In this blog post, we have Yael Cabilly – the CoFounder of Fortunet, and investment banking firm that focuses on the mid-large Amazon business for sale. Today we will cover all the things you should know on how to sell your Amazon FBA business and things to know in preparing your business for sale? How much your business is worth? When is the time to sell your business?
If you’re thinking about selling Amazon FBA business, stick to this video until the end and we promise you tons of value. Yael will share how their company help sellers prepare the business for sale, prepare the storytelling of the business and really make sure you the seller gets the maximum benefit of what the brand they built.
Tomer [00:00:00] In this great video that they aired with a new guest on the channel Al-Khalili, we cover everything that you know on how to prepare your business for yourself, how much your business worth, when actually to sell and much more. So stick to the end.
Make sure that you watch everything if you’re in your phase of thinking on how to sell your Amazon FBA business and promise you that you’ll get a ton of value here.
Now, before getting into the video, make sure that you subscribe to the channel and you click the bell if you want to get more content like this video and also go to Sourcing-Monster.com and subscribe to the newsletter because I share updates and tips that I don’t share here. And let’s start with this great interview that I had with Yale competing.
Tomer [00:00:52] Our guest for today is one of the co-founders of Fortune, it an investment banking firm that helps medium and large Amazon business to sell their store. Welcome you. Could you give us a little background about yourself and fortunate?
Yael Cabilly [00:01:09] So I’m originally an attorney. I was a trademark lawyer for 15 years. And then in twenty fifteen, I started working with Amazon sellers. So first on the legal side and helping them with suspensions and trademarks. And I fee, I started the firm that focuses only on Amazon IP and e-commerce.
How To Sell Your Amazon FBA Business
That’s the law firm were 14 and really doing practically only Amazon. That’s the law firm. In twenty eighteen, together with two partners, we started a separate company named Fortunate. It’s an investment banking firm where we help sellers going through the the the the sale process.
Yael Cabilly [00:01:59] And the purpose of that company is really we we wanted to create something that is only on the sales side, not intermediary and not not finding buyers, but really taking the sellers from the beginning, from the moment they’re thinking about selling the the business, building the strategy of that sale and really going through the entire process until the money’s in their pockets.
Yael Cabilly [00:02:27] We’re also, I think, 15 done on that company growing very, very fast. And again, focusing on the sale side.
Tomer [00:02:37] Nice. Very cool. Do you also buy some as it’s for your own investment or you only can you do the deals with the buyers and sellers so you have like a pool of buyers and then you connect them with the sellers and you already have all the knowledge to really maximize the the sale price for the buyers, right?
Yael Cabilly [00:03:00] Yes. I mean, we don’t see our services much about connecting sellers to buyers.
Yael Cabilly [00:03:07] If you want to, you know, your seller, just go on Google. You want to see who the buyers are, just going to Google, you’ll see who the virus are. You don’t need to connect you to buyers.
Yael Cabilly [00:03:16] It’s true that you cannot get to all the buyers, but what we see are services are really more about. Maximizing the value of the exit, just like you said. And we build the process, we built a process around that so that the seller would get to the maximum the seller can with the current business.
So one of the processes, for example, is to prepare the business for sale, prepare the storytelling of the business, really knowing the buyers, basically all the advantages of your business. The second thing is the preparation of the financials.
And we’ll talk about that and what you need to think about when you prepare it. And the third party is going through a kind of auction. There are a lot of buyers in the industry.
There are hundreds, if not dozens of specific buyers for for Amazon. And today, it’s February twenty twenty one. If you watch it in a year, if the numbers are completely different, the multiples are completely different.
And we’re in the industry now where it’s very much a seller’s market. And as a seller, you know, you’re not selling the business every day.
For most people, it’s a lifetime event and you want to make sure that you’ve taken that and you get the maximum out of what you’ve built. So so it’s a lot about showing it the right way.
And we’ll talk about that. But also this auction process where all the buyers of the industries are looking at your business and they’re giving their best offer, we feel it’s very important in order to get to the right price.
