Sell Your Amazon Business for Millions: Step-by-Step Guide from a 7-Figure Seller

How to Make Millions Selling Your Amazon Business (Step-by-Step Guide)

Have you ever dreamed of turning your Amazon business into a million-dollar payday?

If the answer is yes (and who wouldn't it be?), then this article is for you!

I recently sat down on my YouTube channel with Tomer David, an absolute wiz in the world of Amazon.

Tomer's not just some talking head – he's the real deal.

This e-commerce expert from Sourcing Monster has been in the game for 14 years, and guess what?

He managed to sell his own Amazon FBA brand for a whopping 7 figures – that's right, MILLIONS!

Intrigued?

You should be!

In this article, we're going to take a deep dive into Tomer's success story.

We'll break down exactly how he prepped his Amazon business for sale, the steps involved in the selling process, and even his emotions after the big exit.

Want to get all the juicy details he shared?

I've got you covered in the video below:

Psst… This conversation is also available in a written format:

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

Now, buckle up and get ready to learn everything you need to know about turning your Amazon dream into a reality – a super-sized, million-dollar reality!

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Vova: Hey, Tomer! One of the questions I get asked a lot is how to even begin the process of selling an Amazon business.

So, let's dive right in.

How did you get started?

Did you find some helpful online resources, like YouTube videos on how to sell an Amazon business, or maybe attend a webinar?

We'd love to hear what sparked the idea and what initial steps you took to prepare for selling your very successful business.

Tomer: That's a great question, Vova.

Believe it or not, the idea of selling my business was actually on my mind from the very beginning, even when I first started building it.

I can't quite pinpoint where I heard this advice, but for some reason, I just had a feeling that keeping future sellable in mind would be important.

Now, looking back, I realize it helped a lot.

My business had a foundation that made it more attractive to potential buyers.

That being said, it wasn't all sunshine and roses.

Even with this initial focus on sellable, there was still a lot of work to be done.

The process of actually selling opened my eyes to some areas where I could have done even better. 

Interestingly, the idea of selling itself came from a simple Facebook post!

It was from a company that existed before the whole "selling your Amazon business" thing really became a popular topic.

This post was particularly interesting because it offered a unique approach to buying businesses.

Instead of purchasing 100% ownership, they bought a portion of the equity, allowing the original owner to stay involved as an operator with a stake in the company's future success.

This concept really resonated with me.

My business, while successful, hadn't reached its full potential yet.

The idea of selling a percentage, say 40% or 50%, appealed to me.

While I wouldn't have complete control anymore, I could still participate in the business's growth and secure some financial security right away.

This was ideal because, as I mentioned, I was confident in my business's potential, but I also knew there was room for further development.

Filled with this newfound perspective, I started thinking bigger.

With the right financial backing and a partner who could share the ownership, I believed we could take the business to even greater heights.

This would not only allow for significant growth but also alleviate some of the stress and pressure I was feeling as the sole owner.

Taking some of the money I had made from the business would give me a financial safety net.

It was a win-win situation.

However, this process fell through.

It wasn't the perfect fit for me.

It fell in the middle.

While the company did buy other businesses using a similar equity-sharing model, our specific situation wasn't a good match.

This experience though opened my eyes to the entire concept of selling a portion of an Amazon business.

It was a wake-up call, prompting me to consider alternative options.

Shortly after, I received a message from a business aggregator, a company that specifically buys and grows e-commerce businesses.

They expressed interest in purchasing my company.

Intrigued by this new possibility, I decided to explore it further.

I provided them with my profit and loss statements (P&L) and granted them access to my Amazon seller account information.

Things moved quickly afterwards.

The aggregator sent me a Letter of Intent (LOI).

This is a formal document outlining their initial interest in purchasing my business.

It also included some basic terms of the deal, such as the proposed sale price.

Seeing this official document with a dollar amount attached, somewhere around 1 million or 1.1 million dollars, was a real turning point.

It made the whole possibility of selling my business feel much more real and concrete.

