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AMAZON FBA ACQUIRERS
The entrance of institutional investors (FBA aggregators) into the acquisition market for Amazon FBA businesses is great news. These firms are well funded, professional, and very fast-moving. But there are so many of them it can be hard to keep track.
On this page, you’ll find the most up-to-date list of Amazon FBA aggregators anywhere, including their locations and disclosed funding, as well as the many other buyers of these businesses. Or jump straight to Amazon FBA business valuations.
Institutional Buyers of Amazon FBA E-Commerce Businesses
This is the most comprehensive and up-to-date list of Amazon FBA aggregators, starting with the acquirers with disclosed funding (including both debt and equity):
Institutional buyers who have not disclosed their available resources yet:
The total currently stands at 80 confirmed acquirers of this kind with $10.938Bn in disclosed funding. This number is lower than reported on some other cites - this is because it is only the active acquirers - there are more than a dozen aggregators who have ceased operating or pivoted to new business models.
* Funding amounts for some companies have been converted from other currencies. Cap Hill Brands has announced funding of “greater than $150m”. Growve has taken equity investment of an undisclosed size in addition to $175m debt financing. The undisclosed companies on the list are in stealth mode but we have spoken to the founders and can confirm they are real. In addition to the above we are aware of two more in the list above with funding > $50m each who have not publicly disclosed this yet. We also work with one publicly traded company that is acquiring Amazon FBA businesses - this firm would also qualify as institutional capital but is not on the above list of private equity buyers.
Some groups claiming to be Amazon FBA acquirers have been removed from the list above if we have not been able to verify them. Other former Amazon aggregators have pivoted to other business models, been acquired, or shut down. These are listed at the bottom of this page.
* Funding amounts for some companies have been converted from other currencies. Cap Hill Brands has announced funding of “greater than $150m”. Growve has taken equity investment of an undisclosed size in addition to $175m debt financing. The undisclosed companies on the list are in stealth mode but we have spoken to the founders and can confirm they are real. In addition to the above we are aware of two more in the list above with funding > $50m each who have not publicly disclosed this yet. We also work with one publicly traded company that is acquiring Amazon FBA businesses - this firm would also qualify as institutional capital but is not on the above list of private equity buyers.
Some groups claiming to be Amazon FBA acquirers have been removed from the list above if we have not been able to verify them. Other former Amazon aggregators have pivoted to other business models, been acquired, or shut down. These are listed at the bottom of this page.
If you would like to speak to us selling your Amazon FBA business to these acquirers or the many other acquirers of e-commerce businesses, just send us an email at info@tonyandvik.com. Even if you just need some advice from someone who understands the market, we would be happy to help.
What Are They Looking For? How Much Will They Pay?
What is an Amazon FBA business worth to these institutional buyers? How much would they pay for your business? If you would like a specific valuation for your business just contact us at info@tonyandvik.com or use the calculator form on our Valuation page.
Each acquirer has different criteria, and there are dozens of elements that go into a valuation. But broadly speaking we can group their acquisition criteria into two categories: (1) “yes/no” decision criteria and (2) valuation metrics.
Each acquirer has different criteria, and there are dozens of elements that go into a valuation. But broadly speaking we can group their acquisition criteria into two categories: (1) “yes/no” decision criteria and (2) valuation metrics.
“YES/NO” DECISION CRITERIA
Generally speaking these institutional investors will be interested if your business meets all of these criteria:
- Private label - you are selling primarily your own branded products
- Large enough - generating minimum net profit levels (Each acquirer is different but most require minimum $200k annual net profit*, some require $500k annual net profit* )
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Strong net profit margins - most say minimum 15% net margins, some are looking for 20% and above: for all acquirers, the higher the better
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Amazon focus - each acquirer is different, some say minimum 80% of sales through Amazon, some say minimum 30%
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Amazon fulfilment - must be FBA (or seller-fulfilled prime in some cases); much less appetite for FBM businesses
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Brand registry - you own your own trademark and you have attained Amazon’s Brand Registry 2.0 designation
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No black hat tactics - you haven’t ever engaged in anything that might result in a future deactivation of your account
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Not a fad - the business should not be selling a “here today, gone tomorrow” product
* Net profit in this context = Seller’s Discretionary Earnings (and adjusted net profit which adds back the owner’s salary and many other costs) for the last 12 months
In addition to the above each acquirer has its own preferred niches, and each one has a few niches that they will specifically avoid. These vary quite a lot, and generally speaking there are relatively few niches that are on each acquirer’s “excluded” list. There are some themes common amongst many acquirers (highly competitive sectors like electronics are on the excluded list for some of them; apparel is excluded for others), but most are open to considering exceptional businesses even in a sector that they have technically excluded.
