There has been an explosion of interest in Ecommerce Consumer Goods Brands over the last 5 years, institutional investors have entered the space looking to capitalise on the strong margin and lean operating models of digital first brands. Just who are these buyers? In this article, we will provide an overview of the types of buyers who are currently reviewing and acquiring Amazon FBA, DTC first and other marketplace brands.
Aggregators & Roll Ups
The most ‘famous’ of such acquirers are the Aggregators. Such businesses, like Olsam Group, Thrasio and SellerX came to fame following the Amazon FBA goldrush throughout 2019 - 2022. These organisations acquire individual Amazon FBA and DTC brands with the objective to scale them further by implementing their operational expertise, consolidating and finding synergies across acquisitions and utiling economies of scale as a consequence of their deep pockets.
Aggregation as a concept is not particularly new, in more traditional terms Aggregators are typically called ‘Roll Ups’, there have been many very successful roll up organisations like Constellation Software with a focus on SaaS. This is the same within Ecommerce & Amazon FBA, some have been very successful and others have found operating brands combined with a challenging interest rate environment difficult.
As of 2024, there are generally two types of Amazon Aggregators. 1) The established players, who are sourcing individual brands with an SDE of $2m+. 2) An array of new entrants, buyers who have raised between $1-10m in financing and are looking to prove their expertise via good M&A and strong operational management with the objective of fundraising once the market becomes more favourable. On the DTC side, there are roll ups that acquire brands across all sizes and geographies.
Strategics
A strategic buyer within the Ecommerce ecosystem will be an acquirer that seeks to buy a brand, whose acquisition would add synergistic value to their existing portfolio. For example, the team at Chapter International partnered with a DTC business within the Health & Personal Care category and successfully closed a transaction to a listed business. The synergy was the DTC brand operated within a part of the skincare niche, the buyer decided rather than launch their own suite of products, they would rather grow via M&A. Another example could be a larger Amazon FBA seller looking to scale via M&A, categories such as Supplements have clear areas of synergy - acquiring brands with complimentary product lines is a strategy multiple larger sellers are forwarding.
Financial Buyers
Financial Buyers are organisations that look to buy or invest in a brand with the objective of receiving a target financial return to then sell the business within 3-5 years. Within Amazon FBA, these transactions are comparatively rare as Financial Buyers usually require an ongoing management team to work with them to scale the business, most also cite majority Amazon revenue as too much of a risk. On the DTC side, if a strong leadership team is in place that will remain post-transactions and EBITDA is $5m+, there will be plenty of interest.
Lifestyle Business Owners
The Amazon FBA business model in particular is renowned for its low touch and straightforward operating model. Multiple Ecommerce business owners can operate a high performing 7 figure brand working 2 hours a day. As such, there are an array of Lifestyle Business investors or Acquisition Entrepreneurs looking to buy and operate their own brand. From our experience, such buyers generally review brands that are sub $1m in valuation and acquire them from marketplaces like Flippa.
We at Chapter International aid buyers and sellers to either acquire or exit their Amazon FBA & DTC brands. If acquiring or selling a brand is something that you are considering in 2024, please contact us for a confidential conversation. Our team can provide guidance across the full process and assist you in deciding what type of business is right for you.
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