It was an exciting moment, and I knew I had to carefully consider this offer.

To help me navigate this new situation, I decided to reach out to a trusted friend, Sharon Even – the same last name as yours, Vova!

Sharing this news with Sharon, who understood the e-commerce world, felt like the right next step.

Vova: That's fantastic, Tomer!

Having a concrete offer in hand must have been a huge moment.

In fact, it reminds me of a similar situation I faced when considering selling my own business.

The broker who ultimately helped me with the sale was actually introduced by someone who knew about your successful exit.

When I initially approached the broker, they carefully reviewed my business's financial performance.

They acknowledged it was ultimately my decision, but also offered some valuable insights.

They believed that with some additional time and effort to improve the structure of my business, I could potentially secure a higher selling price.

It was great to have that professional opinion to consider alongside everything else.

Tomer, would you be comfortable sharing the name of the broker who helped you navigate the sale of your business?

Did they offer similar advice, or did you decide to move forward with the initial offer?

I'm sure some viewers and readers might be interested in learning more about their services.

Tomer: Absolutely! The broker I worked with is called Fortunet.

If you're considering selling your business, I'd be happy to connect you with them.

They're not your typical brokers – they're more like an investment bank that works for you, the seller.

Their main goal is to get you the highest possible sale price.

One key difference between Fortunet and traditional brokers is their fee structure.

They charge you, the seller, instead of taking a cut from the buyer's side.

This eliminates a potential conflict of interest that can arise with some brokers.

In some cases, a broker might prioritize a quick sale that benefits them more than getting you the best possible deal.

Fortunet, on the other hand, was firmly on my side throughout the process. 

While their services weren't cheap, I firmly believe I couldn't have achieved the same outcome on my own.

Their expertise and guidance were invaluable.

Looking back, even though their fees were significant, it was absolutely the right decision.

I wouldn't have been able to sell my business for the price I did without their help.

Vova: Thanks for sharing that, Tomer! 

That's fantastic information about Fortunet, and I'm sure it will be valuable to viewers and readers who are considering selling their own businesses. 

In fact, I have a separate video interview with Yael Cabily, one of the founders of Fortunet.

Let me embed that down below, so readers can easily access it without leaving this page.

The conversation dives deeper into the process of buying and selling businesses, which might be helpful for anyone considering either side of the transaction.

Now, back to your story, Tomer.

You mentioned Sharon connected you with Fortunet.

Can you tell us more about what happened after that initial introduction? 

What was the process like working with Fortunet?

Did you provide them with your financial statements, like your profit and loss (P&L)?

I'm curious to hear how things unfolded from there.

Tomer: Absolutely! After connecting with Fortunet, the first step was formalizing our agreement to work together.

Then, we dove right into the financial nitty-gritty.

Accurately understanding your business's financial health is crucial.

This allows you to focus on the metrics that really matter to potential buyers, specifically a metric called "seller's discretionary earnings" (SDE).

SDE goes beyond your standard profit and loss (P&L) statement.

It takes your business profit and adds back certain expenses that aren't directly related to the core operations.

These might be things like owner education costs, travel expenses, or other personal outlays that wouldn't be incurred by a new owner.

The goal is to provide a clear picture of the business's true profit potential, excluding expenses specific to the solopreneur running the business.

Fortunet worked closely with me to clean up my financial records and ensure everything was accurate.

They didn't just focus on the numbers; they delved deeper to understand my business operations.

They requested various documents, such as cost of goods and invoices from freight forwarders.

This information helped them get a complete picture of my business's financial health.

With this data in hand, we collaborated on a strategic action plan specifically designed to improve the profitability of my business in the eyes of potential buyers.

One key area we focused on was product launches.

I had several new products in the pipeline, but Fortunet wisely recommended putting those launches on hold.

The reason for this is simple: launching new products on Amazon often involves an initial investment period where you lose money on the product to gain market share and establish brand awareness.

These initial losses wouldn't be reflected in my P&L statement, but they could negatively impact the perceived profitability of the business for a potential buyer.

