Selling an Eight Figure Amazon Business with Jason Yelowitz

Entrepreneur Jason Yelowitz has been a trusted Quiet Light advisor for over 10 years. In between brokering deals, he started seven businesses. For the first one alone he raised over $10 million in venture capital funding. He has mastered the ability to stay calm in the face of the uncertainty surrounding large business deals, how to handle bookkeeping scrutiny, and how to ensure he and his clients are negotiating with the actual decision maker. In this webinar, Jason shares his unique insights into 8-figure Amazon FBA deals, and what every founder needs to know before selling.

Key Takeaways:

• Why it’s important to expect the unexpected – and how 8 figure deals differ from smaller ones
• What are the three key questions business owners need to answer before selling.
• How to stay grounded and fight the jitters that come from big exits.
• How to make sure you’re negotiating with the final decision-maker (It’s not as easy as you’d think).
• The one essential element in building a business that will stand up to deep scrutiny (Hint: it’s bookkeeping).
• How to avoid seemingly small issues that could torpedo a deal.

TRANSCRIPT

**Sam:**

Welcome to the month of October, featuring Jason Yelowitz, one of our very own.

Okay, all right. Well, hopefully everyone is settled and ready, and I think we will jump in.

Good morning or good afternoon, depending on where you are. Welcome to *Selling an Eight-Figure Amazon Business* with Jason Yelowitz.

Again, I mentioned this if you were on a couple of minutes ago, but this is Quiet Light’s monthly AMA series. For those of you who may not be super familiar with Quiet Light, I’ll give you a quick background.

Quiet Light helps entrepreneurs buy, build, and sell businesses for six, seven, and eight figures. A big part of what we do is educational—think podcasts, webinars just like this, speaking at conferences, and writing lots of articles and blogs. So if, after this hour, you’re still thirsty for more content, you can check out QuietLight.com. We have tons of resources there for you to explore.

My personal favorite part about Quiet Light is that it’s completely entrepreneur-led and entrepreneur-focused. All of the advisors on the team have bought, sold, and/or built businesses at some point in their lives, and many are still doing so today. They truly understand exactly where you are in your process, wherever that might be.

Moving on from Quiet Light, let’s introduce our guest for today, Jason Yelowitz.

Good morning, Jason.

**Jason Yelowitz:**

I’m good.

**Sam:**

I like your fish tank.

**Jason:**

Oh, thanks. Yeah, it’s a good Zoom background.

**Sam:**

Yeah, I appreciate it. In the old days, we had screensavers that looked just like that, but I wanted the real thing.

**Jason:**

Yeah.

**Sam:**

I love it. Some featured special guests—we’re giving our audience some bonus guests today.

So, Jason is based in Reno, Nevada. He is a speaker, author, senior advisor, and serial entrepreneur at Quiet Light. He’s actually the longest-serving advisor at Quiet Light, so if you’re looking for someone who is extremely well-tenured, has literally seen it all, and has been in your shoes for miles and miles and miles, Jason is your advisor.

In fact, since joining Quiet Light in 2010, he has become the most requested advisor on the team, which makes sense because Jason’s profile is sort of what we look for when we expand the team and search for new advisors.

A quick anecdote on that: Mark Daoust, the founder of Quiet Light, wrote an article for Forbes explaining how he was able to grow from a one-man show into a larger organization. As part of that process, Jason, a former client, came over and said, “Hey Mark, I’d love to join the team.”

Mark, what I hope was politely, said no.

But Jason wasn’t quite willing to take that for an answer. I’ll share my favorite quote from the article:

*”When he asked again, I said no again. And again. But to his credit, Jason Yelowitz is a persistent man, and I finally agreed to bring him on board. To this day, that was one of the best business decisions I have ever made.”*

Needless to say, we are in extremely capable hands with Jason this morning. If you want to check out that article, you can head over to Forbes and read the full thing.

When Jason isn’t brokering deals and building businesses, he enjoys speaking at conferences and business schools. He also volunteers as a coach and mentor for people who are just starting to dip their toes into entrepreneurship. He’s written a book called *The Bathrobe Millionaire*, and if you can imagine he has any free time after all of those activities, he enjoys spending it with his family and kids, traveling, reading, hiking, and challenging conventional wisdom on a range of topics.

