Typically the complete process takes around 1-2 months depending upon the complexity and size of the transaction.
01. Selling Costs
Before selling your Amazon FBA business, you should know about the costs involved with selling a business. Find out the tax implications, it will be different for the asset sale vs stock sale, etc. Additional costs include broker fees, legal fees and escrow fees which depends upon the complexity and size of the deal.
02. Business Valuation
Before selling your business, it’s very important to align your valuation expectations with the current market value of your company. Once you provide the required financial Information regarding your business by completing the questionnaire, we’ll be able to share an estimated valuation range.
03. Listing Agreement
Once you decide that it is the opportune time to sell, we will require you to sign an Brokerage Agreement or Listing Agreement. This agreement will have an exclusivity period of three months. Typically most of our deals close within 1-2 months.
04. Information Memorandum
Our expert advisors will produce a Confidential Information Memorandum (CIM) to highlight the key features of your business and customize it based on the target buyers type. We would required your inputs and additional financial information to create the CIM
05. Buyer Outreach
We have an exclusive buyer network and we will also create a list of customer list of potential strategic and financial buyer for your business. Once the target list of buyers are identified, we will reach out to them and if required, disclose confidential information only under a strict Non-Disclosure Agreement.
Often interested buyers setup a few discussions and meetings before putting down an offer. We setup such meetings between the buyer and the seller after they show serious intent of acquiring your business. We will setup all these meeting and conference calls with standard confidentiality.
07. Letter of Intent
Most of the times you will receive several offers to buy your Amazon FBA business. We will advice you to explore and choose most suitable options based on your expectations and ROI. Once both the parties agree to proceed, you will be required to sign a Letter of Intent (LOI) agreement, containing terms such as the deal price, closing deadline and the additional deal terms. It is advised to involve an attorney before singing the LOI or related agreements.
08. Due Diligence
After the LOI is signed, the acquirer will start the due diligence of your business, and we will provide our full support during the complete verification process. Normally, the Buyer will deposit 10% in Escrow to his commitment towards the deal. Due Diligence usually takes between a 1 – 3 weeks, depending upon the size and the complexity of the deal.
09. Asset Purchase Agreement
After the due diligence process is completed satisfactorily, you will be required to sign an Asset Purchase Agreement (APA) with the buyer. APA is much more comprehensive and is legally binding. This will also include the Bill Of Sale. As always, it is advised to involve an attorney before singing the Asset Purchase Agreement too.
To ensure the transparency and minimize the risk, we encourage both buyer and seller to use a 3P escrow service. To make things simple, our team will set up the escrow transaction based on the terms in the executed Asset Purchase Agreement. Once the APA is signed by both the parties, the buyer will transfer funds to the escrow account. Escrow fees range from 0.5-0.7% of the transaction value and are normally split equally between the buyer and the seller.
11. Asset and Fund Transfer
Once the escrow provider confirms that the escrow account has received the required funds, you need to start the transfer process for all agreed-upon assets (such as trademark, raising transfer request to Amazon etc) over to the buyer. Business buyer will spend a few business days to audit the assets before giving a go-ahead to the escrow provider to release the funds to you. Once the funds are released, you will get the funds after deducting our agreed upon brokerage commission, which will be transferred directly to us.
12. Stabilization or Hold-outs
Usually the acquirer will negotiate some period for post-sale hand-over and support. As per LOI, support duration can be anywhere from few weeks to few months. The hand-over and support terms are typically discussed and agreed to by both parties in the LOI and APA agreements.
These are typically performance based payments usually negotiated at the time of signing the Letter of Intent. For example, one buyer typically offer sellers 50% of all net profit over the acquired profit for the two-year post-acquisition period. This will help you get incremental benefits if your business performs well after the sale.