1 Amazon FBA Exit. 1.7M$. 3 Years.

Explore the Remarkable Journey of a $1.7M Amazon FBA Exit in Just 3 Years

Hey there!

Ever wondered what it takes to make a big splash in the Amazon FBA world?

How about scoring a jaw-dropping 7-figure exit after just 3 years in the game?

Well, you're in luck because today, I've got a fascinating story to share with you.

I recently had the pleasure of chatting with the brilliant Tomer David, a seasoned Amazon expert hailing from https://sourcing-monster.com and the Sourcing Monster YouTube channel.

With a whopping 14 years of e-commerce experience under his belt, Tomer isn't just your average seller – he's a true master of the game.

And get this – he's notched an Amazon FBA business exit worth $1.7 million in just 3 short years.

Curious to learn more about Tomer's journey and how he turned his Amazon FBA brand into a million-dollar success story?

Well, you're in for a treat!

Sit back, relax, and let's dive into this inspiring tale together.

Trust me, you won't want to miss a single detail!

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Meet My Guest: Tomer David

Vova: Hey there!

Welcome to today's chat where we're diving into the world of selling your Amazon business.

Joining me is Tomer David, who's been through the process himself.

I'm eager to pick his brain about the ins and outs of selling on Amazon, what it really takes, and whether it's all worth the effort.

If you're considering selling your own business, stick around because we're going to cover some valuable ground today.

Also, for those interested, let me provide the details of the broker that Tomer works with now.

They are called Fortunet.

Connect with Tomer's Broker

So, if you're thinking about selling, feel free to reach out to them.

Just mention Tomer's name, and they'll know where you're coming from.

Just a quick heads up, though.

I'm not sure if there's any sort of affiliate agreement between Tomer and the broker, but it might be nice to show some support for his content through Sourcing Monster.

Tomer also has a YouTube channel, blog, and tons of resources for Amazon sellers.

Tomer also offers this course for those in the Amazon space.

Tomer's Amazon FBA Course

And he's available on Udemy as well. :) 

So, before we get into the nitty-gritty of selling on Amazon, Tom, could you give us a brief intro about yourself?

Tomer: Absolutely.

Thanks for having me, Vova.

It's great to be here for our first video chat on your channel.

And hey, I'd love to have you over on my channel sometime to share your own journey in the Amazon realm and how you're managing things while globe-trotting in India.

It's pretty cool how you're blending work and travel seamlessly.

So, this is something I'm genuinely excited to share, and I'm sure many of your viewers and readers will find it interesting too.

Thanks again for having me.

My journey in the world of Amazon began about four years ago, but I've been in e-commerce for much longer, around 12 years or so.

Actually, if we go back to 2013, it's been closer to 15 years already.

I tend to count from the moment I dipped my toes into Amazon.

What really drew me in was the incredible potential it offers.

With Amazon, you can run a substantial business from practically anywhere on the globe, which is pretty mind-blowing.

Plus, you can manage a sizable operation with just a small team or even as a solo entrepreneur, which is something quite unique and hard to come by in other industries.

So, it was a significant shift for me, moving away from the traditional e-commerce model with factories, offices, and a team of employees to a more streamlined operation that I could manage from anywhere.

Working from home for the past few years has been truly remarkable.

And, as you mentioned, today we're delving into the topic of selling your business, specifically how I sold my Amazon business.

It's something I decided to do last year after noticing a lot of chatter in the Amazon seller community about selling or exiting their businesses.

I was curious about the process, so I took the plunge and eventually closed the deal last year.

Vova: That's awesome, man.

We're glad to have you here sharing your experience with us.

What Made Tomer Sell His Amazon Business

Vova: So let's dive into the big question: why did you decide to sell your Amazon business?

I mean, it was pulling in six or even seven figures, churning out consistent profits every month.

What prompted you to sell a business that was no less than a money-making machine, especially when it was running smoothly and growing healthily?

Tomer: That's a really good question, and it's one I often get, especially from those outside the Amazon seller circle who might not understand the ins and outs of it.

You mentioned it being a cash cow, but in reality, it's more of an inventory-based business.

Sure, on paper, it might look like I'm raking in 100 or 120,000 a month in profit, but the reality is a bit different.

