How to Sell Your Amazon FBA Agency for Top Dollar

The Amazon marketplace is thriving, which means there’s enormous opportunity for agencies that help sellers succeed. And like most online businesses, you can sell your Amazon agency if you follow the right steps.  

In this article, we address everything you need to know about selling an Amazon agency, including:

• Why you might want to consider selling your agency
• How to value your Amazon agency
• When you should sell
• How to market your agency

Reasons to Sell an Amazon agency

Before diving into the how, it’s important to understand why you might want to consider selling your Amazon agency. A few common reasons to consider an exit include:

• Pursuing other opportunities
• Personal financial strategy 
• Skill set limitations

Pursuing Other Opportunities

There’s always an opportunity cost when you’re the owner of a business. In other words, by managing your business you have to forgo other opportunities that are out there.

When you’re first starting a business, it’s often easy to feel highly motivated and passionate. During the early stages, there’s an enormous amount of learning and growth that takes place. For many entrepreneurs, there’s nothing more exciting than founding a new business.

“By selling your Amazon agency, you create space to pursue other desires and ambitions, both personally and professionally.”

If you’re like many entrepreneurs, there comes a point at which other opportunities come calling. In many cases, pursuing those opportunities require that you give up your role in your current business.

By selling your Amazon agency, you create space to pursue other desires and ambitions, both personally and professionally. New opportunities could include:

• Starting a new business
• Changing careers
• Spending more time with your family
• Traveling

Many entrepreneurs feel most alive during the founding stages of their business. Therefore, it’s no surprise that many owners choose to sell their businesses in order to pursue new ventures beyond Amazon. In some cases, owners choose to sell in order to embark on an entirely new professional journey.

Additionally, selling your business can often free up time for you to spend with your family. In some cases, entrepreneurs choose to step away for an extended period of time to travel or pursue other personal interests. 

Selling Your Business to Diversify Your Investments

Needless to say, selling your Amazon agency can significantly change your financial situation. Depending on the value of your business, an exit can be a truly life-changing financial event. 

“When you sell your business, you have the opportunity to diversify your personal investment portfolio.”

When you sell your business, you can invest your profits in a variety of ways. Some entrepreneurs choose to acquire other businesses that allow them to leverage their existing skill set. Others, prefer to invest in index funds, cryptocurrencies, or real estate. Essentially, when you sell your business, you have the opportunity to diversify your personal investment portfolio.

Skill Set Limitations

Many entrepreneurs are great at founding businesses. However, that doesn’t mean that they have the tools and resources required for scaling past a certain point.

In general, the skill set involved in starting a business is not necessarily the same skill set that’s required to scale. Therefore, as an owner, it’s important to be honest with yourself about where your limitations lie. 

For example, let’s say that you’re an expert when it comes to:

• Creating an Amazon storefront
• Amazon store optimization
• Product research services (including for private label products)
• Running sponsored product Amazon ads
• Amazon product listing optimization
• Addressing Amazon Seller Central or Vender Central issues
• Amazon advertising
• Resolving Vendor Central, Amazon account, and product listing issues
• Amazon retail expansion strategy
• Other digital marketing and Amazon marketing services

With this skill set, you may have created a highly profitable Amazon agency helping your clients increase their Amazon sales. However, at a certain point, being an Amazon expert in areas such as paid advertising isn’t going to be enough to sustain your company’s growth. Instead, the determining factors of growth will become activities such as implementing systems and managing larger work teams.

If you find yourself struggling to meet the new demands of your growing business, it may be worth it to sell to someone who is more experienced in growing larger companies. 

How to Value an Amazon Agency for Sale

One of the first questions that owners ask is, “How much is my business worth?”.

It’s an important question. To answer it, it’s important to understand what drives the value of your business.

Most online businesses are valued using the SDE Multiple Method. 

There are two parts to this equation: SDE, and the multiple. 

Seller’s Discretionary Earnings

Seller’s Discretionary Earnings (SDE) are the pre-interest and pre-tax profits that a business generates before accounting for one owner’s benefit, non-cash expenses, one-time investments, and any non-related income or discretionary expenses.

This may sound like a complicated answer, but essentially, SDE is the total amount of money that a single owner earns from the business each year. For a more in-depth explanation of SDE, be sure to check out our article about Seller’s Discretionary Earnings.

