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Tips on How to Prepare Your Amazon Business for Exit

Hugh Owen
April 21, 2022

With lots of money pouring into the Amazon FBA market, more and more sellers are thinking about selling their businesses. If you’re also eyeing your big payday, follow these steps for a hassle-free exit and to guarantee that your business fetches the highest possible selling price.  

1. Get Your Trademark Registration, IP Rights, & Patents inOrder

Most Amazon brand buyers are looking for private label companies where the brand and trademark registry is a key part of the asset purchase. Many aggregators will check your registry in both the U.S. and China (as well as in other markets where you sell your products) so make sure that you have all this information readily available.  

2. Maintaining Profitability 

While having a large sales volume is great, no one wants to buy an asset that isn’t profitable. If you’ve had unforeseen expenses pop up, it may be a good idea to wait until you have at least six months of positive net operating income before taking your brand to market. Focus on steady growth and avoid artificially pumping up your sales numbers with heavy marketing spend.    

3. Concentrate on Amazon

Some sellers have been opening up storefronts on their own websites or through other third-party seller platforms, but Amazon is still king as far as most buyers are concerned. Maintaining stable performance on Amazon should be your top priority prior to exit. Aggregators are more than capable of scaling your brand across multiple platforms; what they’re looking for is a well-organized business that they can evaluate accurately so that they know how much to pay for it and how much of their resources will be needed to further grow the business.

4. Maintain Good Account Health

Make sure that your account health is strong prior to exit. If you’ve had any issues in the past, be transparent about this from day one. No Amazon FBA buyer wants to buy a brand only to have it suspended, thus putting the entire asset at risk. Be transparent about any rebate campaigns that you’ve used in the past and if you have multiple accounts, this should be disclosed from the outset as this also increases the risk of account suspension. 

While most aggregators understand that infringements happen to the best of sellers, and many are fine with one account suspension, it’s very important to be transparent about account health from the start of negotiations.  

5. Automate Your Processes and Simplify the Supply Chain

The simpler the business behind the profits, the more enticing it is to buyers. To demonstrate that your business is well structured and transparent, maintain relationships with your suppliers by giving them a call or two prior to putting your business on the market. If you have a product team, Virtual Assistants, and third-party warehouses, make sure that you’re up to speed with all of them and their day-to-day activities.      

6. Be Wary of Unrealistic Evaluations  

In Amazon, as in all rapidly growing markets, there’s always the risk of questionable business practices. If you’re not careful in selecting whom you work with, you could find yourself in a drawn-out due diligence process with no financing available to officially close the deal. Furthermore, if your deal structure includes an earnout and your buyer has the money but lacks the operational expertise to run your business, then you risk missing out on your earnout payments entirely. On the other hand, if you work with a capable operator/aggregator who is skilled at scaling Amazon businesses, the earnout could end up being a very significant portion of your overall payout. 

Summary

Pursue steady profits on Amazon, set up a clear business structure, and focus on building a reputable brand with positive reviews to increase your chances of receiving an attractive exit offer. If you would like to learn more and receive a free valuation of your business, send us a message.

Accel Club is listed as one of the Top 10 Amazon Aggregators in a recent survey conducted by ecommerce aggregators. They recently published their 2022 Definitive Guide For FBA Sellers,  visit their website for more information.