So, instead of pushing forward with new launches, we shifted our focus to optimizing my existing product line.

We even identified some products that were still in the launch phase but weren't performing well and decided to discontinue them.

The goal was to streamline my product offerings and ensure everything was contributing positively to the bottom line.

In such a situation, some sellers might choose to hold off on a sale and focus on long-term growth.

In my case, however, the situation was different.

Fortunet and I agreed to prioritize maximizing profits for the short-term to improve the attractiveness of the business to potential buyers.

This meant temporarily putting new product launches on hold and focusing on optimizing my existing product line.

However, we didn't completely abandon innovation.

The idea was to showcase a balance between immediate profitability and future potential.

We kept a record of promising product ideas in the pipeline.

This way, a potential buyer could see not only a healthy bottom line but also the exciting possibilities for future growth  – a brand with established success and a roadmap for continued expansion.

Vova: That makes perfect sense, Tomer.

So, to summarize this part of the process, it sounds like once you decided to move forward with selling your business, the focus shifted towards maximizing short-term profitability to make it more attractive to potential buyers. 

This involved temporarily pausing new product launches and optimizing your existing product line.

But you also mentioned keeping some promising product ideas in the pipeline.

This way, you could showcase a balance between current financial strength and exciting future possibilities for the brand.

Is that an accurate recap of this stage of the process?

Tomer: Yes, that perfectly summarizes that stage of the process, Vova. 

Maximizing short-term profits was crucial because the sale price of a business is often based on a multiple of its annual earnings.

This multiple is a number that gets applied to your profit (or SDE in this case) to determine the overall value of the business.

For example, if you're making $100,000 per year in profit and the multiple is 3, the sale price would be around $300,000 (100,000 x 3).

In my case, the agreed-upon multiple was 4.2. 

This meant that every extra dollar of profit I could show on my books translated to a significant increase in the overall sale price.

An extra $100,000 in profit would translate to an additional $420,000 on the selling price (100,000 x 4.2).

So, you can see why focusing on profitability in the months leading up to the sale was so important.

The extra effort we put into optimizing my existing products really paid off. 

While the multiples used for Amazon businesses have come down a bit recently, the basic principle remains the same – the more profitable your business is, the higher the sale price will be.

Vova: That's a great point, Tomer. 

Even though you had experience selling previously, Fortunet's expertise definitely played a valuable role.

They recognized that focusing on new product launches while planning an exit wouldn't necessarily be the most strategic move.

Their guidance helped you prioritize maximizing short-term profits to increase the sale price.

So, with Fortunet's help, you optimized your existing products, streamlined your operations, and put a hold on new launches.

This process likely involved some adjustments and took some time to implement.

Once everything was in order and the business was ready for sale from your perspective and Fortunet's, what happened next? 

How did the actual sale process work?

Did the buyer take over your accounts directly?

Tomer: You're absolutely right, Vova.

While I had experience as an Amazon seller, selling a business was a whole new ball game.

Fortunet's expertise in this area was invaluable.

They provided guidance throughout the entire process, which ended up taking about a year.

This extended timeframe was actually a strategic decision.

Fortunet suggested waiting a year after receiving the initial Letter of Intent (LOI) to allow for further profit maximization.

This extra time gave us the flexibility to implement the changes they recommended and truly optimize my business for sale.

During that year, we had regular monthly calls with the Fortunet team. 

They would analyze my business performance and suggest specific actions to improve profitability.

This might involve removing underperforming products, streamlining operations, or focusing resources on my most successful offerings.

It was a process of continuous refinement over the course of a year.

After that year, Fortunet took the next step: marketing it for sale.

They created a detailed document, like a lengthy presentation with information about my business, but without revealing everything confidential.

This document, which included things like product highlights and financial data summaries, was then sent to potential buyers.

Fortunet's network included a mix of businesses interested in acquiring Amazon FBA businesses, like aggregators, as well as some private equity firms.