Jason, is there anything I’ve missed? I found your background fascinating. I’m almost wondering, who are we talking about? That person sounds phenomenal.

**Jason:**

Thank you for that. No, I don’t think you missed anything.

Thanks for having me.

Some of the people watching may wonder why they haven’t seen me. I’ve been at Quiet Light now for almost 12 years, and I’ve kept a relatively low profile, mostly helping people one-on-one.

The reason I wanted to come on now is that, in 12 years, I’ve never seen a market anything like what we’re seeing today, particularly for Amazon businesses—especially larger ones.

That’s why I thought it was important to get out there and talk to folks who have these businesses and may, at some point, be thinking about selling.

**Sam:**

Awesome. Yeah, it’s quite a crazy time, never mind everything else going on in the world, but specifically for Amazon businesses.

As you mentioned, some people may not be as familiar with you since you’ve been more behind the scenes. Maybe give us a quick background on how you got started in entrepreneurship and what your initial journey was like.

**Jason:**

Okay, awesome.

I came of age in Silicon Valley during the original dot-com bubble in the late ’90s. I was an entrepreneurial person at heart, and I started a company. I spent about a year trying to raise money. That’s what you did back then—you went knocking on the doors of venture capitalists.

I got rejected easily 30 times.

As Mark mentioned, I’m persistent, so that didn’t faze me.

What was interesting is that I finally hired a broker to help me raise money, and there were just small course corrections he guided me toward. Next thing you know, a VC wrote us a check for $10 million, which at the time was pretty good money.

About a month after that, the entire dot-com bubble started to unravel. I raised the money in February 2000, and starting in mid-March, the bubble that had been inflating for five years began to collapse.

I got to be on the front lines of both the good and the bad.

A couple of years later, I found myself running a lead-generation business for Realtors, and that business did fantastic right through the housing bubble…

**Jason:**

A couple of years later, I found myself running a lead-generation business for Realtors, and that business did fantastic right through the housing bubble. Then, when the bubble burst, I got to witness firsthand how quickly things can go south.

What’s interesting now is that I feel like we’re in a golden age for Amazon FBA businesses, especially the larger ones. It may or may not last, but having been on the front lines of the last two bubbles, I know that when things go south, they can go south very quickly.

**Sam:**

Got it.

Just for everyone tuning in, if you have any questions at any point, please feel free to put them in the Q&A chat box. I’ll make sure we get to them throughout the next hour.

If you prefer to ask live, of course you can raise your hand, but the quickest way to get your question answered is through the Q&A box. If any questions come up, just drop them in there.

Jason, you’ve mentioned a few times now that this is a big moment, especially for larger Amazon deals. Can you talk a little bit about what makes these larger deals different from some of the smaller ones?

**Jason:**

You bet.

There are differences for the seller, but the biggest difference is in the buyer pool.

If there’s anyone listening who owns one of these FBA businesses—and that’s what we call Amazon businesses internally, even if they’re fulfilled by merchant—we typically use “FBA business” as shorthand.

A couple of years ago, these businesses generally weren’t very sellable. If someone called and said, “I’ve got 14 ASINs and I’m selling only on Amazon,” most buyers would say there wasn’t enough product diversity, enough channel diversity, and that it was too risky.

I distinctly remember turning down a business as a listing in 2018 that today would sell in a heartbeat.

The big difference, of course, is the rise of the aggregators.

Anyone who owns one of these businesses is probably being contacted constantly by aggregator firms. These are essentially private-equity-backed operators. They’re usually started by a handful of founders who have experience with Amazon.

What’s unique about this moment in history is that there are probably more than 70 or 75 aggregators today, and collectively they’ve raised over $10 billion.

This reminds me a little of when I was raising venture capital for my first business. At the time, I didn’t have a website. I didn’t have a business plan. Revenue wasn’t even something we planned to discuss for another three years, and yet I was able to raise $10 million.

Today isn’t exactly the same, but the amount of money flooding into this space is enormous.

It’s a combination of factors. Amazon has been growing rapidly, especially during the pandemic, when many people shifted more of their shopping online. At the same time, Federal Reserve policy and central bank policies around the world have created an environment of cheap money. Interest rates have been low, making it attractive to borrow large sums of capital.