To maintain and expand those impressive figures, I had to continually reinvest the profits into buying more inventory.

There's always that underlying fear too, you know?

Even when you're making 50,000 or 60,000 in profit, there's this nagging worry about losing it all.

I believe every Amazon seller can relate to that.

And because of this fear, you're constantly driven to launch new products because, let's face it, Amazon products have a limited shelf life.

That 50,000 you make today won't necessarily stick around forever.

You've got to keep your eyes on the future and keep adding new products to stay ahead.

And to do that, you've got to keep pumping money back into the business.

So, it's not like running a passive business where you can sit back and watch the money roll in.

I certainly didn't experience that.

If you're making a whopping $100,000 per month, taking out 10,000, 20,000, or 30,000 won't hurt for sure.

But for me, it's more about securing long-term stability and reinvesting in growth.

I couldn't shake the feeling that all my eggs were in one basket, and that basket was Amazon.

So, I wanted to ease that constant worry and relieve myself of that fear.

That was my main reason for wanting to sell, to be honest.

It's not that the business wasn't performing well; it's just that I had this personal fear of losing everything.

Vova: Absolutely, that totally makes sense.

It's interesting how different business models come with their own set of challenges and rewards.

I remember us chatting the other day about my affiliate business, and it's a whole different world, but I enjoy both the Amazon selling and affiliate aspects equally.

On the affiliate side of things, it's a whole different ball game though.

I don't have to worry about managing inventory.

I can churn out content, or even if I take a break from creating, the money can still flow in if I've set things up right.

So, when it comes to an inventory-based business like selling on Amazon, it's not just physically demanding, but it can also be mentally taxing.

Even if you try to let go of the constant worry, it's always there lingering in the back of your mind.

You know you've got to keep buying inventory, even if you're making good money, because your business is growing.

You're constantly reinvesting back into the business, which is okay, but it adds a layer of pressure.

So, it's completely understandable when you said that the fear of suddenly losing everything was definitely one of the factors that made you contemplate and ultimately drove you to take action.

How Did Tomer Start the Process of Selling His Business

Vova: How did you actually kickstart the process of selling your business?

Did you turn to YouTube tutorials on selling an Amazon business or stumble upon helpful webinars?

I'm curious about your journey, how you got to the point of realizing, "Okay, it's time to take action," and what steps you took from there.

Tomer: Honestly, from the get-go, I had this idea in mind that I wanted to build a business that could be sold.

I can't quite recall where I picked up on that notion or why I decided to do it that way, but I intentionally structured everything with the idea that it would be ready for sale someday, or at least that's what I thought at the time.

As I delved deeper into the selling process, I realized that while I had implemented many smart strategies from the start that other sellers hadn't, there was still a lot of groundwork to cover.

The idea of selling first crossed my radar through a Facebook post by a company long before the buzz really kicked off.

This company specialized in acquiring equity in brands rather than buying them outright.

The concept intrigued me because I had faith in my business, and I felt it hadn't reached its full potential yet.

The idea of selling a portion, say 50%, 40%, or 60%, while still retaining some control and securing some cash really appealed to me.

That approach seemed like the best fit because, like I mentioned earlier, I had confidence in the business, but I knew it hadn't reached its full potential yet.

I believed that with the right infusion of capital and finding a buyer willing to purchase a partial stake, we could propel it even further.

Plus, for my peace of mind, it offered a way to alleviate some of the stress and fear I was experiencing by securing a portion of the earnings from the business.

However, this particular arrangement didn't materialize fully.

While the company I mentioned had bought a few businesses using this structure, it didn't pan out in my case.

Nevertheless, this experience opened my eyes to the possibilities, and shortly after, I received a message from one of the aggregators expressing interest in buying my business.

I figured, why not?

So, I promptly sent them my profit and loss (P&L) statements.

I granted them access to my Amazon account, and then, just like that, they sent over an LOI, which stands for Letter of Intent.

It's basically an official letter expressing their desire to buy your business, outlining simple terms and the proposed amount of money.

When I received that letter, it was like a lightbulb moment for me.

Seeing that offer, which was around a million dollars or maybe a bit more, made everything feel real and tangible.

I remember discussing it with Sharon Even, a close friend of mine who coincidentally shares your last name, Vova.

