Broker, M&A Advisor or Investment Banker are all the typical names of firms that market themselves as those who can work with you to sell you Amazon FBA and or Ecommerce business. Overall, such businesses can generate tremendous value for an Ecommerce business owner, maximising valuation and ensuring favourable deal structures.
This article seeks to define what a true M&A Advisory and Investment Bank is, how they operate and the key reasons to sell your brand with such an Advisor. The right intermediary can add immense value to an exit process, there are broadly speaking two types of ‘Brokers’ in the Amazon ecosystem at the moment, with other technology platforms also being available.
The first type of ‘Broker’ is defined more as an Introducer who generally charges a commission for sending an email to a list of contacts. They generally do not conduct any form of Financial Analysis and only focus on the headline Quantitative metrics. Such individuals also sometimes receive a referral fee from the buyer. Their key USP is the ability to introduce you to interested parties.
Professionals on the other hand, like Chapter International, exclusively represent the seller. They provide a full service offering, from initial Financial & Valuation Analysis, Profit & Loss verification and or confirmation, Investment Memorandum build, initial outreach, Negotiation and Due Diligence project management and broader advisory services. Our USP here being the all encompassing element to the service offering, Professionals are able to advise and negotiate on all things, from SDE to specific clauses in the final Purchase Agreement.
There are multiple other reasons partnering with a professional intermediary adds immense benefit:
Time
All of the above takes time, with navigating and managing a process between different international buyers, lawyers and accountants can be challenging - as well as timezones!. This combined with negotiating an array of different clauses and structures at once is difficult and most importantly, still running your business in a ‘normal’ fashion. Having a team of M&A professionals in your corner is a valuable asset.
Expertise
Expertise is crucial, the reality of any exit for an Amazon FBA Seller or Ecommerce DTC brand business owner is they are likely selling the firm to an Acquirer with an in-house M&A team. These teams are veterans at acting in their firms interest and have in some cases, made north of 50 acquisitions in 2021/2022. There is a fundamental imbalance, and certain strategies buyers commonly use their knowledge to re-trade on LOIs or renegotiate to ensure less than optimal deal structures for the Founder. As an Investment Banker works with multiple buyers, across different geographies and demographics, they ensure you are receiving a fair deal in your best interest.
Furthermore, fundamentally an intermediary is a seasoned negotiator for Sellers, upon understanding what is best for you, the best Brokers negotiate the optimal deal possible using all levers possible; from future potential, financial engineering and a competitive yet fair process.
Experience
Experience is also crucial, the team at Chapter closed 7 deals in 2023 across the FBA & DTC brands niche. The largest being a £20m transaction and the smallest being a $750K exit; each presents their own challenges as every engagement is different. A common belief is that Brokers work ends at the signing of a LOI or Term sheet, this isn’t the case. Navigating Due Diligence is crucial with correct messaging and negotiations being fundamental to the smooth completion of this progress. A firm understanding of Due Diligence is just as important as a Brokers ability to negotiate the highest possible multiple and deal structure. The key is to ensure the deal closes.
Fundamentally, selling your business is one of the most exciting experiences of an Entrepreneurs career. It is the end of a Chapter and will act as a financial boost to the next phase of your professional story. However, selling a business can be challenging, there are many highs and lows and working with an expert to navigate you through this process is crucial. Even the most expert operators sometimes use accountants or agencies. Even the largest, most successful businesses use Investment Banks to navigate their exit, the same applies to Amazon & Ecommerce business owners if they want to receive the best deal and leave nothing on the table.
Please reach out to amunday@chapterintl.com for further information, or a confidential discussion regarding the potential sale of your business.
Even if an exit is not of interest to you currently, please use our Valuation Calculator to gain insight into the potential value of your brand.
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