Attention Amazon Sellers: We Buy Private Label Businesses!
Do you own a private label brand that has strong sales on Amazon? If so, we may be interested in acquiring your brand or FBA business. Read on for more info…
Who is Vocational Media Group?
At Vocational Media, we’re all about Amazon. Our team manages marketing campaigns for our clients, who are established brands selling on Amazon. Most sell using Fulfillment by Amazon (FBA) in order to streamline operations, though in some cases Fulfillment by Merchant (FBM) makes more sense. Some are manufacturers, others develop private label brands, and others are distributors with unique advantages.
We also sell our own products through Amazon as well. So we’re familiar with the idiosyncrasies associated with Amazon. Even better, we’re really well connected with tons of other business owners who sell on Amazon and are actively looking to acquire new accounts, new product lines, etc. within Amazon.
What is VMG Looking For in a Possible Acquisition?
Ideal prospects will meet most of the following criteria:
- Average monthly sales on Amazon between $20,000/mo and $250,000/mo
- Gross margin (after all COGS and selling fees) of 20% to 50%
- Amazon account and listings in good standing
- All or most products being sold are private brands owned by the seller, preferably with applicable trademarks
- Established off-Amazon presence: website, social media presence, email list, sales on other marketplaces. This is a nice bonus but not essential
How Much is My Amazon Brand Worth?
This depends on many factors, but generally speaking we see multiples of between 24x and 30x the monthly net income for most Amazon businesses. So if you sell $100,000 in sales revenue per month and your net income on that is $30,000 after all expenses, then you’d likely be looking at a valuation between $600,000 and $900,000. This does not count inventory though, and as such the value of inventory is typically added to the transaction on a “landed cost” basis.
Key factors determining where in this range the value is include: is it FBA vs. FBM, is it a reseller vs. a private label, sales volume, how many products/SKUs are being sold, how diversified is revenue by product, how long have the products been established, are there any non-Amazon assets such as website that accompany the core business, etc. Also how the deal is structured – all cash up front vs. a payout over time or earn-out, etc.
Isn’t 24-30x Low? I See Bigger Numbers on Other Websites!
Many brokers publish their best multiples in order to attract potential sellers. They may even list your business at a 40X monthly multiple but that doesn’t mean that is what you will get. Oftentimes they are showing the highest examples and those are examples where there are earn-outs, payment terms, etc. and not guaranteed cash up front. Likewise, many aggregators like to share the stories of their higher multiple purchases in order to stimulate new deal flow – to get other potential sellers to come to them. But in reality in many cases those are the exceptions and filled with caveats.
Valuation multiples in the Amazon FBA space hit their peak in 2021, when the various aggregators had deep pockets from investors and when many sellers were riding a post-COVID internet sales spike. At that time, valuations ranged from 36x to 48x+ and in some cases even 60x the monthly SDE income when factoring in seller-financing and earn-outs.
But nowadays the situation is a bit different. Most of the aggregators aren’t buying, and indeed many have gone bankrupt. Alas, the higher valuations of 2021 turned out to be a bit too good to be true.
Now in fairness, oftentimes a business will ultimately get a slightly higher price when they list through a broker rather than a direct sale. That said, for valuations under $2 million many brokers charge 10-15% of the transaction price. As such, it doesn’t make much sense to pay a 10-15% commission to a broker when you could sell directly to us at a 5% discount, does it?
Would VMG Buy My Account, Business or Brand? And What’s the Difference?
Typically we are looking to acquire brands and thus likely would not purchase your business outright. This is commonly referred to as an asset acquisition, and its actually how most FBA acquisitions are structured. In some select cases, we might be interested in possibly buying the business itself. Usually there is not much difference from a valuation standpoint, its more about limiting liability and combining efficiencies. In no case would we be interested in buying an account though by itself (without purchasing the company itself) as that is against Amazon’s TOS. Please do not contact us asking us to buy your reseller account. We’re not interested!
Does VMG Buy Amazon Accounts?
No. We buy brands, and sometimes businesses. Please read the paragraph above for more information on this.
Why Should I Consider Selling to VMG?
We typically offer generous terms – most or all cash up front, so there is no risk to you. If you sell your brand for 20% cash up front and then 80% on payment terms, you risk not getting that 80% if the new owner messes it up, or if the aggregator can’t get funding. We’ve seen that all too many times.
Instead, when you sell to VMG, we pay cash up front – so you know you are getting your money.
Lastly, we’re a knowledgeable buyer. We know what we’re buying and how Amazon works. So selling to us is painless, whereas selling through a broker your business would likely be purchased by someone who knows very little about Amazon and either backs out at the last minute or hounds you with petty inquiries both before and after the sale is finalized.
Will I have to Sign a Non-Compete? Can I Start Up Another Amazon Business Later?
When you sell a business it is a deal that both parties negotiate, so everything is open for discussion. Most commonly, we are generally fine if you choose to sell on Amazon again after the transaction, so long as you are not competing with the product line(s) we just acquired.
What if VMG is Not Interested?
As is the nature of acquiring businesses, most of the ones we look at or discuss we don’t actually end up purchasing. That said, we do have a large network of potential buyers and facilitators as well. In some cases we may represent a client of ours who might be interested in acquiring your brand. In other cases, we may be able to refer you to a broker who has interested buyers. So even if we don’t acquire your brand ourselves, we can likely still help you sell it.
What is the Process of Selling my Amazon FBA Private Label Brand to VMG?
The first step is to fill out our intake form on this page. We’ll ask a few high-level questions about your business – top level sales, approximate gross margin, types of products sold, etc. We will keep this information confidential.
If we are interested, we’ll then ask for some more detailed information and at that time we’re happy to sign an NDA (Non-Disclosure Agreement) before you send us that information. That will include things like financials broken down by product, by month, etc. Then we’ll schedule a phone call to review this and ask any questions we might have. After that, if we are interested then we’ll make an offer on the brand via a Letter of Intent (LOI). This will outline the price we’re offering, the payment terms and other stipulations. This is typically a 1-2 page document so its an easy read! You can choose to accept our offer, reject it, or counter it. If and when we come to a mutual agreement then we typically conduct a “Due Diligence” period during which we simply verify that the numbers you provided are accurate, and ask you to provide the information we’ll need to take over the brand at closing. This typically takes anywhere from 10 to 30 days. The last step is then closing – we’ll both sign a final sale agreement (this one will be a longer document!) and we’ll transfer the money to your account and you’ll give us the keys to the brand.
Want to take the first step and see how much your business is worth? Fill out our acquisition interest form below to get started.
FBA Brand Acquisition Valuation Form
Please fill out this form if you are potentially interested in selling your Amazon brand or business. We will keep all information confidential.
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