The Broker that Helped Tomer Sell His Business

Vova: Interestingly, Sharon also connected me with the broker who did a transaction on my sale.

So, after they reviewed the numbers, I sought their advice, and they suggested that while the decision ultimately rested with me, waiting a bit longer and structuring my business more efficiently could potentially fetch a higher selling price.

By the way, would you mind sharing the name of the broker you worked with?

I think it could be helpful for our viewers and readers.

Tomer: Absolutely, their name is Fortunet (https://fortunet.net/).

And as you mentioned earlier, if anyone's considering selling, feel free to reach out to me, and I can put you in touch with them.

Plus, you might even get a better deal since they're not your typical brokers; they operate more like investment bankers, working in your best interests.

They really prioritize ensuring that you get the best possible deal and exit strategy.

Plus, their fee structure is designed in a way that they take their cut from you, not the buyer.

This setup effectively eliminates any potential conflicts of interest that often arise with traditional brokers.

You see, sometimes brokers might prioritize their own interests or the deal itself over securing the best outcome for you.

But with Fortunet, I felt like they were truly on my side throughout the process.

While their services didn't come cheap, I firmly believe that I wouldn't have been able to achieve the selling price I did on my own.

So, even though I had to pay a significant fee for their assistance, I consider it money well spent.

In fact, I'm certain I couldn't have pulled it off without their expertise and support.

It turned out to be true – their advice for me to wait and prepare more thoroughly for the sale was spot-on.

Vova: I also have a video featuring Yael Kabily, one of the founders of Fortunet, where we discuss the ins and outs of the selling and buying process.

You'll find it right below, so you can watch it here without having to leave this page.

It's a valuable resource with some really useful insights.

So, you must watch it!

The Process of Selling

Vova: Now, Tom, could you walk us through your specific selling process?

You mentioned working with Sharon.

She's got a YouTube channel, and here's her YouTube handle: @SharonEven.

I highly suggest checking it out and learn from her expertise.

So, once Sharon connected you with Fortunet, what was the next step in the selling process?

How did things unfold from there?

Did you have to provide them with your profit and loss statements as well?

I'm quite curious about the details.

Tomer: Yes, indeed.

After we signed the agreement, we dived straight into crunching the numbers.

Understanding your financial standing is crucial because it helps you pinpoint the key metrics that potential buyers focus on, such as the Seller's Discretionary Earnings (SDE).

The SDE essentially reflects your profits, but it also factors in certain expenses that aren't directly tied to the business.

These expenses could include things like education or travel – expenses that typically show up on a regular P&L statement but are actually related to the owner.

The goal here is to present the business's true profit without including expenses that are tied to the owner or solopreneur.

So, we meticulously went through the numbers, ensuring everything was accurate.

They requested various documents such as the cost of goods and invoices from freight forwarders, and we organized and cleaned all the data.

From there, we devised a plan of action aimed at increasing profits.

So, I had about five or six more products lined up for launch, but we decided to put those plans on hold.

Launching new products tends to eat into your profits initially. 

You see, when you introduce a new product on Amazon, you often end up losing money at first, with the hope of making a profit later on.

Vova: That's true.

Tomer: However, these initial losses don't show up on the profit and loss statement.

The P&L only reflects the overall financial picture.

So, we paused those new launches and instead focused on evaluating existing products.

We even considered eliminating products that were in the launch phase but weren't performing well.

Typically, if you weren't planning to sell your business, you might continue pushing these products and exercise more patience.

So, here, we made a deliberate choice to focus only on products that were profitable.

However, we also kept some ideas in the pipeline.

This way, if a potential buyer came along, we could show them that we had plans for future growth.

It's important for buyers to see that there's potential for the brand to continue growing even after the sale.

Vova: Got it. So, you're saying that as you move closer to selling, the goal is to showcase the highest possible profits.

Tomer: Exactly. Because typically, the value of a business is often determined by its profitability.

For instance, if you're making $100,000 in profit annually, buyers might offer around three or four times that amount.

In my case, it was 4.2 times upfront, with the possibility of receiving more after a year.

I was almost close to getting a higher multiple, but I was satisfied with the 4.2X.

Essentially, it means your yearly profits multiplied by 4.2.

