Who Would Buy My Amazon FBA Business?
Many Amazon FBA sellers didn’t launch their business with the idea of selling when they first started out. But if any seller asks themselves whether they want to be running Seller Central in 15 years, the answer is probably “No!” Whether now or in the future, there are lots of reasons why it will eventually make sense for an entrepreneur to sell their business. It could be to free up capital for a new venture or a personal decision like paying for a child's college tuition, but either way selling an Amazon FBA business can allow a seller to cash out and free up money for whatever they need, as well as the time to pursue what they’d like.
When considering a sale, it is important to understand the types of buyers who may be interested in acquiring an Amazon FBA business. Not all buyers are the same and understanding both sides of the equation can help you find the right buyer to match your business and your goals for selling.
It is not unusual for an individual entrepreneur to be in the market for an existing business. They may see this as an investment or as their primary job and income. Funding could come from cashing out another business, investing some of their retirement funds, or even taking out an SBA loan.
There are some benefits of this type of profile:
In comparison with other buyer types, this is the biggest pool in terms of number of buyers. There are always individuals searching for profitable business opportunities. This may be especially important for certain niche sellers that may not be attractive to larger buyers. With a broader buying pool, there is a better chance that someone may have a differentiated interest in your particular FBA business.
The individual buyer may also offer more flexibility with deal structures. This could be a factor for sellers who have specific financial goals, like getting all the cash at close, which may not be possible with other buyer types.
Individual buyers certainly also come with cons:
This could be their first time buying a business, and their lack of experience and expertise could slow down the transaction. Even worse, it could lead to broader issues like financing falling through, which could derail the deal altogether. We bought one business from a Seller who told us that the first business he sold to an individual took 14 months (!), so when we closed after 30 days he was pleasantly surprised.
For Perch and other institutionally-backed operators, our business model revolves around purchasing and operating Amazon FBA businesses. These institutional buyers represent an increasing pool of capital available for these businesses.
Some pros that may appeal to certain types of sellers:
A significant benefit is that they have institutional funding, so there is no need for external financing, greatly streamlining the purchase.
Second, because this is their business, they have the capability to move fast.
Finally, since companies like this thrive on their reputation, there is a high level of accountability to assure you that everything will be handled fairly and professionally.
There are of course tradeoffs, as with any option:
First of all, we can have more rigid deal structures—for example, it’s very rare for an institutional buyer to make an all cash offer—so you need to expect to have some of your payout tied to the future stability or growth of the business.
Second, they may or may not be interested in your particular business. Not every seller fits their business model even if it’s a great business, and they may pass on yours.
Family Office Buyers
The family office buyer is different from the first two; in fact, there is a serious upside to the family office.
They often have the financial wherewithal to purchase much larger businesses. For sellers with Amazon FBA businesses out of the financial range of individuals and even institutional buyers, the family office may be a good fit.
One consideration to keep in mind:
They likely have little interest in running an Amazon FBA business; they are only seeking an investment opportunity. This can be seen as a con for sellers looking to get completely out of their business and not continue with day-to-day operations.
Whether you are considering selling in the near term or just thinking about your long term goals, don’t hesitate to reach out to talk with someone from our Acquisitions team. We can give you a good sense for which type of buyer might be best suited for you based on your business and your goals, and it’s never too soon to start a discussion. If you’re interested just drop us a note on our contact form or connect with Nate or Colby on LinkedIn.