I've been running an ecommerce business for 3 years now and get good sales from Amazon, but have been investing every penny I've earned back into more inventory. I feel it might be the time to cash out soon and use the funds to start a new business and do it bigger. But I don't know where to even start with finding out how much my business is potentially worth. And I don't want to listen to business brokers give me a sales pitch disguised as a "free valuation", at least not until I've made up my mind.
If you're after just an overall idea, then most FBA businesses sell at around 2.5x - 3.5x SDE, with SDE standing for Seller's Discretionary Earnings or your Net Income + any discretionary or one-off expenses.
There's much more to it, though, and a lot of metrics will end up impacting the actual valuation. Is it mostly a single-product business? Expect the valuation to take a hit. Have you been steadily growing both your top and bottom line each year? Expect it to increase.
You may want to give https://thefbaguys.com/amazon-valuation-tool/ a go. Valuation tools are notoriously incorrect but this is a good exception in this regard ... as it's limited narrowly to just FBA businesses and can, therefore, take into account the metrics that apply to FBA businesses specifically.
Also - when you talk to a GOOD broker, they won't deliver you a sales spiel or convince you to sell earlier than you should. Many (most) of them will, but there are still a few decent people left in the industry who are happy to suggest you what's in your actual best interest, not what makes them a quick commission.
Answered 5 years ago
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