So if you earned $100,000 in profit, it could mean a sale price of $420,000 or whatever your profit amount was multiplied by that number.

Nowadays, the multiples have decreased, so each additional dollar you earn can significantly impact the final sale price.

For instance, if you show an extra $100,000, it could mean an additional $420,000.

Vova: And I understand that Fortunet, the team, provided guidance on this because even as an experienced seller, you might not have been fully aware.

You were still launching products, and they advised you in plain wording to hold on because if you're planning to exit soon, it might not be the best move.

They provided you with some valuable tips because they're experts in the field and want the best outcome for you, the seller, and of course, for the buyer of the business.

You prepared accordingly and worked on your business to remove certain products and halt new launches.

It likely took some time to get everything in order.

Then, I assume you probably checked back in with the Fortunet team to ensure everything was ready.

Now, when the business was set to sell based on their recommendations and your efforts, what was the next step?

How do you transfer ownership?

Did they simply take over your accounts with your passwords and emails?

Tomer: Yeah, sure, I can explain how it works.

But before we dive into that, I want to highlight something important.

As Amazon sellers, many of us, including myself, don't have much experience selling businesses.

That's exactly where Fortunet came in to help – they have the expertise and knowledge in this area.

They provided guidance throughout a year-long process. 

They advised me to wait a year after receiving the Letter of Intent to maximize the value.

During this time, we had monthly calls to strategize.

They suggested eliminating certain products and making other adjustments to enhance the business.

So, during that year, we worked on fine-tuning the business to potentially show more profit.

After that period, we entered the market.

Fortunet prepared a comprehensive document, similar to a sales pitch, detailing the business over 40 to 50 pages.

It included some information about the business, like slides and certain products, but not everything.

This document was then shared with potential buyers, mostly aggregators, but also some private equity investors.

Following this, I started having calls with interested buyers.

It involved a repetitive process of answering similar questions over and over again.

We didn't receive as many calls as we hoped for, and the ones we did get were quite lengthy and challenging to handle.

Eventually, we found a buyer who showed strong interest, and we received a few Letters of Intent (LOIs).

After reviewing them, we decided to proceed with the best offer.

However, the process didn't end there.

Once we agreed to the terms, there was still a long road ahead.

Signing the LOI marked the beginning of the due diligence phase, where the buyer thoroughly examines every aspect of your business.

This involves providing a multitude of documents, which can be very stressful for many sellers.

Fortunet warned me that the process would be exhausting, but I managed it by breaking it into smaller tasks and prioritizing them.

Whenever they requested something, I made sure to respond promptly.

After signing the agreement, the sale proceeds were placed into an escrow account.

This means the funds were held in an account that neither the buyer nor I could access without mutual consent or meeting certain conditions.

I transferred all the assets to the buyer, and once they approved, the money was released to me.

So, you start by granting them access to various assets.

This includes transferring the domain name and any associated social media accounts.

Then, you go through a process of changing passwords and updating financial information.

This involves changing bank account details and updating credit card information, followed by transferring ownership of the account itself.

Vova: Interesting, and then the funds are deposited into your bank account, right?

Or wherever you agreed to receive them, probably a bank account.

It could be a monthly payment, a lump sum, or staggered payments over time, depending on what was agreed upon between the buyer and seller.

Tomer: Yeah, it's all part of the selling agreement.

In my case, there was an initial payment, and then another payment for the inventory three months later, after they had verified everything.

It's all done securely, with the funds going directly to your bank account.

Fortunately, the transaction process itself was very smooth and easy.

Vova: That's great to know.

Fortunet can assist with both buying and selling, although their primary focus is on helping sellers.

But they're also equipped to assist buyers, so if anyone out there is interested, you can reach out to them at https://fortunet.net/.

Tomer: Yeah, they have a list of buyers.

They essentially match you with potential buyers.

I believe their primary focus is on Amazon sellers, but they might also deal with Shopify stores.

Tomer's Feeling About Selling His Amazon Business

Vova: Tomer, selling your business was quite a journey, with its own ups and downs. 

To suddenly have a significant amount of money in your bank account from selling something you built over the years…

How did you navigate through both the challenging moments and the less stressful ones?

Were you eager to jump into another Amazon venture right away, or did you feel like taking a break?