All of this has led to a convergence of firms pursuing the same idea: acquiring Amazon businesses.

These firms are in a mad dash to compete with one another.

From my vantage point, many of the 75-plus aggregators may not be around in a few years. It feels similar to the dot-com era, when the vast majority of firms didn’t survive. But right now, we’re still in the bidding-war phase.

Over the last couple of months, some of these firms have completed massive capital raises and debt raises. They’ve also started to realize that they can either buy 100 businesses worth $1 million each and then have to manage 100 businesses, or they can buy one business worth $10, $20, or $30 million and operate far fewer companies.

I think a lot of aggregators are discovering that operations are more difficult than their spreadsheets originally suggested. As a result, they’re becoming much more interested in larger acquisitions.

For anyone who owns one of these businesses, there are really three major decisions to make.

The first is: **Should I sell?**

In my experience over the last 12 years, the decision to sell is a combination of personal priorities and where the business sits on its growth curve.

If your business is growing rapidly and you have good reason to believe that growth will continue, you’re probably better off not selling right now. The value of the business is largely based on earnings, and if those earnings are going to double, you’ll likely come out ahead by waiting.

That said, none of us really knows what’s going to happen.

Was there a COVID-related boost that’s temporary? Will container costs continue to rise? Will inflation hurt margins?

If you’re thinking about selling, my advice is not to wait until growth has flattened out. You want to sell while there’s still some gas left in the tank for the next owner.

One reason is that the sales process takes time.

From the moment you decide to sell, you have to prepare the business, create the listing, receive offers, negotiate, and close the deal. Several months can pass.

If the business flattens out or starts declining during that period, it can be detrimental to the deal. Buyers may renegotiate the price, or the deal may fall apart altogether.

This is one of those “be prepared” moments. You want to be thinking about it ahead of time and taking action before you absolutely need to.

The other side of the “Should I sell?” question is emotional.

When I sold my own business through Quiet Light, I dreaded getting up in the morning. I didn’t want to deal with the product anymore. I didn’t want to deal with the customers. It just wasn’t fun.

I think people should consider selling before they reach that point.

By the time you’re burned out, you’re no longer fully engaged. To get the best outcome in a sale, you need to stay in the game.

So that’s the first decision: Should I sell?

The second decision is: **When should I sell?**

Historically, when I reviewed a business that had room for improvement, I would often tell the owner to go make a few improvements and come back in six months or a year. There wasn’t much urgency because I felt reasonably confident the market would still be there.

Today, I’m less confident.

I’m seeing some strange dynamics that I haven’t seen before.

For example, I’ve always believed that there’s a price at which any business will sell. I’ve tested that theory over the years.

I once sold a business that was losing $300,000 a year for $1 million.

I had another listing where the company hadn’t sold anything in eight months. The website was basically a shell, there were vendor issues, and yet I still received five offers.

For most of my career, I’ve believed there’s always a price where a deal gets done.

Recently, though, I’m finding that isn’t always true.

There are some businesses that buyers simply aren’t interested in, even at surprisingly low multiples.

Meanwhile, businesses that qualify for SBA financing are getting lots of offers. FBA businesses with the right characteristics are getting lots of offers.

But a traditional e-commerce business that doesn’t qualify for SBA financing—even if it’s a good business—can be much harder to sell right now.

What that tells me is we’re in an “other people’s money” market.

Buyers strongly prefer businesses they can finance with borrowed capital. Aggregators often rely on credit facilities for acquisitions as well.

That’s one of the reasons it’s such a strong market for larger FBA businesses right now.

**Jason:**

So the first decision is: **Should I sell?**

The second decision is: **When should I sell?**

The third decision is: **Should I go it alone, or should I hire an advisor—whether that’s Quiet Light, one of our competitors, an investment banker, or someone else?**

That’s obviously a personal decision.

The downside of hiring an advisor is that you’re going to pay a fee. Nobody enjoys that. I certainly didn’t enjoy paying the fee when Quiet Light sold my business, but in my mind it was simply the cost of doing business, and it was well worth it.

Another downside is that there will probably be more preparation work upfront. We’re going to ask more questions and dig a little deeper to make sure the business is properly prepared before it goes to market.