VALUATION METRICS
High scores in any of the criteria below will generally result in more appetite for the business and a higher valuation:
- Size - the larger the better
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Net margins - the larger the better (eg: £400k profit from £2m sales is actually more attractive than £400k profit from £3.5m sales)
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Growth - consistent strong growth (Especially if there is a reason to expect even faster growth in future (eg: have not launched yet in some major Amazon markets)
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Leading positions in organic searches on Amazon - this is important
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Relatively few SKUs - it is more attractive to these acquirers if 95% of your sales are from 5 SKUs (or variations of them) than 500 SKUs
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Higher percentage on Amazon - if your business is 90% Amazon, more of these buyers will be interested than if it’s 50% Amazon (This is changing - as the FBA aggregators build out their operational capacity they are increasingly interested in multi-channel operations. Many of them are now specifically seeking businesses with substantial DTC revenues and will consider businesses with less than 50% of sales via Amazon)
There are many other factors that affect the valuation, such as the seasonality of the product range, supply chain factors, the competitiveness of the market, and many others. But the above list is a guide to the most important factors in the valuation.
Bear in mind that each acquirer has different priorities. We work with one very large acquirer who prefers a larger number of SKUs, for example. To another, it is the defensibility of your position through IP and other barriers to entry that matter most. Knowing the buyers is important.
Bear in mind that each acquirer has different priorities. We work with one very large acquirer who prefers a larger number of SKUs, for example. To another, it is the defensibility of your position through IP and other barriers to entry that matter most. Knowing the buyers is important.
Amazon FBA Business Valuations
In this fast-moving market valuations are shifting. Historical benchmarks do not currently provide a good basis for comparison, as the competitiveness of the market has driven valuations of the best businesses up above the usual range. If you would like a valuation for your business just ask us. Email us at info@tonyandvik.com, schedule a call with us (FOR FREE) or use our very quick valuation form to get started.
YES OKAY BUT HOW MUCH?
The Amazon brand aggregators are seeking to acquire good businesses for 3 to 4x multiples of SDE, but they will stretch beyond this for the businesses they are most interested in. With a well-executed competitive bidding process the most attractive Amazon FBA businesses can achieve 5x multiples, and in exceptional cases 6 or even 7x multiples.
Businesses that are larger, with higher margins, more growth potential and with more of the above metrics in their favour will be valued towards the upper end of this range, if the sale is handled well. Smaller businesses with fewer of these criteria in their favour are valued at the lower end of the range, and occasionally below this range (smaller businesses sometimes trade for 2.0x to 2.5x multiples).
The biggest factor that affects the final price and terms of the deal is how effectively the sale process is executed. Selling the business to one of the acquirers above will usually result in an acceptable outcome, but by no means the highest price. No buyer will voluntarily pay the maximum they can afford, or offer the absolute best terms, if they don’t have a reason to do so. Dealing with them on your own will simply not result in the best price and terms.
Preparing the business for sale properly, presenting it well, to the right people, at the right time, and managing a competitive bidding process properly will allow the business to reach its full market potential and achieve the best terms for the seller.
This can be handled very quickly where necessary. We have had sellers come to us after receiving good offers from reputable buyers, and within two weeks we have negotiated a total price for them of 25% more than they had achieved on their own, and with better terms. Sellers who are negotiating on their own are leaving money on the table.
Selling directly without a broker entails other risks. For example in 2021 we have heard of multiple cases of Amazon Aggregators retrading on deals (an unprofessional practice), and each time this has occurred the seller has been dealing directly with the buyer, without a professional broker like Hahnbeck representing them. It’s important to have a team on your side to protect your interests.
Remember also that the buyers in the list above are not the only buyers - there are many other acquirers of Amazon FBA businesses (see below).
Other Amazon FBA Acquirers
The list above does not include all of the other acquirers of Amazon FBA and e-commerce businesses, some of whom individually have access to as much as $50,000,000 to invest in acquisitions. These buyers include family offices, strategic buyers, e-commerce brand houses and individuals.
These groups are diverse and each has different investment criteria. Some are looking specifically for private label Amazon FBA businesses, other are looking more broadly for e-commerce businesses with a variety of business models. One of the family offices we work has more stringent criteria than the institutional buyers in terms of size (minimum $1m EBITDA), whereas many others have slightly more inclusive criteria, in one dimension or another.