Selling a business seems like a unique experience, and I'm curious about your perspective, as I've never gone through it myself.

Tomer: That's a great question, Vova.

I actually had been considering this for about a year and a half, so it didn't catch me off guard. 

It wasn't like a sudden decision where I sold it within a month and it was a surprise.

So I had time to imagine what it would be like afterward.

When it actually happened, it was strange seeing such a large amount of money, over a million dollars, in my account.

I thought to myself, "Wow, that's a lot of money," but it didn't really feel like I had done anything extraordinary.

I was mostly okay with it.

The only time I felt a strong emotion was when I called my father to tell him.

I could sense his pride in me, and that made me feel really good.

But aside from that, there wasn't much else.

I thought having all that money would make me happy.

I gave my wife $20,000, kept $10,000 for myself, and we decided to splurge on things we wanted.

Honestly, I didn't even spend all of that $10,000.

I realized I'm not really into materialistic things.

I don't care much about what I wear or what car I drive.

Maybe we did some renovations around the house, which was nice, but after a few weeks, I started thinking about what to do next.

As I mentioned earlier, I traveled to India for a business venture.

It's still ongoing, focusing on YouTube channels for kids.

It's a new venture that I've embarked on.

Alongside that, I've also started another Amazon business.

This whole experience feels like just the beginning for me.

I see it as a learning opportunity, gaining valuable knowledge and insight for future endeavors.

I'm aiming for something much larger in scale.

This journey with Amazon has equipped me with the know-how and confidence for my next venture.

I still strongly believe in the potential of Amazon as a platform.

I've teamed up with a friend, someone I introduced to the world of Amazon.

He started building a brand on his own, and after I sold my business, we joined forces.

I bought a 50% stake in his business, and together, we're working towards growing it into a significant brand.

Our aim now is to work towards achieving a bigger exit, hopefully in the eight-figure range or even higher.

Plans are great, but sometimes things don't go exactly as expected.

Still, I strongly believe that consistent effort and determination pay off in the end.

Just like your approach in everything you do, perseverance is key.

Keep taking action, keep learning, and keep pushing yourself.

Success is definitely attainable if you stay committed.

Vova: That's great advice.

Tips for Those Who Want to Sell Their Business

Vova: Tom, you've already shared many valuable tips for those considering selling their business, such as preparing your business for sale when you're in the process.

For those who are just starting out, or maybe even for someone like myself, whose business has been running for about a year and is generating sales in the range of $600,000 to $700,000 this year, with profit margins around 25%, there are some important factors to consider when thinking about selling the business.

Last year, I received an offer of around 2.2 times the yearly profits, which was lower than what I hoped for, but still significant.

So, what should we focus on if we're considering a future exit?

How should we structure our business to maximize its value?

Tomer: Yeah, my advice would be not to rush into selling your business for 2.2 times your yearly earnings.

That's quite low compared to what your business is actually worth.

Selling it for such a low multiple doesn't really make sense, especially considering the potential it has and the profit it generates.

In most other industries, businesses are sold for much higher multiples.

The reason we're seeing these low numbers now is mainly due to supply and demand dynamics.

There's currently an oversupply of businesses for sale, which drives down the prices.

However, as the economy improves, we can expect these numbers to increase.

During this period, one strategy you can employ is to focus on growing your business.

Increasing your revenue can make your business more attractive to potential buyers, even if it means sacrificing some profit margins in the short term.

Yes, they definitely consider profit margins; it's crucial.

But if you're on the cusp of hitting seven figures, it might be worth sacrificing a bit of profit margin to reach that next milestone.

By crossing into the seven-figure territory, you make your business more appealing to a wider range of potential buyers.

For those who are just starting out or are relatively new to the game, it's wise to think about structuring your business with an eventual sale in mind.

That means keeping your profit and loss statements organized, along with your cost of goods and invoices.

Sellerboard can help with tracking profit and loss, and more!

Trust me, it's a headache trying to scramble for all that paperwork a year or two down the line when you decide to sell.

So, my advice for beginners or those considering selling down the line is to get your financial house in order from the get-go.

It'll save you a lot of hassle and stress in the long run.

Keeping every receipt organized, whether it's in Google Drive or elsewhere, is key.

It'll save you loads of time and headaches down the road.