Once the marketing materials were distributed, the calls started coming in. 

There were conversations with interested buyers, and while it wasn't a constant barrage of inquiries, it did involve a series of calls where I answered similar questions repeatedly.

It can be a bit tiring, but it's part of the process.

Luckily, we did receive a few Letters of Intent (LOIs) from interested buyers. 

These are essentially formal documents outlining a buyer's initial offer for the business.

We carefully considered the best offer and decided to move forward with negotiations with that particular buyer.

Of course, this involved asking them questions as well to ensure everything aligned with our expectations.

The whole process took some time and back-and-forth communication.

After we reached an agreement with the buyer and signed the initial Letter of Intent (LOI), there was another hurdle to clear: due diligence.

This is where the buyer meticulously examines every aspect of your business.

They'll request a lot of documents and ask detailed questions.

It can be a stressful time for many sellers, but Fortunet had already prepared me for this stage.

They explained that it can be tedious, but with good organization, it's manageable.

I focused on tackling their requests one by one, providing everything they needed as quickly as possible.

Once the LOI was signed, the sale proceeds were placed in a secure escrow account.

This essentially acts as a neutral third party holding the money until both sides fulfill their agreed-upon obligations.

As the seller, I would transfer all the business assets to the buyer.

Once the buyer verified everything was in order, the funds would be released to me.

The final step involved transferring ownership of the business.

This meant providing the buyer with access to everything they needed to operate the business, like domain names, social media accounts, and bank accounts.

We also went through the process of changing passwords and login credentials to ensure a smooth transition.

Vova: That's a great breakdown, Tomer.

So, after all the paperwork and due diligence is complete, the money finally arrives!

Escrow ensures a safe and secure transaction. 

The funds are essentially held in a neutral account until both you and the buyer fulfill your obligations.

Once everything checks out, the money is deposited into your bank account, the one you designated for the sale.

There can be some flexibility in how the sale proceeds are paid out.

The buyer and seller can agree on a payment schedule that works for both parties.

This might involve a one-time lump sum payment, or it could be structured with a larger initial payment followed by additional installments over a set timeframe.

Tomer: That's exactly right, Vova.

The specific payment terms are all part of the formal sales agreement.

In my case, the buyer agreed to a two-part payment structure.

The majority of the sale price was paid upfront, directly deposited into my bank account for security reasons.

There was also a smaller, separate payment for the inventory.

This second payment came three months later after the buyer had a chance to physically verify the inventory levels.

The entire transaction process itself went very smoothly, just as Fortunet had assured me.

Vova: Great to hear about the smooth transaction, Tomer.

I think it's important to clarify that Fortunet can actually assist both buyers and sellers.

While they specialize in helping business owners sell their Amazon FBA businesses, they can also connect potential buyers with suitable opportunities.

Tomer: That's right, Vova.

Fortunet does have a network of potential buyers that they can connect sellers with.

While their primary focus is on Amazon FBA businesses, they may also work with some Shopify stores on occasion.

Overall, their expertise lies in the world of Amazon sellers and businesses.

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Conclusion

That wraps up my conversation with Tomer about selling his Amazon FBA business!

It was a fascinating journey, and we learned a ton from his experience. Here are some key takeaways:

1. Preparation is key: Thinking about selling your business well in advance allows you to take steps to maximize its value. This might involve optimizing your product line, improving profitability, and having a clear understanding of your business's financials.

2. Expert help can be invaluable: Tomer's experience highlights the benefits of working with a professional brokerage like Fortunet. They can guide you through the entire sales process, from initial preparation to closing the deal.

3. The process takes time: Selling a business isn't something that happens overnight. Be prepared to invest some time and effort into getting your business ready for sale and navigating the due diligence process.

If you're thinking about selling your Amazon FBA business, hopefully, this conversation has been helpful!

Remember, there's a lot to consider, but with careful planning and the right guidance, you can achieve a successful exit strategy.

Thanks for joining me, and don't forget to like and subscribe for more informative content!