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How to Find an Amazon Business for Sale
By Quiet Light
If you’re interested in acquiring an FBA brand, knowing how to find an Amazon business for sale is an important first step. By taking your time and doing your research, you should be able to identify and purchase a business that flourishes well into the future, setting you up for entrepreneurial success.
In this article, we discuss:
- When to buy an Amazon business
- Costs associated with buying an Amazon business
- How to acquire an Amazon business
- How to transfer an Amazon seller account
When to Buy an Amazon Business
Getting the timing right when purchasing an Amazon business is helpful to ensure a high ROI. There are several things to think about when deciding when to purchase an Amazon business and jump into the world of online entrepreneurship. These include:
- Your personal financial situation
- Lifestyle considerations
- Market factors
Your personal financial situation
First and foremost, it is important to make sure you are in the right financial situation to purchase an Amazon business before deciding to do so. Of course, this depends on your target Amazon business size, as well as how you plan to finance the transaction.
All Amazon business purchases entail some risk of failure. As such, it should go without saying that you should not over-leverage your finances in order to purchase an Amazon business. Of course, what may be a rash decision for one individual may be a reasonable risk for another.
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A lot of this comes down to your unique situation. Are you a single individual with no dependents who can take on a higher level of financial risk? Do you have a mortgage and a family who depend on you for their financial well-being? Obviously, these two scenarios could lead to two very different assessments about whether or not an investment feels right to pursue.
Regardless, you can always adjust the size of your investment to meet your needs. For example, instead of purchasing a multimillion-dollar business, you may want to consider a budget Amazon business.
Your planned method of financing will also impact when is the right time to make a purchase. While some may prefer to pay cash, others may wish to finance the deal with an SBA loan. It may be helpful to speak with a business Advisor to determine your financing options.
“First and foremost, it is important to make sure you are in the right financial situation to purchase an Amazon business before deciding to do so.”
Lifestyle considerations
Finances aside, it is important to take your personal life into consideration when determining the best time to buy an Amazon FBA business.
For starters, running a new business will likely take a significant amount of time and effort, at least in the beginning. Do you have space in your schedule, work and otherwise, to take on the responsibilities of running a new business? All the good intentions and skills in the world can be wasted if you don’t have the time and energy needed to execute.
As mentioned previously, the way your current personal lifestyle informs your orientation toward risk will have an impact on the appropriate timing for you to buy a business.
On the other hand, if you are currently highly unsatisfied with your current work situation and are seeking to change things up, you may have a sense of urgency in finding and acquiring the right business.
“All the good intentions and skills in the world can be wasted if you don’t have the time and energy needed to execute.”
Market factors
Outside of your current financial and personal considerations, it is important to think about current and future market conditions when purchasing a new business.
If you know what type of FBA business you would like to purchase, what are the expectations for that industry moving forward? Do you see a contraction on the horizon or a period of significant growth? These are factors to consider before pulling the trigger.
Aside from analyzing the future prospects for the industry you are seeking to enter, what about the market for Amazon FBA businesses as a whole? Are business prices currently high?
The availability of credit will have an impact on this. During a period of loose credit, business financing will be less expensive to attain. While this could be beneficial to you in terms of securing cheap financing, it will likely increase demand in the business marketplace.
However, the reverse is also true. As such, your planned method of financing will have an impact on when you may want to buy. If credit is tight, business demand may be reduced, thus lowering prices.
In this scenario, it may be beneficial to purchase a business with cash if you have the means to do so. This will allow you to take advantage of lower prices while avoiding the extra costs associated with higher interest rates. Amazon aggregator firms, with their large stocks of business capital, often take this approach.
Costs Associated with Buying an Amazon Business
Aside from timing your purchase well, it is also important to have a solid understanding of the costs associated with buying an Amazon business. Any smart investment starts by having a clear idea about how the financials will pan out.