Calculating The Multiple

The multiple is a number that is multiplied by the SDE to determine the business’s value. For example, if a business’s SDE is $500,000 and the multiple is 4X, then the value of the business is $2M ($500k x 4 = $2M).

There are four critical factors that determine the multiple. We call these The Four Pillars of Value. They include:

• Growth
• Risk
• Transferability
• Documentation

How Growth Impacts Business Valuation

Not surprisingly, investors like acquiring businesses that have strong growth prospects. All else being equal, if your Amazon advertising agency is poised for expansion, buyers will view it quite favorably.

The most important growth metric is SDE growth, but it’s not the only one that investors consider. If you’re rapidly attracting new clients, increasing revenue, or expanding your market share, these activities can also raise the value of your business. 

“Both current trends, as well as growth opportunities, will greatly impact the value of your Amazon agency.”

In addition to looking at your current growth trends, buyers will also pay attention to the growth opportunities that your business faces. Therefore, it’s important for you to be able to articulate how a potential buyer can grow your business following the acquisition. 

For example, let’s say that your Amazon marketing agency is only offering general consulting or inventory management services for sellers on the Amazon platform. If that’s your situation, what would happen if your agency started offering Amazon PPC management, listing creation services, or strategies for maximizing your clients’ buy box percentage? More than likely, your existing Amazon FBA business clients would start using your agency for additional services, leading to easy growth for the business.

In summary, both current trends, as well as growth opportunities, will greatly impact the value of your Amazon agency.

How Risk Impacts Business Valuation

Even if your business is experiencing rapid growth, buyers will be warry if it’s also exposed to significant risk.

For Amazon agencies, there are a few different areas to look at when evaluating risk, including:

• Competition
• Turnover
• Reputation

Smart buyers will examine how your agency stacks up against your competitors. If you’re quickly gaining market share, that will reflect very positively on you and your business. On the other hand, if your agency is losing market share to its competitors, buyers may be cautious. 

Like all service businesses, agencies need to be very careful when it comes to management and HR practices. Agencies may not have a Cost of Goods Sold (COGs) expense, but their personnel expenses can easily make up for that. If your agency has a high turnover rate, that could cause some concern among investors. Not only does a high turnover rate put pressure on hiring activities, but it could also indicate that there are some internal management issues that need to be addressed. 

Additionally, smart buyers will pay attention to your agency’s reputation. What are Amazon FBA business owners saying about their experiences working with you? 

If your agency has mostly positive feedback, that will really impress buyers. On the other hand, if your business has a questionable reputation, that will be a huge red flag. Not only do reputation issues take time and energy to repair, but they can also spell disaster for service companies that rely heavily on referrals and testimonials. 

How Transferable Is Your Amazon Agency?

All else being equal, businesses that can be easily transferred to a new owner are more valuable than those that can’t. If your business is highly systematized and doesn’t rely on your own personal reputation, it will be much easier to hand it off to the right buyer. 

On the contrary, if your business has barriers to transferability, it will be more difficult to sell. In turn, that will reduce its value in the marketplace. 

“Businesses that can be easily transferred to a new owner are more valuable than those that can’t.”

One issue that owners sometimes face pertains to their operating practices. If you, the owner, are the only one who knows how to perform critical tasks in your business, that could be a problem. What happens when you’re no longer there to ensure that everything gets done?

To avoid this issue, smart business owners create detailed Standard Operating Procedures (SOPs) to ensure that all roles and responsibilities are accurately documented. Furthermore, if you have qualified employees or contractors to handle most of the operations, that will add to the ease of transferring your business to a new owner.

The Importance of Documentation in Agency Valuation 

When a potential buyer examines your business, they’re going to pay close attention to your documentation practices. If your Amazon marketing agency has detailed records and is well organized, that will immediately increase its value. On the other hand, if your business has sloppy financials or is lacking clear SOPs, buyers won’t be as interested and your business will be worth less. 

“Together, the Four Pillars of Value determine the multiple used in the valuation process.”

Given the importance of documentation, one of the first steps to selling your business is organizing your financials, along with any other business documentation. Ideally, everything should be easily presentable to show potential buyers.  

Together, the Four Pillars of Value determine the multiple used in the valuation process. Therefore, it’s critical that you spend some time to optimize your marketing agency for each of these areas before listing it for sale.  