Tomer [00:05:04] Nice. Nice. Now, you mentioned that a year ago the multiples and the selling price that buy is like buyers will pay was maybe less than what you could get today.
Tomer [00:05:18] Right. So the multiples went high, I guess because there are more buyers, there is more money to spend. And also the you know, this business is kind of exploding in the last year. So it’s a really good investment.
But, you know, with real estate, like when you don’t really have enough assets prices going up, you feel that we see that same thing here. I think that there is more demand from buyers, but there is really less assets or less businesses for sale which reflect in pricing the multiples and all of that.
Do you see this trend going continue or you see that at some point it will, you know, get down?
Yael Cabilly [00:06:03] It’s a good question, you know, in the last year or so, we know that for, for example, businesses of more than a million, we know that today there’s about thirty thousand.
There are thirty thousand buyers, more than thirty thousand. But out of the thirty thousand, over a million dollar sellers, not all of them want to sell the business. Right? Only some percentage of them.
So and at the end, what the market feels right now is that is that, yes, on every account that we go to market, sometimes we get 20 offers, sometimes even more than depending on the kind of business and and how many buyers it fits. But it feels very much like a seller’s market right now will remain the same.
It’s a good question. A lot of the buyers are actually going directly to the sellers and they’re trying to gauge their interest to sell the business directly.
This kind of this this is we always say that it brings us clients because a lot of clients, when they get approached, they want to know where they are, what the multiples are, what they should do and be consulting. So this these moves of of going to the sellers and suggesting to buy their business at the moment wakes some of them there and think about the fact that it can be sold.
So I think that with time, there’s going to be more sellers willing to sell the business and thinking about it or preparing for it. And probably that’s the number of sellers will stabilize, maybe not decline, but probably not grow as it has been in the last year or so.
So we’re going to see, I think, that it’s going to stabilize over the year or two in the coming year or two.
Tomer [00:07:49] Yeah, very, very interesting. Now, you mentioned that there are thirty thousand sellers that sell over a million a year in revenue. I didn’t know that number.
So thank you for sharing this. But you feel that only those that sell over a million are kind of qualified to sell or from your experience, who who is your how you will kind of like, you know, who are your sellers, just like what type of revenues they have?
Yael Cabilly [00:08:18] Right. So it’s a good question. The answer is no. A lot of sellers are selling before they get to a million. We are fortunate, focused on sellers with over a million because because of the prices that we do and the buyers that we focus on.
Yael Cabilly [00:08:34] But I’m thinking, you know, if you look at most of the aggregators and new actors in this industry, many of them are looking at businesses for over a billion dollars, over half a million dollars. Not not the very small ones.
Yael Cabilly [00:08:50] Also a lot of the same effort to try to buy a million or more like two thousand five hundred million.
Yael Cabilly [00:09:00] That one hundred thousand. And the million is the same.
Yael Cabilly [00:09:03] Yeah, I guess so. So definitely. I mean, we all work the same on the on the five hundred K then on the five million.
Yael Cabilly [00:09:12] But I imagine they have to deploy one hundred million dollars and they have a year or two to deploy that money they are trying to get.
We’re seeing that on our side. You know, two years ago when we came out with the business of 10, 15 million, they were very few buyers. Today with these businesses, they’re sold very fast. Even the largest one, even the twenty five million deals, they’re they’re pretty quick.
Yael Cabilly [00:09:42] Just four months and you’re done. So, so, so right. Now, I say, I think that there’s a buyer for any any size of business, most of the aggregators that are well known are focusing on the most of them, more than a million dollars.
But there are some more looking at smaller than there are. Other types of buyers are looking at smaller businesses. So so any time many sellers, by the way, have this one million dollar in mind to get to, and we always laugh like that.
There’s there are some goals like there are those who want to get to a million. Those who want to get to five want to get to 10. So if you look at our transaction, we have tons of one, five, 10 and then 20 something. So and and that’s because of those numbers psychologically, it makes sense you to get one meal.