Now, what are the advantages?

One advantage is that experienced advisors are on the front lines dealing with buyers every day.

Using aggregators as an example, we know many of the CEOs personally. We can often get them on an email thread, move a deal up the chain, or get a higher-level decision-maker involved. We also have someone to call if things start getting rocky.

Sometimes we can help clients achieve better outcomes.

I don’t want to overpromise here, but we’ve certainly seen situations where a seller received a direct offer from an aggregator, and after repackaging the business and taking it to market, the final result was substantially better.

One of my colleagues had a client who ultimately received roughly two-and-a-half times what they had originally been offered. That’s unusual, and everyone’s results will vary, but it does happen.

Part of the reason is that we’ve been trained to evaluate profit and loss statements, identify legitimate add-backs, and present the business in a way that maximizes the earnings figure on which the valuation is based.

The biggest advantage, though, is experience.

If you’ve built a business generating one, three, five, or ten million dollars in EBITDA or Seller’s Discretionary Earnings, you may only sell a business once in your lifetime.

We’re doing it every day.

It’s similar to my experience raising venture capital years ago. I was making a few small mistakes that led to 30 rejections. A little coaching and guidance completely changed the outcome.

Another thing we’ve learned is that getting an offer isn’t the hard part.

Most people are being contacted by aggregators constantly. Getting an offer is relatively easy.

Getting the deal to the closing table is where the nuance comes in.

**Sam:**

I have so many follow-up questions because there’s so much good content in that answer.

First, though, I just want to comment on your observation that people “discovered online shopping” during the pandemic. It’s funny because online shopping has obviously existed for a long time, but it’s also very true.

You’ve mentioned aggregators several times, as well as the challenge of navigating decision-makers.

If I’m an FBA seller, how do I know whether I’m actually talking to the key decision-maker? How do I know I have all the relevant buyers at the table?

It sounds like working with an advisor can help with that, but are there any other tips you can share?

**Jason:**

Absolutely.

First, I want to emphasize that aggregators are not the only buyers.

On our buyer list, aggregators may represent 75 to 100 buyers out of tens of thousands of potential buyers. There are also private equity firms, strategic buyers, and many others.

The reason I keep coming back to aggregators is that, for FBA businesses right now, we’re in a bit of a golden age.

Historically, private equity buyers often wanted the seller to remain involved for years after the sale. Aggregators generally want a much shorter transition period, allowing sellers to gain their freedom relatively quickly.

The valuation multiples have also largely converged. In many cases, sellers can receive offers from aggregators that are competitive with private equity.

Now, regarding decision-makers, this is one of the most interesting things I encounter as an advisor.

Many buyers present themselves as the decision-maker.

In reality, that’s rarely true.

Everybody reports to somebody.

With aggregators, for example, I’ll often deal with an acquisitions person. They have a boss. Their boss has a boss. Eventually, there’s a CEO, and often the CEO reports to an investment committee.

My goal is always to get as close as possible to the person who can actually approve the transaction.

In my mind, the true decision-maker is the person who can authorize the wire transfer.

That’s the person I want to get close to.

It’s not always possible. I’m not going to sit down with an investment committee, and I don’t get direct access to SBA underwriters. But I will politely continue working my way up the chain whenever possible.

I’m not trying to go around people. I simply ask them to bring in the next person so I can establish a relationship.

This becomes important because many deals hit a snag.

Years ago, I wrote an article called *The 11th-Hour Freak-Out* about the tendency of buyers to suddenly discover something concerning right before closing—something they could have identified weeks or even months earlier.

There are ways to navigate those situations and still get the deal closed.

One of those ways is being as close as possible to the actual decision-maker.

That way, when something creates concern, I have the opportunity to explain why it may not be as significant as it appears.

One of the biggest mistakes I see is when sellers tell me, “I’m already talking to a buyer.”

That’s great.

My next question is: How high up the food chain have you actually gone?

**Sam:**

I love that.

It reminds me that the next time I’m dealing with a customer service issue, I might call you. Your persistence and ability to find the actual manager in the room is pretty impressive.

**Jason:**

It is important.

And speaking of mistakes, not to bring up all of your rejections from years ago, but maybe you can talk about some of the smaller mistakes you were making.

