Choosing a Broker for the Sale of an Amazon Business


#1

In my previous post about Preparing Your Amazon Business for Sale, I talked about how to maximize value. However, having a great business still doesn’t guarantee you’ll achieve the best price if you’re not able to get it in front of qualified buyers.

Most people don’t sell more than one business in their lifetime, so it’s important to work with a qualified and experienced broker who can help you through the process. Preventable mistakes or poor exposure can cost you significantly. With that in mind, let’s take a look at the steps you should take to ensure you’ve chosen the right broker for your business.

Experience Selling Amazon Businesses

Amazon businesses are unique in many ways, so it’s very important that you work with a broker who has specific experience with them. For instance, Amazon accounts are generally not transferrable according to the Terms of Service, so a sale must be structured to work around this. As a seller, you want to be confident that you can rely on the experience of your broker to guide you through issues that you may not be aware of. Experience selling ecommerce businesses in general can be helpful, but make sure your broker has at least some experience selling Amazon businesses.

Experience Selling Businesses of Similar Size to Yours

From a broker’s perspective, the process for selling a business valued at $100,000 is not very different than selling a business valued at $1,000,000. What’s more important is that the broker you choose has a list of buyers appropriate for the size of your business. If want to sell your business for $1,000,000, it doesn’t do much good if your broker doesn’t have a list of buyers interested in transactions larger than $100,000. On the other hand, if your broker is selling mostly $1,000,000 businesses odds are strong many of his buyers are also seeking less expensive buying opportunities. And when they come along…they sell quickly.

Current Work Load

Broker should have a reasonable current workload - it can be a red flag if they don't have any current assignments, but you also want to make sure the broker isn't over-committed with too many either. You should similarly confirm that important tasks won’t be handed off to junior staff.

Good Communication

It’s important that you have a good rapport and can communicate well with the broker. You should get the feeling that they are honest and upfront with you, and not just telling you want you want to hear. Make sure you’re also generally comfortable with their style and that you aren’t “talking past each other”.

Similarly, the broker should have a plan to keep you up to date on what’s happening with the process (or be willing to reasonably accommodate your needs.)

Systemized Process

Broker should have a well laid out, systematized process that can be articulated before they are hired (how they will value the business, prepare it for sale, find buyers, and work through the final transaction)

Competitive Fees

The sales commission should be competitive and the seller should never pay anything up front. Commissions typically range from between 10% to 30%. A lower commission is obviously better than a higher one, but I would suggest avoiding any broker who charges more than 20%.

That being said, be cautious of hiring a broker just because they charge a few percentage points less. A skilled broker will earn their commission (and more) by finding a buyer to pay maximum value for your business.

I cannot overstate the value of working with the right broker, so do not make your decision based solely on the commission level.

Reasonable Exclusivity Period

Exclusivity periods can range from between 90 days to 12 months. A good broker with a good listing should be able to sell a business “relatively” quickly, so I recommend avoiding brokers with an exclusivity period greater than 6 months.

Verifiable Track Record

The broker should also be able to provide you with a list of references.

Next Steps

With the list above in mind, you can boil it down a few questions that you’ll want to ask, so I’ve summarized them for you below. Of course, you’ll also want to make sure you speak to the person on the phone to ensure that you have a good rapport.
  • How long have you been selling businesses?

  • How long have you been selling Amazon businesses?

  • how many Amazon transactions have you completed in the last 12 months?

  • What is your average transaction size (or the min/max business size you typically work with)?

  • Have you ever run your own ecommerce or Amazon business?

  • What commission rate do you charge?

  • What is your exclusivity period?

  • Can you put me in touch with 2 or 3 references I could speak with?

Keep in mind that the broker will also be interviewing you at the same time to determine if they’d like to take you on as a client. Be professional and prepared regarding your business and your goals as the best brokers are the most selective about who they work with as well.

A Recommendation…

I’ve spoken with a few brokers who specialize in selling Amazon businesses, so I thought it might be helpful to provide a recommendation:

Joe Valley – Quiet Light Brokerage
Skype: ncjoevalley
800-746-5034 x105

https://www.quietlightbrokerage.com/about/joe-valley

To make the vetting process easier, I’ve posted the answers to many of the above questions (with Joe’s permission).

  • How long you’ve been selling businesses? I joined Quiet Light Brokerage as an Advisor in April of 2012.

  • How long you’ve been selling Amazon businesses? My first listing with an Amazon component was in 2013.

  • How many Amazon transactions you’ve completed in the last 12 months? Note from Dax: I’ve confirmed with Joe that he’s sufficiently experience and active but have decided not to post the 12-month transaction history as it will always be changing. You should reach out to Joe directly for updated figures.

  • What is your average transaction size (or the min/max business size you typically work with)? We have a strong buyer database for listings ranging from $100,000 to $5,000,000. In the last twelve months my largest transaction was $2,000,000 and my smallest was $180,000. Note from Dax: Reach out to Joe directly for updated figures.

  • Have you ever run your own ecommerce or Amazon business? Yes. One core principal at QLB is that we have all built, bought or sold our own online businesses. We didn’t jump out of college and into brokering. We’ve all had our “home runs” so to speak and bring a wealth of real world experience to the process.

  • What commission rate do you charge? It is 10% on the first $1,000,000 and 8.5% on everything above.

  • What is your exclusivity period? 90 Days. The vast majority of our listings are under LOI and closed within this time frame.

  • Can you put me in touch with 2 or 3 references I could speak with? Note from Dax: Joe provided me with references, but it would not be appropriate for me to post them publicly. Please reach out to Joe directly if you would like to contact his references.

Joe has generously offered to provide my readers a $500 discount off the final commission. Simply mention you found him through my site when you first reach out to Joe in order to receive the discount upon the successful sale of your business.

This post is part of the Ultimate Wiki Project.


Preparing Your Amazon Business for Sale
#2

Thanks for the shout-out Dax. For the record 90% of the people I do valuations for never sell. Most shouldn’t. Those who sell are either emotionally tired, don’t like their partners or planned to sell all along and have reached their goals.

Here is a link to the 10 Steps to Selling an Amazon Store article. The eBook can be downloaded here.

Amazon business owners…I had a good call with one of you this morning. We called it an “Intervention” call because he was doing amazing numbers but not tracking anything numbers in quick books and had loose records on monthly inventory numbers.

If you ever want to sell you should build your business with that in mind…it’ll be worth more if/when you sell and it will be A LOT easier on you in due diligence.

Read the article or eBook…you have nothing to lose and so much to gain.