In this section, we will review some of the common costs involved when buying an Amazon business, including:
- The cost of the business
- Due diligence professionals
- Business Advisors
“Any smart investment starts by having a clear idea about how the financials will pan out.”
Cost of the business
The most obvious cost when purchasing a business is the actual price you pay for the business. Of course, this will vary for everyone depending on your current financial situation, how you plan to finance your purchase, and your goals for the business once you take over ownership.
Fortunately, the marketplace for Amazon businesses is quite developed. There are numerous businesses for sale at any given time in every imaginable industry or niche. Some may be small, while others are quite large.
This means if you are looking for a small business in the ballpark of $100,000–$200,000, there will be options for you. Likewise, if you have a larger budget in the range of $15 million or more and are seeking to find a more established business, you will also have options available.
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It is also important to note there are many different deal structures possible when purchasing a business. Depending on negotiations with the seller, you may have the opportunity to purchase the business with one large lump-sum payment. Or, you may prefer to pay the majority of the sale price up front, with the remainder distributed over the course of an agreed-upon amount of time.
Likewise, there is a range of financing options available. Whether you pay in cash, secure an SBA loan, or make your purchase as part of a larger investment fund strategy, it is important to have your finances in order before making an offer.
Due diligence professionals
Purchasing an Amazon FBA business is a consequential financial and personal decision. As such, it is crucial to do the work necessary to increase your chances of long-term success. One of the most important steps involved in purchasing a business is the due diligence process.
We will touch on due diligence later in this article. For now, however, know that due diligence is a period of time after an offer has been made where you, the buyer, have the opportunity to verify the accuracy of the seller’s claims regarding the performance of the business.
From accounting records to inventory management, it is highly important that you have the ability to ascertain the true nature and success of the business. This is a process where the right knowledge and attention to detail are crucial for success.
For that reason, it is common to hire lawyers and other professionals who specialize in due diligence. While this will incur costs, it will also help ensure you make a sound purchasing decision, setting you up for success in the long run.
“Whether you pay in cash, secure an SBA loan, or make your purchase as part of a larger investment fund strategy, it is important to have your finances in order before making an offer.”
Business Advisors
Purchasing a business can be a confusing and challenging process. Whether you are finding attractive businesses for sale, collecting and analyzing data, or negotiating agreement terms and closing the deal, there are many different steps that can go awry.
“While business Advisors do add cost to the transaction process, this should easily be offset by the value the right Advisor brings to the table.”
For this reason, many entrepreneurs find it helpful to work with an experienced business Advisor throughout the process. Aside from helping you identify prospective businesses and negotiating favorable terms, the right Advisor will keep a keen eye on the details of the business in question to ensure it is a worthwhile investment. This may include verifying supplier relationships to analyzing FBA fees, among other things.
While business Advisors do add cost to the transaction process, this should easily be offset by the value the right Advisor brings to the table.
How to Acquire an Amazon Business
Once you have prepared your financing strategy and determined you are ready to purchase an Amazon business, what does the actual acquisition process look like? While every business investment may take its own path, there are certain general steps that must be followed. These include:
- Identifying the right business for you
- Negotiating a deal with the seller
- Signing a letter of intent
- Conducting due diligence
- Signing the asset purchase agreement
- Closing
- Transition and training
Let’s take a closer look at each of these steps.
Identify the right business for you
The first step in successfully purchasing an Amazon business is to find the right business for your needs. As mentioned, nowadays there are many different businesses in every imaginable niche that are waiting to be discovered by you.
However, it is important to determine exactly what you are looking for. What size of business do you want? Have you considered the pros and cons of FBA versus FBM? What business will allow your skill sets to really shine?
Once you have a good idea of what you are looking for, you can start your search. Tools such as Centurica and Flippa provide an easy place to browse for listed businesses.
Many entrepreneurs choose to work with a business Advisor when looking for the right business to purchase. The right Advisor will be able to use their networks to allow you to access a wider pool of businesses. In addition, they will be in a position to help you choose a business that fits your needs.