Yael Cabilly [00:10:37] And I think that it also depends on the person may be at your first deal. You want to cash out like myself. I want to sell my business. Guess I would have enough capital, but I’m not going to be out of the game.
I’m going to continue selling on Amazon and maybe at my second said I will have more patience because I know that they have the money to invest in and maybe not really sell because I really need the money and then I could grow it more and more and sell it eventually for a higher price. But yeah, good, good answer.
Yael Cabilly [00:11:14] Just to add on that, I think that probably ninety five percent of our clients are going back to Amazon, the ones they sell, they’re building a new brand to resell. We have a seller now that’s being her second exit and probably next year third exit.
So so they’re all going back, even those that sell because they’re tired of Amazon, we see them coming back and selling the business and going back to Amazon, selling on Amazon.
Yael Cabilly [00:11:44] So, yeah, because it’s a opportunity that I don’t know any opportunity or a business that you can invest not to get a lot of money and grow it in scale. It’s very fast and sell it for like very quick. It’s really crazy what’s going on.
But yeah, for from the seller point of view, what are the factors to decide who to sell to other than, like the selling amount? So maybe you get like ten offers and you will go for the higher price usually. Or it also depends on some other factors.
Yael Cabilly [00:12:24] Not so it’s a good question, actually. Not necessarily the highest price. I mean, highest prices is what, attracting your eyes. But but you need to look at the structure.
So just this morning, I spoke with a seller who told me I got an offer of a multiple of six points five. I was like, OK, good, and how is it divided? So we said a multiple of two upfront and then a multiple of zero points five after a year. And the rest is depending on growth. If the buyer grows it, we will sell.
The multiple is nice. But at the end what you got is the two X on your business and that’s a four or five X business. Now what you want to look at is really the overall both the price and the structure, the structure. We always say that for us it’s the unpause thinking about the right structure for the seller.
We have a lot of hours around that and planning the right thing and planning what what we want for the seller. What the seller, what’s the best for that particular seller.
So if you launched a new product recently, right, if you sell the business, you feel you kind of lost the money on on that launch because you didn’t have any multiple on it because you just launched it, you actually lost money and you’re giving it away to the buyers.
So sometimes it takes up the multiple because you’re coming with a nice asset, but sometimes it doesn’t.
And what we would ask is to have to gain from that profit. So sometimes we would ask to split the profits for two years for this particular product or you have to build something around it. We had a case where because of covid, so the client had two different missions. Right.
One of them was super successful, really grow during covid and the other one is somehow related to inviting people over and kind of already.
So that went down dramatically. And so the buyers told us, listen, we’re looking at that business. This business is going to get a, let’s say, three x multiple because it’s not not that good because some of the thirty percent is declining.
So we said, no, there’s thirty percent that’s declining and. Seventy percent that’s growing like crazy for that, we want, let’s say, five X or whatever, and for the 30 per cent we agree to the three X, but we want to have some kind of structure that allows us to get more in case the product goes up again when it is.
So we kind of instead of listening to you, have to really be focused on what the business is and then adapt the structure to that. So that’s what’s the second thing when you think of a buyer and going back to the structure, if you’re taking a risk and you get an upside, so they tell you you’ll get four X cash and then you can get an upside.
If we take up your business, you’ll get 20 percent of the profit, whatever, some 50 percent of the profit, whatever you decide now. Who’s the buyer and what history do they have?
Are they knew they do they have any story of growing businesses or not? So if you’re taking a risk, you want to know what the background is, what they’ve already done, and you want to make sure that this particular team can do it because you depend on the on the buyer for that. If you cannot, then you want to get as much cash as possible.
So it really depends on who the buyer some of the buyers are very successful, growing the businesses and they can show you a history of very nice growth. Some may be successful, but they don’t have these three. So you need to understand where they come from, what they did, what they built.
So that is there. You can make a decision today. And I’m always saying it’s it’s a double with diligence, I think that the buyer does of due diligence on the seller. But the seller wants to understand as well who’s the buyer for sure.
