asking the right questions before closing the deal is crucial to get to know your aggregator better.
We’ve noticed time and time again that many sellers are not getting the results they expected from selling their Amazon FBA businesses, which is why we wanted to put together this list of questions to ask your aggregator when selling your business.
An Amazon roll-up firm—also recognized as a liquidator or consolidator—takes an existing Amazon FBA brand under their umbrella of companies. They then scale these businesses to gain more revenue.
What’s great about selling to an Amazon FBA acquirer is that more often than not, their price matches current market offers for your business. Even better is that they tend to add a little bonus on top of that.
For example, Benitago offers a price match guarantee plus $250,000 to the final offer.
This is one of the first important questions to ask an Amazon aggregator. Why? Because Amazon aggregators have earned a reputation for being more finance-fluent with little to no capability to grow and scale an Amazon FBA business. This translates to lowered or no stability and earnout payments for the seller.
Other reasons to ask this question include an Amazon roll-up firm’s tendency to favor one kind of Amazon FBA business over another. As such, it’s important to ask whether or not they have experience working on brands within your niche.
This way, you’ll know whether or not they’ll be able to grow your business effectively.
A good rule of thumb is to ask them about some problems you come across as your Amazon FBA brand operator. For example, if you feel that your buyers are not being fulfilled efficiently and on time, you should ask what team of professionals the aggregator has on hand to handle these kinds of issues.
It’s time to get a clear picture of what they’ve accomplished in the past with other businesses they’ve bought. Ideally, not only will you want them to show you proof of their past successes, but they can also foresee similar results with your brand.
Remember, you are the Amazon FBA seller, and you want to make sure your business is in great hands. Don’t be afraid to ask for proof of their experience with the business and if they’ve yielded similar results with other Amazon FBA brands.
All in all, when selling an Amazon FBA brand, you want to make sure you are putting your business into the hands of someone that can effectively grow it. Don’t be afraid to ask them questions regarding their experience and how they’ve solved problems in the past.
The number of acqusitions made by the company and the number of in-house brands they’ve grown from scratch should help you decide whether to accept an aggregator’s offer. Why? Because this insight will help you determine the aggregator’s experience with Amazon. Asking questions that give you further insight into how their staff deals with Amazon issues is another way to determine whether the aggregator has the expertise necessary to grow and scale your business.
If this is your first time selling an Amazon brand, then it may also benefit you to know their take on structuring deals. Not only will this help you understand how they handle payouts, which is crucial if you decide to go for an earnout structure, but you’ll also know that you can trust them to help you get the best deal for your business.
An aggregator that is serious about growing your brand should be willing to share their experiences with others who have worked with them. Essentially, if they can connect you with other sellers that recently sold to them, it will give you some insight into how they run their business.
For example, you’ll want to know whether or not they’ve had good experiences with brands that they’ve acquired in the past. Think of it as a form of social proof you can use to verify their answer to the first question.
If you’re looking at an earnout or stability pay deal structure, it’s very important to know that your aggregator can take your business to the next level. You don’t want to skip this step, as it will be difficult to get an effective return on your investments in the future if you end up dealing with a bad liquidator.
To make this decision, it’s critical that you ask about the Amazon FBA acquirer’s background. Ask them about their experience with making acquisitions and how they’ve managed these brands before. You may even ask them about the results of their previous transactions so you can get a view of how they can replicate this process with your business.
Don’t be eager to accept offers made by just any Amazon aggregator. You’ll be surprised how some don’t have the resources to back their offer.
You’ll want to make sure the aggregator has sufficient capital for your Amazon FBA sale. Remember, this is a deal for a lifetime, and you want to be sure about what you’re getting yourself into.
The best proof of capital you can ask for is a copy of their balance sheets. This way, you’ll be able to know if they have enough capital to fulfill their promises.
If the aggregator has several transactions under their belt, then it’s safe to say that they’ve been successful at helping other sellers grow their brands. This will reassure you that they are capable of helping your brand reach its full potential.
If this is your first time selling to an Amazon FBA roll up firm, then you’ll want to look into asking them about their track record as well. Often, an aggregator may be able to grow your business quickly if you are okay with their business process.
Take Benitago, for example. We use a unique strategy to help businesses scale successfully. This is something we’ve developed ourselves. Most of the time, an Amazon roll-up firm will do the same. Still, it’s important to look at their track record to see if you’re missing anything.
In an ideal world, once your business is sold, you can wipe your hands clean of it and admire it from a distance. Unfortunately, in some cases, an Amazon FBA buyer may request or require your assistance after the fact.
This is especially true for deals that follow an earnout or stability pay structure. You’ll want to know what their commitment level is going to be after the deal is finalized.
This expectation should help you decide whether or not going into a deal with this particular Amazon roll-up firm is the right choice.
Some sellers prefer one mode of payment over another. For example, some may want to receive their payout via cash, while others prefer to go the route of stability pay. You’ll want to ensure that you’re getting exactly what you want.
Make sure the aggregator allows you to choose your payment structure. After all, it’s your business, and it is up to you if you want an earnout, stability pay, or if you want to get a direct deposit. A good liquidator should be flexible enough to allow sellers to choose their preferred mode of payment.
This will give you a good idea of how quickly the Amazon roll-up firm can go from making an offer to closing your deal. Some businesses may require more due diligence before proceeding to the next step, while others may require very little.
As much as you’ll want to take your time with making a decision, it’s only right that you be informed about the typical timeline for completing an Amazon roll-up deal too.
Sellers should ask questions before committing to a deal. Don’t feel pressured into selling too quickly. Many sellers think they need to jump at the first offer, but this isn’t always the case. There is no rush when selling your Amazon business.
The fact of the matter is that you have all the time in the world to sell your business, and you can use this opportunity to get as many offers as possible.
If any of the questions above lead you to believe that this is not the right entity for your Amazon business, then it’s time to walk away from the deal.
At the end of the day, this is an investment that you’re making and not just a buy-out offer.
You want to make sure you’re making a good decision for yourself, but also the future of your business. So make sure that when deciding this, you examine all important aspects carefully before committing.
As you’ve learned above, there are many things to consider before selling your business. Unfortunately, these points can be the difference between a successful and an unsuccessful sale. However, if you’re using all of the information above to make a thoughtful decision, then you shouldn’t have much to worry about.
Depending on the deal structure and your current sales situation, your Amazon business could be worth a lot of money, or it may not. However, if you’re able to sell to the right Amazon FBA buyer and have performed enough research into the market, there’s little that can interfere with your success.
Ready to discuss how to make your exit? Our experts at Benitago turn small businesses into huge enterprises. Get in touch with us today for a free consultation and valuation.