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Business Valuations for an Amazon FBA Business You Intend to Sell

Posted by Andy DeJaco in Articles

Most online businesses undergo the same process for identifying appropriate value. This is known as using multiples of seller discretionary earnings or what is also referred to as seller discretionary cash flow.

This term refers to the profit that is left over for the company owner after all the cost of the sales and non-discretionary operating expenses are removed from the gross income. The owner salary should be included with this profit number when it comes to selling an Amazon business.

What Values Are Included When Selling an Amazon Business?

If you want to sell your Amazon business, you must have a clear picture of the potential value before you even list the company for sale. Working with an online business broker to sell your Amazon business can make it much easier to identify the right number to list it at.

You want to have a broad picture of all of the different numbers included in an Amazon business for sale. However, the true value of the company is extremely important to know.

The SDE or seller discretionary earnings is typically considered revenue minus the cost of sold goods minus operating expenses plus owner compensation. In order to value an FBA company when selling an Amazon business, the first step is to calculate the SDE. Then the person must devise a multiple to apply to it. This is one of the most critical pieces of the equation and one you should discuss directly with your online business broker when selling an Amazon business.

Why Big Picture and Small Details Are a Must When Selling an Amazon Business

When selling your Amazon business, it can be hard to get a numerical picture of the company when you have such a sentimental attachment to it. There are a number of different factors that can be used to identify the multiple.

These factors can span a wide variety of traffic, operational and financial aspects that ultimately have to do with scalability, transferability, and sustainability much like any other business. Any factor that indirectly or directly affects these core drivers will influence the overall multiple.

An internal valuation completed by an online business broker or someone that he or she knows in the marketplace can be an extremely important piece of information to figure out whether or not right now is the right time to list your Amazon business for sale and what you are likely to receive in the marketplace.

An online business who broker operates in this landscape on a regular basis will be able to tell you more about whether or not you are being realistic with your valuation and can help you identify the right potential buyers for your Amazon business. Selling an Amazon business does not have to be difficult when you have the support of an experienced online business broker to assist from end to end.

When you’ve grown a business on Amazon quickly and aren’t sure of your next step, sitting down with a business broker can help to clarify all the benefits of moving forward with a sale. Online business valuations should be obtained early on in the process so you can verify that selling an Amazon business is the right step for you.