Tomer [00:16:43] Reputation also, you know, and and I think it’s really recommended working with a firm like you or others similar to yours, because that’s what you do.
Tomer [00:16:54] You know, all these things when a seller that only knows about Amazon and don’t have experience with all these things come directly to the buyer, there are so many things that can go wrong because they don’t know what they don’t know. And also, when you deal with the buyer that you already did like 10 deals with, you know, how they operate, you know, their reputation.
And you can recommend to the buyer, look, from our experience, after you sign the contracts, for example, they come up with ten more requirements or they check X, Y, Z in more depth, which in my opinion, I would prefer to get less money, but get the smooth transaction. You know, that’s how I look at things. And you want to do it all. That’s your expertise.
Tomer [00:17:43] So I definitely recommend to anyone if as I said, I think that’s what I guess if you’re soothing or you wouldn’t go without a lawyer. Why? Because you may have watched tons of movies and you know that you can have Giachino, that you can present your case, but they are professionals doing that. And you know that your best chances would be if you take an attorney.
I think that in this case, you want to have a consultant if you feel that it’s adding value. The problem is that, as you said, you don’t know what you don’t know.
So just to give you an example, when you prepare the panel, OK, well, you can prepare the Byrock and prepare it for you, which is very often the case if you work directly with the buyer. Now, there are things that some sellers haven’t even thought about, like, for example, is that we have I’m sorry you’re breaking up so arrogant.
Yael Cabilly [00:18:48] They were a seller. Yeah. Had recently the seller was using. Yeah. Sorry you can hear me. I can go upset again and I.
Yael Cabilly [00:19:00] So I’m saying a cellar that we presented recently, he was using only airfreight and we calculated that because of that he lost about one hundred K and we know that the buyer will not use airfreight. He he did that, by the way, because he didn’t have the cash. It wasn’t organized in advance. So we did everything at the last moment. So he had to use airfreight, but that was his restraint.
That’s not going to be the case for the buyer. So we took that those hundred one hundred K and we came to the buyer and we said, listen, this is the real expense, but you want to have that expense.
And so we asked to adjust that particular part. And one hundred K with the multiple it can be four or five hundred K so, so, so just by that, just by thinking about how to build it correctly and professionally, you just covered any fee and you just, you just gain five hundred k so, so, so that’s part of the thing.
And of course I think that even the process itself. Of not speaking with one or two buyers or even three buyers, but lining up, working with all the buyers in the industry, then, you know, you’ve got the right price only at that point where everybody’s seen it and you’ve done it the right way and you prepared the panel the right way. You know, you’ve got to the maximum you can. And there’s, of course, the part about the structure that can get complicated, doing the loan.
Tomer [00:20:43] Very, very good points here these days.
Tomer [00:20:48] Who are the type of buyers that are operating in this space right now? Is these big companies that got these hundreds of millions dollars behind them? Or you also see like private investors that I know back then, maybe a year or two years ago, people would buy put offers on businesses and then it’s up to SBA approval loan or things like that.
Tomer [00:21:16] And it’s it doesn’t make sense because if they cannot maybe get their approval for that, you know. Yeah. So were the players in this space right now.
Yael Cabilly [00:21:29] So there are many types. And in twenty twenty a lot of new types came in. I can tell you that there are it depends of the size of business. Right. So there are private buyers. There are voices coming in, there are private equities for the larger businesses on Amazon, they work very often, they work with an agency.
They are the what we call the aggregators company that have raised one hundred million, two hundred or seven hundred million just to buy Amazon businesses.
They are sellers who want to expand their very specific category. So larger Amazon sellers, larger e-commerce companies, I think we covered most of them, but really all types of sellers of buyers, most of them, some of them are faster than others. So private sellers, when it’s the first time, sometimes they they can lose a deal because of their their pace. And and by the time they get that offer, it was already sold. This the industry is very fast right now.