Best Time to Sell Your Amazon Agency

Another common questions owners ask is: “When is the best time to sell my business?”

There are a few different ways to answer this question…

As mentioned above, businesses are more valuable when their growth trends are positive. Therefore, it’s best to sell your business when its recurring revenue and SDE have been steadily growing for a period of time. 

Additionally, it’s best to sell your business after you’ve implemented effective operating procedures for your activities. Remember, if your Amazon agency is well documented and easy to transfer, you’ll likely fetch a higher purchase price.

Before selling your agency, consider creating and implementing SOPs for each of these activities that you engage in:

• Amazon sponsored products display ads
• Amazon brand registry services
• Listing creation processes
• Customer service protocols 
• Amazon SEO practices
• Strategies for Amazon Prime Day
• Seller Central management services
• Amazon marketing consulting
• Researching Amazon marketplace trends 
• Running brand awareness campaigns
• Enhanced brand content services
• Inventory management practices

Just like selling an Amazon business, selling an agency requires careful documentation. If you can create detailed SOPs, you’ll be one step closer to being ready to sell. This includes being able to share onboarding practices for each new third-party seller that your agency works with. 

When Are You Ready to Sell?

In general, it’s best to sell your agency when your agency is ready to be sold as opposed to when you want to sell it. In other words, if there are important steps you can take to maximize your business’s value, it’s usually best to complete those steps before going to market. 

Having said that, there are situations in which a seller is simply ready to let go of their business. Whether it’s due to health reasons, other opportunities, or other personal matters, business owners sometimes decide that it’s worth selling even when the timing isn’t optimal for their financial interests.

Although there are best business practices for maximizing the value of your business at exit, each entrepreneur needs to make their own decisions about what is best for their own personal situation.

Marketing an Amazon Agency for Sale

You’ve decided to sell your agency, completed the necessary preparations, and now you’re ready to proceed. There are a few final steps you need to complete in order to list your Amazon agency for sale:

• Valuing your Amazon agency
• Creating a marketing package
• Listing your business for sale

The Valuation Process

The valuation process is a critical step along the path to selling your Amazon agency.

While there are several online tools and valuation calculators, none of them can consider the myriad elements that impact the true valuation of your Amazon marketing agency. Therefore, if you want a full and complete understanding of your business’s actual value, it’s best to receive a detailed valuation performed by an industry professional.

During the valuation process, a qualified Business Advisor will examine numerous business aspects to gain a complete understanding of the asset you’ve created. A few pieces of information they’ll look at include:

• Financials (including Profit and Loss statements)
• SOPs
• Employee and contractor agreements
• Client agreements
• Trademarks and copyrights
• Other legal documentation 

Additionally, the Advisor will ask questions to learn more about how your business was built, as well as how it’s currently operated. Everything from your HR practices to direct marketing strategies will be closely examined. After gathering the necessary information, they’ll calculate your business’s value. 

Creating a Marketing Package for Your Business

Once the valuation process is complete, your Advisor will help you put together a marketing package for your marketing agency.

Your marketing package should provide a detailed overview of your Amazon agency. Everything from financial statements to revenue sources, to Amazon review response practices, should be laid out in a presentable manner. Think of your marketing package as an in-depth guide for understanding your business. 

Listing Your Business for Sale

After your marketing package is complete, it’s time to list your business for sale.

At Quiet Light, our business listings are emailed to an extensive list of qualified buyers who are active in the marketplace. Each listing includes key details about the business in question. If a potential buyer is interested in your business, they’ll have to sign a non-disclosure agreement in order to view your marketing package. 

What to Expect Once Your Amazon Agency Is Listed for Sale

It’s an exciting moment when your business listing is live! Years of hard work and dedication are officially on display for the world to see. While listing your business for sale is a substantial step, it’s by no means the end of the journey.

“It’s an exciting moment when your business listing is live! Years of hard work and dedication are officially on display for the world to see.”

There are several steps that follow the listing stage, including:

• Listing your business for sale
• Communicating with buyers
• Receiving a Letter of Intent
• Signing an Asset Purchase Agreement
• Due Diligence
• Closing
• Transition and training

To learn more about each of these steps, be sure to check out this article about selling online businesses. 

By working with the right people and following the proper steps, you’ll be in a great position to sell your Amazon agency for top dollar.