Many of the most successful builders of Amazon FBA businesses are also seeking to grow through acquisition. Rather than relying purely on their ability to build successful new brands, they see what the other acquirers see: acquisition is a faster and more reliable route to growth. Some of the largest Amazon sellers in Europe have approached Hahnbeck looking for acquisitions of up and coming brands.
INDIVIDUAL BUYERS
Sellers of e-commerce businesses should not forget that the individual buyers - the group who has historically been responsible for most Amazon FBA acquisitions - are still very much in the market. At Hahnbeck we work with larger businesses (>£1m) but even at this level there is still a strong contingent of individual buyers bidding for acquisitions. Bear in mind of course that it takes exceptional foresight and confidence as an individual buyer to compete against the likes of Thrasio and Perch for acquisitions, and most of the individuals who inquire about these businesses ultimately are left behind in the bidding. But there are individuals who have the ability to compete for these acquisitions, and it would be to the seller’s detriment not to include them, as doing so would in some cases exclude the eventual highest bidder.
The price and terms of the acquisition are not all that matter of course, and while each of the institutional buyers and other groups mentioned above brings different things to the table, sometimes individual buyers can make a personal connection with a seller in a way that institutional buyers are sometimes not able to do, especially if they are not located in the same geography.
FAMIILY OFFICES
Family Offices are the investment arms of wealthy families. They vary a little in size but are large enough to have employees, which differentiates them from individuals and partnerships. Some represent one family while others are a combination of investments from several families. They may raise outside capital in addition to their own, so there is a blurred line between these groups and private equity funds. We’ve seen family offices paying increased attention to e-commerce lately, as it becomes clear that the sector is outperforming others and will continue to do so.
OTHER PRIVATE EQUITY GROUPS
Search funds and other small private equity groups are increasingly looking at e-commerce acquisitions. While previously these groups preferred traditional, even “boring” businesses in sectors that are relatively unmodernised, we are noticing increased interest for e-commerce businesses amongst these buyers. Like many others, they have seen the potential for scalability offered by e-commerce and are paying increased attention to the space.
Very often we see owners of successful businesses in other sectors who are looking to diversify their holdings into e-commerce. We also see small private equity groups and partnerships planning to acquire multiple e-commerce businesses and combine them into one entity, similar to the roll-up model pursued but the institutional investors above, but at a smaller scale.
E-COMMERCE BRAND HOUSES
These groups have multiple e-commerce brands under one roof, typically having grown through a mix of building and acquiring the brands over time. These businesses were amongst the earliest acquirers of Amazon FBA businesses (and other e-commerce small businesses), and they are still very much in the market for acquisitions.
STRATEGIC BUYERS
Strategic buyers are companies in the same industry or related industries to the target company. For e-commerce businesses this does not simply mean “other e-commerce businesses” - it refers to businesses in the same niche. For example an e-commerce business focused on vitamins and nutritional supplements would make a great acquisition for a larger supplements company, even if that supplements company primarily uses other channels (like brick-and-mortar retail) for their existing business. An Amazon FBA business selling a brand of sportswear may be acquired by a larger sportswear brand. An e-commerce business selling drones might be acquired by a strategic buyer selling other technology, looking to add drones to its product range.
Strategic buyers are important because they can usually make more profit from the acquisition than anyone else*, so they are normally a very important group to work with in a sale. However, they do tend to be constrained by traditional methodologies in a way that they new institutional buyers are not: for example larger strategics will still not usually look at very small (£1m) acquisition targets. Larger strategics also suffer from the all of the issues of large companies in terms of speed and flexibility - they will be more rigid and usually much slower than everyone else. But for an acquisition of the right size, a strategic buyer can often pay more in total consideration. The hard part is bringing them to the table.
* In the case of Amazon FBA businesses the maxim that strategic buyers “have the most to gain from an acquisition” is being tested - e-commerce brand houses and institutional buyers of Amazon FBA businesses are often able to realise substantial synergies, and can improve businesses post-acquisition to the point where they can arguably make more profit from the acquisition than a traditional strategic acquirer.
Former Amazon Aggregators
Several former Amazon aggregator firms have pivoted away from the model, been acquired or shut down. Here is a list:
- Boopos - pivoted to new business model
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Brands United - no longer acquiring
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Diverge Group - pivoted to new business model
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Fortia Group - pivoted to new business model
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Orange Brands - acquired by Berlin Brands Group
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Plus Ultra Group- no longer acquiring
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Primeridian - no longer acquiring
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River Sea Network - pivoted to new business model
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Thirstii - acquired by Thrasio
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Zeelos - no longer acquiring
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