How To Prepare for A High-Value M&A Transaction

In this week’s blog on exiting an Amazon business, Chris Shipferling, Managing Partner at Global Wired Advisors, an M&A Investment Bank, shares his expertise on this hot topic. With his many years in this business, we appreciate Chris’ insight and advice.

M&A Transactions

High-value M&A transactions are trending digital, and with online and Amazon-based businesses generating tremendous deal flow in the market, it is unlikely that interest in these companies will revert to pre-COVID levels.

In fact, many asset classes are experiencing increased demand and commanding premium valuations in the range of 7-8 figures. Conditions are prime for ecommerce operators to execute on their exit strategy and secure the maximum value for their businesses, particularly if the business:

  • Features a highly differentiated, defensible product offering.
  • Has been awarded the Amazon’s Choice and/or Best Seller badges.
  • Operates in a highly desirable market or niche.
  • Offers actionable short-term growth initiatives.
  • Is poised to sustain its upward sales velocity.

Future Projections – A Boon for Digital Brands

As new investment capital flows into the space, the audience of prospective acquirers for ecommerce businesses will likely become increasingly segmented. FBA aggregators, for example, construct their entire portfolios around premium brands on the Amazon platform.

Lack of diversification could prove detrimental to some underperforming firms, but early entrants have already demonstrated that acquiring, scaling, and leveraging profitable brands is an effective strategy to drive significant ROI.

Consequently, we expect to see a continual influx of new aggregator firms attempting to replicate early successes. Not all will be successful, but the interim presents a unique opportunity for Amazon sellers to generate increased attention for their deals.

Private equity and corporate strategic acquirers are also vying for control of premium digital assets. Many are investing heavily in Amazon brands, whereas others have developed a more agnostic approach, pursuing successful companies with heretofore unrealized growth potential.

There will be ample opportunity, now and in the future, for owners of successful ecommerce businesses to capitalize on their hard work by pursuing a high-value sale.

Preparing For a Successful M&A Transaction

Investment criteria is continually evolving and as such, it pays to be prepared – literally! We recommend owners begin organizing and reviewing all pertinent documentation 12-24 months in advance of their anticipated exit date.

Essentially, this entails gathering all business licenses, articles of incorporation, etc., as well as proof of any intellectual property or exclusivity agreements with suppliers. Your financial records should be professionally prepared, accurate, and complete.

Selecting the appropriate intermediary to represent your deal is also critical to a successful M&A transaction. The caliber of your intermediary will have a material impact on the way your company is perceived by the market and thus, can influence the outcome of a potential sale.

Business brokers are listing agents, typically from a sales background, who employ passive strategies to generate revenue through volume. They are ill-equipped to handle larger transactions and do not possess the requisite skillset to achieve the best results.

Conversely, working with a qualified Investment Banking professional will help you achieve the optimal outcome. They possess the institutional acumen, internal resources, and vast network of qualified investors to earn you the highest dollar value for your business.

Key Takeaways

At present, the M&A landscape is shifting rapidly towards ecommerce as aggregators, private equity firms, and strategic acquirers pursue the best digital assets. Online and digitally native businesses are in high demand, and there is money to be had.

If a high-value M&A transaction may be on the horizon, start preparing now. It is never too early to start positioning your business for a successful exit, and there has never been a better time to market your deal to interested, highly motivated institutional investors.

About the Author

Chris Shipferling Chris Shipferling is a managing partner at Global Wired Advisors, an M&A Investment Bank headquartered in Charlotte, North Carolina. Chris oversees business development and serves as the firm’s liaison with prospective clients, drawing on his 20+ years of corporate executive and institutional investing experience to help business owners successfully exit their online or digitally native businesses.

 

 

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Cyndi Thomason

Cyndi Thomason is founder and president of bookskeep, a U.S.-based accounting, bookkeeping, and advisory firm for ecommerce sellers worldwide. She has a passion for data analysis and process development. She uses that passion to educate her clients and help them structure their businesses to maximize profits.

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