Now that you’re an advisor and you’ve been through the process both personally and professionally, what are some common mistakes people make that could potentially be avoided?

**Jason:**

Often, by the time someone calls me, it’s already a little late.

Remember that growth curve we talked about earlier?

Sometimes people wait until the business starts flattening out or declining before they begin the sales process.

Then we package the business, bring it to market, receive an offer, and the first mistake happens.

They start talking about the offer.

They tell their parents.

They tell their spouse.

They tell their friends.

Before long, they’ve mentally spent the money.

They’ve told everyone they’re about to receive $10 million, and now they’re emotionally dependent on that outcome.

That puts you in the wrong mindset.

You’re too attached to one specific offer.

It’s important to continue operating the business as though you’re going to own it forever.

Tell your spouse if you need to, but don’t start planning the dream house, the Ferrari, the vacation, or retirement.

Stay focused.

Keep your game face on.

Stay in the business until closing—and for a month or two afterward during the transition period.

That’s mistake number one: counting the money before it’s actually yours.

Mistake number two is failing to disclose small issues.

I had a deal years ago where a seller had been involved in a nuisance lawsuit. It ended up costing him about $5,000 to settle.

It wasn’t a major issue.

The problem was that he forgot to mention it.

When the buyer discovered it, they lost confidence.

Their thought process was simple:

“If you didn’t tell me about this, what else haven’t you told me?”

Trust was broken.

The best way to maintain trust is simple:

**Disclose. Disclose. Disclose.**

Bring up issues early.

Bring them up often.

And if you have an advisor, tell your advisor everything.

We’ll help communicate those issues properly.

Some common examples today include supply-chain disruptions, shipping delays, rising container costs, tariffs, supplier price increases, and inventory constraints.

A seller may think, “This is normal business stuff. I deal with it every day.”

But buyers tend to focus heavily on the most recent period of performance.

They’re paying close attention to what’s happening between the day you decide to sell and the day the transaction closes.

Part of that is human nature.

The other part is that buyers naturally wonder whether the seller knows something they don’t.

They’re looking closely for signs that the business may be changing beneath their feet.

That’s why it often feels counterintuitive to sellers.

They think, “Why would I bring up bad news? Aren’t we trying to sell the business?”

But the answer is no.

The goal isn’t cheerleading.

The goal is honesty.

Authenticity.

Integrity.

Those are the things that get deals done.

**Jason:**

Authenticity, honesty, and integrity are what get deals done.

The old-school approach of acting like everything is perfect might help you get an offer, but it doesn’t help you get a deal closed.

What often happens is that the buyer stops sharing their real concerns with you. If you’re constantly saying, “Everything is amazing, nothing is wrong, and nothing could ever go wrong,” the buyer starts thinking, *Okay, this person is selling me. Let’s go discuss the real issues internally.*

On the other hand, if we’re open and honest and say, “This is a great business, but I want to make you aware of a few things,” then buyers tend to trust us more.

For example, we might say:

*”We do have a container that’s arriving late, but we’re going to make up for it with some air freight so we don’t run out of stock.”*

Or:

*”Amazon reduced our restock limits somewhat, but we’ve already arranged for a 3PL and have a process for feeding inventory into Amazon.”*

As long as we present both the reality and the solution, buyers realize we’re not trying to hide anything.

When that happens, they’re much more likely to tell us directly what concerns them.

That gives us an opportunity to address those concerns before they become deal-killers.

We want communication to stay fluid, and the best way to make that happen is to disclose everything—even things that may seem small or insignificant.

**Sam:**

I love that perspective because when people think about negotiation, they often assume the goal is to keep every card hidden.

The reality is that doesn’t help. It just creates distrust.

And the truth is, no business is perfect. I can’t imagine there’s an FBA business anywhere that doesn’t have a few issues or challenges. Those things don’t have to become major problems unless you pretend they don’t exist.

**Jason:**

That’s exactly right.

I remember reading a bunch of negotiation books back in the 1990s. They all said the same thing:

*”Never be the first one to name a price. Whoever speaks first loses.”*

The problem was that everyone else was reading the same books.

I’d find myself sitting at the negotiating table, and nobody wanted to say anything.

“So, what do you think it’s worth?”

“I don’t know. What do you think it’s worth?”

