
Ask HN: How to sell e-commerce private label business? - hippich
We grew a particular niche brand selling mostly on Amazon (via FBA) and for 2019 I am trying to decide maybe I want to sell it. It makes about $400k with revenue of around $1m (did not finish year-end books yet) and takes me part-time to run it without touching stock or shipping much myself.(I have a full-time job on top of it)<p>What avenue I should approach to get an idea if it is sellable and for how much? The typical response I see online is 1x - 2x multiplier, which doesn&#x27;t make much sense to me (I&#x27;ll just keep increasing sales, and perhaps quit my full-time job then).<p>Also, what is a typical process of talking with prospective buyers? I want to protect data, and at the same time I want to give enough information to prove it is viable and relatively easy to run (comparing to a brick and mortar store for example)<p>What kind of lawyer I should be looking for to prepare a sale contract to make sure I will not be screwed?<p>How such transactions are structured typically? (i.e. people pay all in cash, or obtain financing from a bank, or always require seller financing, etc)<p>What are the tax implications of such a transaction and what I should be looking for?<p>Any thoughts, experience, and ideas are really appreciated.
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siegel
As an attorney who does this type of thing, I can comment on a few of these
things:

1) 1x-2x multiplier isn't offbase historically. Remember, though, that not
every niche brand can be maintained on a part-time basis without touching
stock or things like that. So, when one thinks of, say, a 2x multiplier, the
calculus on the part of the selling company is much different than yours (i.e.
they are selling to cash in and avoid further expense, effort, etc..., as well
as hedging risk, of course, which presumably is a goal you share). But it
doesn't necessarily impact the acquiror's calculus - depending on the type of
buyer, they are going to fit your brand into their existing sales
infrastructure. So, the effort and expense you incur doesn't matter to them
quite as much as you would think.

In other words, you might not be able to reasonably expect a much greater
multiplier because this business is so easily self-maintaining. Instead, it
might just not make sense for you to sell.

Mind you, this is assuming the acquiror has an infrastructure your brand would
fit into. Other types of buyers may feel quite differently and could pay a
hefty premium for a business like yours. Finding that type of buyer is
something I'm not sure how to do.

2) How these transactions are structured depends in a large part on the type
of buyer. And there are a lot more structuring variables than all cash vs.
financing.

3) Tax perspective? Not sure how you are structured right now. You may be able
to qualify for QSB treatment, which would exempt much sale value from capital
gains taxation. But I'm not sure you are structured now to allow that (or if
you are an entity at all). There are way too many variables in terms of tax
implications and you just need to make sure you have an experienced tax
attorney (or accountant, if they have the right experience) looking at your
proposed deal structure and working with the main attorney representing you.

4) In terms of the type of lawyer, an experienced corporate and commercial
business attorney makes sense. This is not the size of deal that would be cost
effective at a large firm. So, maybe I'm biased given what I do, but I think
you'd be looking for a smaller firm that has business M&A experience. PLEASE
make sure you go to an attorney before you sign a term sheet. You'll have a
much harder time negotiating things if you haven't done so at the term sheet
stage.

Hope this is helpful and happy to answer other questions.

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consultutah
In the price range you are looking at,
[https://feinternational.com/](https://feinternational.com/) is a popular
choice.

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moltar
Empire Flippers

