The Best eCommerce Business Brokers to Help You Sell Your Business for Maximum Value
eCommerce is a dominant force in all of retail these days, representing big opportunities for the shrewd business buyer or seller.
Statista projects that eCommerce sales across the globe will reach $6.3 trillion by 2023 and $8.1 trillion by 2026. In everything from fashion to electronics to home goods, consumers everywhere show no signs of slowing down with their utilization of online retail outlets.
With all that activity, sellers of eCommerce businesses will be looking to fetch a high valuation for their firms, and buyers will be looking for opportunities that position them for fast growth.
For many, however, it’s only sensible to navigate these waters with an experienced eCommerce business broker by your side. A savvy broker who thoroughly knows eCommerce will help you ensure you’re getting the best deal possible with the greatest upside, whether you’re looking to buy or sell.
How An eCommerce Business Broker Can Help Sellers
An experienced seller’s broker in the eCommerce field can play an invaluable role in the sale process long before you start speaking to potential buyers. By working with one, you can have more confidence and assurance that you’ll end up making a lucrative deal.
Specifically, a good broker will:
Provide A True Assessment Of Your Company’s Worth
A good broker will be familiar with reliable methods of valuing eCommerce companies. They will apply them to your business to come up with a range of values you can be confident in selling your business for.
Two valuation formulas a broker may consider, depending on the size and complexity of your business, are EBITDA and SDE.
EBITDA stands for “earnings before interest, taxes, depreciation, and amortization” and adds back some expenses to your total business income. SDE stands for “seller’s discretionary earnings,” and the formula adds back personal expenses of benefit to the owner. eCommerce businesses often fetch a valuation between 2.5-5x EBITDA or 2-4x SDE.
Other factors that may hold significant weight in the valuation include shifts in consumer preferences and buying habits, as well as increased competition with your niche. Some of these changes are seasonal and temporary, while others can signal the start of an enduring trend.
A competent eCommerce broker will be able to factor in those things to value your business appropriately.
Help Boost Business Metrics That Matter To Buyers
Savvy eCommerce store buyers are going to want to see your performance numbers. If you have a good broker, they will help you identify and optimize the numbers that business buyers place a premium on.
These key performance indicators usually include:
Average Order Volume (AOV)
Website Conversion Rate
Customer Acquisition Cost (CAC)
Customer Lifetime Value (CLV)
Cart Abandonment Rate
Gross Profit Margin (GP)
Net Promoter Score
A good broker will work with you on all aspects of your business to improve the numbers in these areas. They can help bring your performance in line with existing online retail benchmarks to help you get the highest financial return at the point of sale.
Other metrics that go beyond pure sales also matter to many business buyers, such as optimized order fulfillment cycles.
For this reason, a broker may also assess your inventory management, as well as your supply and logistics partnerships. They’ll then suggest practical changes in those areas to improve your fulfillment — and potentially raise your eCommerce business’s value well ahead of the sale.
Increase Your Brand Awareness
In eCommerce, a strong brand is a great asset. It can help your business stay resilient and continually make sales, even during periods of reduced overall activity in your market.
For this reason, a good eCommerce broker will often help boost your brand awareness online through digital marketing activities such as social media advertising, email marketing, and SEO.
Brokers can also advise on opportunities to capture a smaller niche market. Because specialty hobby and arts-and-crafts niches tend to attract more consistent customers who loyally follow brands, it might be a good idea for your business to pivot and make a dent in these areas instead of focusing on only bigger, broader markets.
You’ll want to capitalize on any opportunity to redefine your brand in a more powerful, unique way that boosts revenue. An experienced eCommerce broker is often the best person to help you do so before you enter the sale process.
Ways An eCommerce Business Broker Can Assist Buyers
It’s important to ensure any business you acquire will be profitable, a good strategic addition to your current operations, or both. A talented broker will help uncover the most promising opportunities for you and help you every step of the way.
In particular, a good buyer’s eCommerce broker will:
Assist With Due Diligence
A prospective target might look attractive on the outside but can easily end up being a costly buy in the long run. Doing your due diligence as a buyer is crucial to ensuring you’re making a good deal.
A broker shepherding you through the due diligence process will help you assess:
Hidden legal compliance pitfalls such as legal issues or unresolved tax obligations
Operational health, including whether or not there are clear standard operating procedures (SOPs) for day-to-day business activities
Strategy, including whether acquiring a certain eCommerce business truly fits with your plans for growth, rather than taking you off-course
A good broker will thoroughly look around every corner of a potential acquisition target to prevent unpleasant surprises from popping up in the aftermath of closing.
Avoiding Financial Pitfalls
As a buyer, you don’t want to take on outsized costs when buying an eCommerce business. A deal that looks good on paper can easily end up being a bad one if the underlying financials are in poor shape.
For example, the owner might be selling the company out of desperation to offload debt or because they’re privately forecasting poor performance given the particulars of their product offerings, niche, and fulfillment abilities. If you buy, the costs might even compromise financing for your existing business.
As an extension of your due diligence, a broker can help you dig deeper into a business’s financials, including outstanding debts, entanglements with third parties, and inventory costs, to ensure you won’t be taking on more financial maladies than the acquisition is worth.
Ensuring Product Offering Compatibility And Customer Satisfaction
It only makes sense if you’re looking for ways to build out your existing company to ensure your acquisition target’s products and your own are complementary in some way.
A broker can help you do this by ensuring that the products you offer will be enhanced by taking on the smaller eCommerce firm. That way, you’ll be able to upsell or cross-sell products more effectively.
As a result, you’ll be able to serve and satisfy more customers and possibly expand your total addressable market in a significant way.
What Qualities To Look For In eCommerce Business Brokers
Because the eCommerce field is so specialized, you’ll want a broker with experience that goes beyond just any kind of web-based business. It’s key to work with someone who gets the intricacies of online retail, and how quickly things are changing in 2023 and beyond.
Whether you’re selling your eCommerce business or you’re in the market to buy one, you’ll want a broker who meets these minimum standards:
A strong network. A good broker will be in touch with many business owners in the eCommerce space who are looking to strike ethical, mutually-satisfying deals.
Knowledge of marketing, sales, and web user experience (UX) best practices. If you’re a seller, a good broker will ensure your website experience and marketing practices are driving growth. If you’re a buyer, a broker can ensure these components of the target business are already in good working order.
Attention to KPIs. Your broker should be able to ensure the metrics that matter are being met, especially the ones that reveal the health of the business.
Confidentiality. Your broker should keep your activities confidential to protect your competitive edge and avoid compromising a good potential deal.
The right eCommerce business broker can make all the difference between a lucrative transaction that meets or exceeds your goals or a bad decision you’ll quickly come to regret.
Why Work With Raincatcher?
Raincatcher is a best-in-class business brokerage firm, and our professionals have deep experience in the eCommerce industry.
As a seller, our brokers will help make sure your website and business are in the best shape possible for a lucrative sale. If you’re buying, our brokers will help you evaluate the most relevant opportunities to maximize your strategic and financial advantage, and help ensure your acquisition goes smoothly.
Talk to Raincatcher today for the best professional guidance you’ll find anywhere for selling or buying an eCommerce business!