Everybody was trying to trick the other person into speaking first.

That style of negotiation is largely outdated.

Authenticity is in.

One interesting statistic I looked up this morning from our internal database is that roughly 75% of our FBA listings are receiving multiple offers and selling above asking price.

That means we don’t need to obsess over whether saying one small thing will somehow destroy value.

The market is determining the price.

It’s similar to selling a house in a hot real estate market. You price it appropriately, attract multiple buyers, and let the market establish the value.

We’re seeing the same thing with FBA businesses.

What tends to hurt deals isn’t transparency—it’s a lack of trust.

If buyers feel the seller is being too tight-lipped, that can absolutely hurt the likelihood of closing.

**Sam:**

And as you mentioned earlier, buyers have plenty of opportunities right now. There are lots of businesses available, and if someone isn’t transparent, they can simply move on to another opportunity.

**Jason:**

Exactly.

Buyers are looking at a huge number of opportunities.

Often, they have to make quick decisions based on whether a business checks enough of their boxes.

Part of my job is understanding what those boxes are and proactively addressing likely objections.

Let’s say your business performed well in 2019, exploded in 2020 because competitors went out of stock during the pandemic, and then declined somewhat in 2021.

That’s going to come up.

We know it’s going to be an objection.

So we don’t hide from it.

Instead, we address it directly.

We might say:

*”Yes, 2021 is down compared to 2020, but it’s still significantly ahead of 2019. If the pandemic had never happened, the business would still show a strong upward trend.”*

That gives us the opportunity to frame the situation accurately instead of hoping nobody notices it.

**Sam:**

That’s great.

We have a question from the audience about deal terms.

Aside from simply getting a higher price, how do deal terms differ? What should sellers be negotiating for, and what constitutes a good exit?

**Jason:**

That’s a great question.

Most FBA deals are fairly formulaic.

The first thing we do is calculate Seller’s Discretionary Earnings, or SDE.

There are definitions online, but the simple version is this:

If you kept every possible dollar the business generated, how much would you keep?

You wouldn’t pay yourself a salary.

You wouldn’t run personal expenses through the business.

You wouldn’t deduct things like that “business trip” to Hawaii.

The amount left over is your SDE.

One of our jobs is to maximize that figure by identifying legitimate add-backs.

When offers come in, they’re generally structured as:

**SDE × a multiple + inventory value**

The inventory is typically valued based on landed cost.

As for terms, most deals include several components:

* Cash at closing

* A stability payment

* An earnout

* Payment for inventory

The stability payment is generally tied to the business continuing to perform adequately over a period of six months to a year.

The earnout is usually tied to future growth.

The buyer is effectively saying:

*”We’re acquiring your business because we believe we can grow it. If we do, you’ll participate in some of that upside.”*

Part of the audience question was about what matters most.

I may be somewhat biased because I’ve lived through two major bubbles—the dot-com bubble and the housing bubble.

Personally, if I were selling today, I would want as much cash upfront as possible.

Sometimes there are trade-offs.

You may be able to negotiate more cash at closing in exchange for a smaller earnout.

Not everyone thinks that way, and ultimately it’s the seller’s decision.

But it’s worth remembering that many entrepreneurs who started businesses over the last five or six years have never operated through a recession.

That may make them more comfortable betting on future growth.

And that’s fine.

But when sellers are completely candid with me, what they often say is:

*”I want as much money upfront as possible, and I don’t want to keep working in the business.”*

If you hire an advisor, be honest about those priorities.

If you’re negotiating directly with buyers, be as transparent as you reasonably can about what you’re trying to achieve.

The short version is that the major economic components of these deals are usually:

* Cash at closing

* Stability payments

* Earnouts

* Inventory compensation

**Sam:**

There’s definitely a lot to think about there and a lot of decisions that come down to personal priorities.

Thank you for that question.

We still have a little time left, so if anyone else has questions, please drop them into the Q&A box and we’ll try to get to them before we wrap up.

In the meantime, I have a question for you.

We’ve touched on bookkeeping a few times throughout the hour, and I think many people assume that bookkeeping becomes dramatically more important when you’re talking about an eight-figure deal versus a five-, six-, or seven-figure deal.

Can you talk about that? How important is bookkeeping, and what should people be thinking about?