“The first step in successfully purchasing an Amazon business is to find the right business for your needs.”
Negotiate a deal with the seller
Once you have identified a business, analyzed its marketing package, and determined that it likely fits your needs, it is time to negotiate a deal with the seller. Again, a qualified business Advisor will be able to help you navigate the nuances of this process.
There are several things you can do to help yourself in the negotiation process. These include:
- Be respectful
- Communicate in a timely manner
- Be honest and up front
- Keep the seller’s interests in mind
- Be clear about what you bring to the table
Successful negotiations are not all about hounding the seller to get the best deal possible for yourself. Rather, it is where both you and the seller get your needs met and arrive at a mutually satisfactory outcome.
Sign a letter of intent
Once you have arrived at an agreement, it is time to sign the letter of intent (LOI). The LOI is a document that states that you intend to purchase the business for the agreed-upon terms as long as the information represented by the seller is factually accurate.
Due diligence
As we discussed before, the due diligence process is a period of time where you (and potentially your hired lawyers) get to comb through the business to determine the accuracy of their claims.
Do their sales numbers check out? Are their financial statements accurate and correct, or are they hiding information? Due diligence is an extremely important phase, so don’t rush through it. Be thorough and complete. If something concerning comes up, bring it to the attention of the seller so you can find a workable solution, if possible.
Asset purchase agreement
If everything checks out during the due diligence process and you decide to move forward with the transaction, it is time to create and sign an asset purchase agreement. The asset purchase agreement is a legally binding document clearly spelling out the terms of the sale. Once it has been drafted, both the buyer and the seller sign the document.
Given its central role in defining the deal, it is important to ensure it accurately reflects the agreed-upon terms in a legally appropriate manner.
Closing
Once the asset purchase agreement is drafted and signed, it is time to close the deal. During closing, the buyer puts the purchase funds into an escrow account, the seller transfers all relevant assets to the buyer, and the funds are released to the seller. This process helps to instill trust in the transaction process.
“Make use of the seller’s availability as a resource; ask questions, discuss operations, and get a solid understanding of how to run all aspects of the business.”
Transition and training
Most new third-party sellers need some training to get up to speed on Amazon. This is especially true if you are taking over the reins of an existing business. In order to hit the ground running, most agreements include a transitional period where the seller will train you on the day-to-day operations of the business.
Be sure to take full advantage of this training period. This is your opportunity to learn the ins and outs of your new business. Make use of the seller’s availability as a resource; ask questions, discuss operations, and get a solid understanding of how to run all aspects of the business.
How to Transfer an Amazon Seller Account
During the closing process, one of the most important steps is to successfully transfer the Amazon seller account from the seller to you.
The seller account, or Seller Central, is where the owner can view their Amazon seller metrics, create and change listings, and control the operation of their Amazon business.
Is it possible to transfer an Amazon seller account?
In years past, there was some confusion as to whether it was possible to transfer an Amazon seller account. Put simply, it is possible and easy to transfer an Amazon seller account from one owner to another in most situations.
How to easily transfer an Amazon seller account
According to letters received from Amazon about how to transfer a seller account, in order to complete the transfer the owner of the account must change the account information to reflect the details of the buyer. This information includes the:
- Charge method (credit card)
- Deposit method (bank account)
- Relevant tax information
- Account name
- Associated email address
As the new owner, you will also create a new password to ensure your account is secure. Once all of these steps are completed, you will be the owner of the account. All reviews and ratings will be transferred to your ownership in the process.
Conclusion
Purchasing an Amazon business is an exciting step in any entrepreneur’s life. If executed correctly, it has the potential to transform your finances as well as your work-life balance.
Knowing how to find an Amazon business for sale, when to time your purchase, and how to complete the transaction process will help set you up for long-term success as a business owner.
Buy a Profitable Online Business
Outsmart the startup game and check out our listings. You can request a summary on any business without any further obligation.