So, you know, even the private the private buyers and the voices, they those who know and try, they get organized to if they’re interested in the business within two or three days from the moment we sent it, we already get an offer or they speak with the seller and then we get an offer.
So I think it’s very diverse right now as opposed to what was the case, the lows because of the pace and the time it takes. It’s not very easy to have a deal that way as opposed to maybe three years ago, because those with the cash just think of so many, many buyers, any type of buyers.
Tomer [00:23:29] I think it’s more if you if you deal directly with those buyers, then you need to know all these type of buyers and need to know what is how they think when you deal with them. It’s very important because once you have this info, you can give them back offers. But like I said before, if you do it yourself, there are so many things that can go wrong.
But if you do it with an expert like you, you already know how to talk to, let’s say, one type of buyer, which the other end to a different type of buy, will not really talk or give offers back offers that are relevant for them. So I think it’s important to know how they work and operate. This is something that I deal with right now.
But how do you think that people mentally should deal with the timing of the sales and offer? As we know, there is so much money out there right now in the market from buyers that are looking for sellers. The outreach that they do is very aggressive. I get tons of emails every day and I’m sure many, like the rest of the sellers that are selling on Amazon, are getting the same.
Tomer [00:24:36] And that puts people in pressure. Not all people are mentally prepared to be waiting and know what is the right timing for them with the preparation.
Tomer [00:24:46] So what are the tips for you to really be preparing in your mind when to set out to sell, maybe have a goal and maybe do it in a professional way and not just do it because you’ve got an offer or an email from someone you know, which they can pull you to sell even if you’re not ready, because that’s their job to get all these great deals.
Yael Cabilly [00:25:08] Yeah, I think that buyers will always reach out and and that’s fine. I think that you have to kind of disregard that and think for yourself, what do you want?
Yael Cabilly [00:25:21] So there’s the list of things that we always ask our clients. And some are personal. Some are professional. Know I speak. I’ll give you an example. Some of the sellers tell us, listen, I’m I’m super stressed. I cannot sleep at night. Amazon is getting on my nerves. I, I need to sell the business as soon as possible. I want to get rid of it now. OK, so that’s one type of person. And I can understand why there is the suspension activity that we deal with. So I can understand the stress and and when a seller reaches a certain goal, they can they can sell the business. If you’re not at that stage and the seller comes to me and say, listen, I, I have time, I trust my business.
Yael Cabilly [00:26:14] I know there’s a risk with Amazon, but I also understand what the risk is. I know my business is not going to collapse tomorrow. Thank God. And then I want to understand what is the right time for me. Should I wait a year? Should I wait half a year? Should I wait? How so? What we do in those cases is, first of all, we prepare a panel to understand where you are.
I think it’s extremely difficult to take a decision without knowing your numbers and. By the way, a lot of sellers think they know the numbers, but once you do the panel, they discover other numbers. So you want to know where you are right now. Out of the Pinnell, a lot of things come out, a lot of things, we had a case about a year ago, we said with the seller, it wasn’t a big business.
We look at the numbers, we look at the personnel. And we saw that the profit wasn’t very I was around the 18 percent. And then we immediately saw the female that something wasn’t right on the PPC side. So my partner said with the with the seller for like three days. And they eventually they changed the strategy of of the PPC and the profit went up from eighteen to twenty six percent.
And they stayed that way for a year. And when we started the sale about a year later, the numbers were really optimized when it comes to that business. And that’s not because we’re geniuses. It’s only because we’re that things that come out of the invidiously, if not if it isn’t right and something is odd, you will see it immediately. So first of all, your numbers so that you can know who you are and also you can see what’s wrong and what’s not, what’s good and and continue after.
Another thing to think about is your goal. And that’s extremely personal. Some of tell me. I want to sell when I get to five million, I want to sell when I get to one, as we said earlier, I want to sell, then this and that. And then we look at again the numbers.