**Jason:**

There are a couple of interesting things about bookkeeping.

I think bookkeeping is extremely important.

One thing that’s somewhat unique about many FBA deals is that tax returns are often less important than people expect. Depending on the buyer, I’ve had situations where buyers didn’t even request the tax returns.

That’s actually a bit of a relief because we all know tax returns don’t always line up perfectly with the bookkeeping.

The bookkeeping, however—having accurate profit and loss statements and balance sheets prepared on an accrual basis by a professional bookkeeper—is absolutely worth the investment.

One thing we see, especially with aggregators, is that they’ll sometimes say:

*”Don’t worry about providing a P&L. Just give us access to your Amazon account and tell us your cost of goods sold. We’ll build the P&L ourselves.”*

I don’t recommend that, particularly on an eight-figure deal.

What often happens is that the financial picture they create isn’t completely accurate.

They may not know if your cost of goods changed throughout the year. They may not understand how inventory costs shifted from one period to another. They may not know what was actually sold each month or what the true costs were at that time.

It becomes difficult to understand trends.

They also don’t necessarily know about other expenses.

Maybe you have virtual assistants in the Philippines.

Maybe you have a customer service employee in Utah.

Maybe there are other operating expenses that aren’t immediately visible through Amazon data alone.

When we have a clean and accurate P&L, buyers have significantly more confidence in the business.

As a result, they’re much more likely to put their best foot forward with their initial offer rather than holding back because of uncertainty.

Now, bookkeeping intimidates a lot of entrepreneurs.

People often say:

*”I started this business when it was small. I never imagined it would get this big. I didn’t really think about bookkeeping until later.”*

That’s okay.

You don’t have to panic.

There are bookkeeping firms that specialize in e-commerce businesses.

Anyone who emails me is welcome to ask for recommendations.

These firms can perform a historical cleanup. They’ll go back through bank statements, invoices, and other records to reconstruct your financials and create accurate profit and loss statements for previous years.

Most importantly, they’ll do it on an accrual basis, which generally provides a much more accurate picture of how the business is performing.

In my experience, clean bookkeeping is hugely important.

If you don’t have reliable financials, the chances of an offer falling apart—or being significantly renegotiated—are very high.

If your bookkeeping is clean and professionally prepared, the odds of successfully closing a deal increase dramatically.

On eight-figure deals, it’s even more important.

Buyers expect that if you’ve built a business selling $10 million or $20 million worth of products annually, you’re operating at a professional level.

Professional bookkeeping is part of that expectation.

**Sam:**

Got it.

So bookkeeping is important regardless, but as businesses get larger, buyers naturally have higher expectations around the quality of the financial reporting.

That makes sense.

We have another question from the audience:

**Do aggregators actually hit their earnout goals? How likely is it that a seller will receive the full earnout amount?**

**Jason:**

That’s a fantastic question.

The honest answer is:

Nobody really knows.

When you look at the history of aggregators, a few have been around for three years or so, but the vast majority were funded in 2020 and 2021.

Some of the best offers I’ve seen have actually come from newer aggregators because they were highly motivated to complete their first few acquisitions.

When it comes to earnouts, I’m always asking buyers the same question:

*”Show me why my client should believe they’re going to receive this earnout.”*

Typically, they’ll provide one or two success stories.

They’ll say:

*”We acquired this business and grew it fivefold.”*

And that’s great. I believe many of them have achieved some impressive results.

But there simply hasn’t been enough time to know how earnouts will perform across a large sample size.

Many earnouts are structured over three, four, or even five years.

We’ve only seen these businesses operate in a very specific economic environment:

* Low interest rates

* Easy access to capital

* Strong e-commerce growth

* Rapid online shopping adoption

That environment may not remain the same.

As a result, earnouts involve legitimate risk.

That’s one of the reasons I often encourage sellers to prioritize cash at closing whenever possible.

When I have candid conversations with sellers, they usually tell me the same thing:

*”I’d like as much cash upfront as possible.”*

The money that’s already in your bank account is the money you can count on.

It’s a fantastic question, but anyone who claims to know exactly what percentage of earnouts will ultimately pay in full is working with a data set that’s simply too small.

There hasn’t been enough time to know with certainty.