Vova: Great advice, Tomer.

Tomer's Advice for Himself

Vova: Before we finish up, you've shared plenty of wisdom already, but what advice would you give to yourself?

Tomer: Hmm, well, for my journey on Amazon or...

Vova: So, in your Amazon business journey as an entrepreneur, what advice would you give yourself so that we can benefit from your insights?

Tomer: Well, things are always evolving.

What I might say today could be different from what I say in a month.

Continuous improvement is key.

I'm open to learning from anyone, whether they're just starting out or seasoned experts.

I take each perspective into account, recognizing that what works for one person may not work for another.

That's why I always emphasize to my audience that everything I share comes from my own experiences and perspective.

You should give it a shot and see if it suits you.

Always be willing to experiment and take action.

That's been a key factor in my success.

I've tried numerous approaches, and while not all of them have been successful, it's a numbers game.

By trying more things, you increase your chances of finding what works.

Discipline is also crucial.

It enables you to follow through on your ideas efficiently and stick to your commitments.

Vova: Yeah, I hope everything goes well with your new ventures.

And to our viewers and readers, don't forget to visit Tomer's YouTube channel, Sourcing Monster.

I recommend subscribing and checking out his videos.

He has around 400 videos on his channel.

Tomer: I'm not certain if I've reached 400 yet, but it's close.

Vova: So there's a wealth of educational content available, and there's also a blog on sourcingmonster.com, if I'm not mistaken. 

Tomer's Amazon Course

Vova: As I mentioned earlier, Tomer also offers an Amazon course for sellers.

Tomer's Amazon FBA Course

Tomer, is the course more geared towards beginners, or is it suitable for anyone, considering your success in reaching a high level on Amazon?

Achieving a seven-figure exit is quite impressive, so is the course tailored more towards newcomers to Amazon or is it for everyone?

Tomer: The course is beneficial for both beginners and advanced sellers.

Beginners will find it especially comprehensive as it guides them from the basics. 

I've placed a significant focus on the mindset necessary for success on Amazon, which I believe is often overlooked in other courses.

The initial module is dedicated to setting yourself up for success, covering routines and strategies that are applicable not just to Amazon but to any business endeavor.

The course dives into setting up effective habits, time management, and productivity strategies to excel in your Amazon journey.

It emphasizes planning for the future and allocating time for continuous learning, aspects that are often overlooked in other courses.

This unique focus sets it apart and makes it valuable for sellers at any stage, whether just starting out or seasoned veterans.

Even experienced sellers can benefit from the insights gained, as they encompass lessons learned firsthand.

The course covers various topics, including PPC (Pay-Per-Click advertising), with both basic and advanced content within each module, ensuring it caters to a wide audience.

Vova: Fantastic, Tom.

My Thoughts

Vova: Thanks for taking the time to chat, Tom.

Your journey is impressive, and it's clear that it didn't happen overnight.

Your commitment to learning is commendable, especially your openness to learning from anyone, regardless of their experience level.

I share your perspective that there's something to learn from everyone we encounter.

Even brief interactions can offer valuable insights, though I may not have had the chance to delve deeply into every conversation.

It's been great chatting with you today.

Your mindset of learning from every interaction is truly valuable.

I'm optimistic about your future ventures, including your educational business, and I wish you all the success.

Thanks again for joining us.

Thanks for tuning in, everyone.

Take care.

Tomer: Thank you.

It's been a pleasure.

And thanks for sharing your insights with me too.

You've been an inspiration, and I've gained a lot from our discussions.

Vova: You're welcome. :)

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Conclusion

So, wrapping up our chat with Tom, I've got to say, it's been enlightening.

One big takeaway for me is the importance of constantly learning and staying open to new ideas, no matter who you're talking to.

Tom's journey from starting out on Amazon to making a seven-figure exit is impressive, but what's even more inspiring is his mindset of continuous improvement.

From setting up routines for success to diving into the nitty-gritty of running an Amazon business, Tom's insights have been invaluable.

And his advice on preparing your business for sale?

Definitely something to keep in mind if you're thinking about your next steps.

So, to Tom and all our viewers and readers out there, keep learning, keep growing, and keep taking action.

Who knows what opportunities lie ahead?

Thanks for tuning in, and until next time, take care!