5 Tips for a Higher Amazon Exit Multiple
This one's short and sweet. Exiting your Amazon brand is something that you have probably thought about or already are. Going from a 3x multiple to a 5x multiple is a difficult task but it sounds more complicated than it really is.
I'm going to make it really simple for you. If you take action on the following 5 tips I've laid out for you, expect a much more lucrative exit than the industry average.
Tip #1: Strong Growth
Buyers want to see consistent growth in the 50%-100% YOY range. This shows them that you have been disciplined about launching new products and reaching new customers. It's quite possibly the most important metric when exiting.
Tip #2: 20%+ Net Profit
It's an illusion to think that most buyers are looking for stressed FBA assets. They're not. They want to see an average 20% net profit minimum across the board for your brand. To be frank, there is no excuse for not hitting this number.
Tip #3: Intellectual Property Protection
This is trademarks and design patents. More the merrier. More IP protection you have, higher the multiple goes. If you source from China, make sure you have your trademark filed there as well.
Tip #4: Strong product Launch Pipeline
The last thing a buyer wants is to take over a business without a steady product launch map. Have 12 months of future product launches lined up and ready to go. These need to be real launches that you were actually planning to sell.
Tip #5: Off-Amazon Presence
The new gold standard is 80/20, the 20% being revenue generated off Amazon. Think Shopify, Walmart, Faire, social media. The less a buyer has to build out themselves, the higher multiple they will offer you.
Yup, that's it. If you are diligent and tackle each of these, your business will be primed for a beautiful exit.
If you are getting close to exiting and need a broker, please respond to this email! Part of what I do is help sellers position themselves for an exit and make introductions with a broker that fits best.
Now, go blow the buyer market away!
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