We see how much time will get to be there, what you need to do in order to get there. And then you focus on that bull. That’s it. I mean, if you have to have one year to get to the bull, OK, what I would do during that year is to to get as much profit as you can do everything you can profit. Yeah, right. Profit mode, if you can cut costs that are not very important in the growth that cut them, but really focus on doing what you do best.
If it’s launching new variations, then do that. If it’s going to new markets, then do that. I would then start, by the way, with with Krave. If you have one year or a half a year, I would start with crazy adventures of things you’ve never tried, like starting a retail. If you have six months, doesn’t make sense, then take risks.
Tomer [00:29:25] Just try to do it.
Tomer [00:29:26] Like I said, what you do and do it well and try to cut expenses and be prepared and not like that. Like be prepared that even if you see, like, you know, very nice offers similar to my case.
Tomer [00:29:43] But you actually you look at the numbers, you look at the data and it doesn’t make sense then, you know, maybe wait a little bit, have some patients understand that you might get much higher numbers than what you can get now. And, you know, not all the time it will make sense, but many times, like you said, then you gave me this advice and I’m thankful for that to wait.
Tomer [00:30:07] And hopefully it was it will be the right decision for whoever is waiting.
Yael Cabilly [00:30:13] Last question before I go. I’m saying it’s really a case by case basis is something we have cases where you can sell now and you’ll get an amazing price for not one and the making multiple.
But if you only wait six months, you get half a million or a million more and then you need to decide risk versus the upside. You know, if if you wait six months and the only thing you got is 50 or 100k, then you may not wait. I mean, you may want to sell it right now.
Yael Cabilly [00:30:47] The risk you’re seeing, if you’re seeing a big reward that goes with that risk, then depending on your ability to to live with the risk, then you may want to wait. It really depends on the specific case. It’s not one for all.
Tomer [00:31:06] Yeah, I agree. It depends on so many things and the people you deal with your. So, yeah, you’re right. Like I said before, before we wrap it up like this, something that I myself ask myself and I couldn’t really find enough information about it, but oh actually the transfer of the assets work.
So, you know, we have your salary account, you might have your domain names, your Shopify, your Wal-Mart account, all of these. How it actually works as far as transferring. Does Amazon like doing it? They’re against that. The troubles we did Walmart like. Oh, it actually works.
Yael Cabilly [00:31:44] So when it comes to Amazon, you need to ask their permission, if you don’t get the permission, you can do it. So you need to ask permission.
And once you ask for the permission, there is there is a process just to change the the the ownership, the legal entity on the account. When when we do that, we do it step by step, really to make sure everything goes smoothly.
So the legal entity and then bank account and then credit card to make sure that nothing falls. And then there’s the transfer of the trademark with the US Walmart. It’s more complicated. It takes much more time. eBay takes a second.
It really depends on what platform you have Shopify for easy to transfer. But with Amazon, will you have you need to know what you’re doing. Don’t just jump and change everything without getting approval and without knowing how to do it, because that can lead to a suspension. But if you do the right way, I’ve never seen any major problem in that area.
Tomer [00:32:51] China.
Yael Cabilly [00:32:53] You trust, right, with China, you just file a request for assignment with the Chinese Trademark Office? Very much. I by the way, if you don’t want to transfer your account, you can transfer the listing so you can keep the account.
If you if it’s just one listing or two, that’s that’s an option. That’s not that bad. Transferring the listing is not the account. It just takes more time. You have to finish your inventory. They come up with their account on the same listing and then you finish your inventory and they continue from there.
Tomer [00:33:31] You know that you can do it. Yeah, very, very useful and helpful information. Thank you so much for being a guest here. For those that want to reach out to you and contact you, how they can find more about you so you can write me an email yell at add to that dot net or on Facebook Al-Khalili available.
She’s very active in once the world is open again, I’m sure that we’ll see in all these Amazon conferences like you show up in those in our online and for now. But thank you again. And it was great having you. Thank you very much. And hopefully we’ll have you again as a guest in the future.
Yael Cabilly [00:34:18] Thanks very much. Thanks for having me. Bye bye. Thank you.