**Sam:**

I appreciate that answer.

It goes back to what we’ve talked about all day—honesty and transparency.

And in this case, the reality is that we just don’t have enough history yet.

If an earnout lasts five years, there aren’t many aggregators with five years of acquisition history to evaluate.

**Jason:**

Exactly.

**Sam:**

We’re almost out of time, but before we wrap up, is there anything we haven’t discussed that you’d like to leave people with?

**Jason:**

Yes.

The biggest thing I’d say is:

Don’t be intimidated.

Sometimes people have questions but feel embarrassed to ask them because they think they’re too basic.

Other times, people avoid talking to an advisor because they assume they’re going to get a sales pitch.

Let me assure everyone watching—that’s not the case.

You can email me and say:

*”I’m talking with three aggregators. I’m probably going to sell directly to one of them, but I have a question. Does this seem right? Does that seem right?”*

I’ll give you my honest feedback and wish you luck.

There’s no pressure.

There’s no hard sell.

Don’t be afraid to talk with people who have more experience in this area.

Sometimes a small piece of advice can make a meaningful difference in the outcome of your deal.

That’s the biggest takeaway I’d leave everyone with.

Whether you’re thinking about selling, selling on your own, or even working with another brokerage, you’re always welcome to reach out and ask questions.

**Sam:**

That’s amazing, and I think it’s an incredible resource.

You already spend so much time helping people one-on-one, and it’s great that you’re willing to make yourself available in that way.

**Sam:**

Jason, we’re not quite done yet, but we’ll be wrapping up shortly.

One last question for you.

We’ve talked a lot today about mistakes, lessons learned, and things you wish you had known earlier in your entrepreneurial journey.

Now that you’re on the other side of it, what’s been the most impactful or enjoyable part of the experience?

**Jason:**

I love the American dream.

I love the fact that in America, anyone can become an entrepreneur.

A couple of months ago, I was on the phone with a gentleman who wanted a valuation of his FBA business. If memory serves, the business was worth around a million dollars.

As we talked, I learned a little bit about his background.

Just two years earlier, he had been delivering pizzas.

Now he owned a business that could potentially sell for a million dollars.

In fact, he decided not to sell. He wanted to keep growing it, which I absolutely loved.

What I love most is that if you want to build an online business, many of the barriers that people encounter in traditional workplaces simply aren’t there.

Whether it’s age, gender, race, or any other factor, those things don’t matter nearly as much when you’re building an online business.

You can find a supplier.

You can sell through Amazon.

You can build a Shopify store.

You’re not sitting across from someone evaluating you based on things that have nothing to do with your abilities.

At the end of the day, the question becomes:

**Can you figure out what consumers want, and can you provide it?**

I love that.

I never get tired of talking to entrepreneurs who are optimistic, excited, and willing to keep going.

Most of them have been knocked down a few times.

They’ve made mistakes.

They’ve faced setbacks.

But they’re persistent, and they keep getting back up.

That makes me happy.

**Sam:**

It sounds like that’s part of what drew you to Quiet Light in the first place—you just couldn’t get enough of the entrepreneurial world.

**Jason:**

Exactly.

**Sam:**

Well, Jason, we’d love to have you back.

Obviously you’re already part of the team, but we’d love to have you return for another installment of this AMA series, especially in a few months. It’ll be interesting to see where the aggregator market stands and whether these trends continue or evolve into something more permanent.

Thank you to everyone who joined us today.

As we’ve mentioned a few times, if you have questions—big or small, professional or personal—please don’t hesitate to reach out to Jason.

For those watching live, his email is displayed on screen. For anyone watching later, you can reach him at:

**[[email protected]](mailto:[email protected])**

Please feel free to contact him.

And as always, if you’re looking for more content on entrepreneurship, buying businesses, building businesses, or selling businesses, you can visit QuietLight.com, where you’ll find a wide range of resources.

This has been an awesome hour.

We’ve learned a ton.

Jason, it’s been great chatting with you. I think your background is fascinating, and I really appreciate your emphasis on openness, honesty, and transparency throughout what can otherwise be a very intimidating process.

**Jason:**

Thank you, Sam.

I really appreciate your time.

Thank you, everyone.

We’ll see you next month.

**End of Webinar**