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Selling my Ecommerce Business

amp0193

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June 27th Update:

No good news to report. The broker says it's been slow. There's one re-occurring concern that has turned more than one buyer away. It has to with the product being a potential liability issue. The issue is explained in full in the prospectus, but the buyers aren't reading, or understanding fully.

The first prospective buyer (the ones with no money), were not concerned with this at all, but they were also very familiar with these types of products.

The broker is going to re-do the public facing listing. We are going to make a couple of short videos that come out in front of this issue, to walk the buyer through it, and potentially disarm any initial concerns that some buyers may have. We will do these things, and then re-launch to the buyer list after the July 4th holiday, along with having June numbers posted.


Not the news I wanted to hear today, although the broker is optimistic that we'll get it sold.
 
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Sean Kaye

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Legitimate question: aren't you concerned about telling a "prospective buyer" the ins and outs of your business operationally without the broker actually knowing if they are a legitimate buyer - ie. they have access to funds?

It sounds like a great way to get all the competitive intelligence you need to start a competing business.
 

amp0193

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Legitimate question: aren't you concerned about telling a "prospective buyer" the ins and outs of your business operationally without the broker actually knowing if they are a legitimate buyer - ie. they have access to funds?

It sounds like a great way to get all the competitive intelligence you need to start a competing business.

No, I'm not concerned. I trust that the broker is using his best judgement to vet prospective serious buyers.

Also, since I'm selling, it doesn't matter to me if someone starts a competing business.

Even if it took me 6 months to sell... there's no way anyone is going to get any traction on me in that time.
 

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Legitimate question: aren't you concerned about telling a "prospective buyer" the ins and outs of your business operationally without the broker actually knowing if they are a legitimate buyer - ie. they have access to funds?

It sounds like a great way to get all the competitive intelligence you need to start a competing business.

Brokers usually require an NDA. While this is hard to enforce it adds some level of protection. Brokers should do a minimum level of DD on the buyer (check LinkedIn, social profiles, etc...) I know that most don't though, so its a risk for sure. I usually provide a profile of my qualifications if the broker/seller isn't sure and let them know that I'm not a competitor.
 
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CareCPA

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June 27th Update:

No good news to report. The broker says it's been slow. There's one re-occurring concern that has turned more than one buyer away. It has to with the product being a potential liability issue. The issue is explained in full in the prospectus, but the buyers aren't reading, or understanding fully.
...
Doesn't really surprise me. We all know how sue-happy the US is. Literally any physical product could have the same concern.
 

amp0193

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Brokers usually require an NDA. While this is hard to enforce it adds some level of protection. Brokers should do a minimum level of DD on the buyer (check LinkedIn, social profiles, etc...) I know that most don't though, so its a risk for sure. I usually provide a profile of my qualifications if the broker/seller isn't sure and let them know that I'm not a competitor.

We both checked out the linked in profiles of the first buyer before we did a call. I had no reason to think they would not have the cash to buy, after seeing their profiles.
 

amp0193

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Things have been slow, but we did a second conference call with a buyer today.

The call was at 7:30am, and I had my 3-mo-old taking a nap on me in the baby carrier, and my toddler on the other side of the room watching cartoons, while my wife slept. Miraculously.... neither was a distraction on the call!

I think that it went well. Buyer currently runs an Amazon business with 20+ employees, so he knew the ropes. Most of his business is wholesaling brand name products, so all questions were just about my products mainly, and feeling out if they'd be a good fit to expand into.

Before the call, I brewed a big cup of tea, as a constant reminder to talk slower and be relaxed... and it helped!

I was feeling good vibes coming my way the whole time, so I expect an offer to be put in. We'll see.
 
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amp0193

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Any updates?

The buyer in the last post has been emailing back and forth with the broker since we did the call. He finally backed out today. He cited his reason as me getting too many customer services inquiries and that it would be too much extra work to handle. Which, I'll acknowledge, my customer service requirements are probably a lot more than most businesses. There may have been unspoken reasons as well.


As interest has been low and May/June numbers weren't the best, we're going to do a re-launch after July's numbers post (which should be the best ever).

When we re-launch we're going to drop the multiple from 3x down to a little under 2.5x. I'll consider offers all the way down to 2x.


Word of advice: When you're picking your niche/business, always have the exit plan in mind. If I had been thinking about the exit, instead of chasing money, I likely would never have started this business. Too many red flags about this niche, whether justified or not, and they are keeping buyers away. I'm going to have to settle for less because of it.
 

Get Right

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Word of advice: When you're picking your niche/business, always have the exit plan in mind.

Knowing this will make your next venture that much more successful. It's a hard lesson to teach. You almost have to experience it once...or in my case twice :)
 
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amp0193

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Knowing this will make your next venture that much more successful. It's a hard lesson to teach. You almost have to experience it once...or in my case twice :)


I launched a new business 2 weeks ago... and it's clearly going to be much more successful.

Very clean exit in 5-7 years, hopefully. It would be an easy, no-brainer buy out from a larger company.
 

Get Right

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I launched a new business 2 weeks ago... and it's clearly going to be much more successful.

Very clean exit in 5-7 years, hopefully. It would be an easy, no-brainer buy out from a larger company.

Awesome! The next buy-out deal-killer to avoid is the "2 year stay-on with the new company as an employee". I saw a strong man go down this road and it broke him. Sell it and get out. Good luck!
 

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I launched a new business 2 weeks ago... and it's clearly going to be much more successful.

Very clean exit in 5-7 years, hopefully. It would be an easy, no-brainer buy out from a larger company.

Would be cool if you did a write up after this journey on some of the things to consider and not consider when planning for an exit. Most people don't see the exit or get experience with it until it's too late.
 
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amp0193

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Awesome! The next buy-out deal-killer to avoid is the "2 year stay-on with the new company as an employee". I saw a strong man go down this road and it broke him. Sell it and get out. Good luck!

Good advice. I would never want to do anything like that. Better just to keep the business and run it myself.
 

amp0193

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I was able to put up the best profit numbers of all time, by far, in July.

I knew July was going to be good, so we decided to wait to "re-launch" the business for sale until after I had those numbers posted.

We dropped the asking multiple down to 2.25x, so a large drop, and sent it out to the list again a week ago, and updated it on the site.

It has been generating a lot more interest this time around. I've done 2 calls with buyers this week, both sound serious.


I hope an offer comes in from one, or both, of these folks.


It's not that I'd accept anything, but I am eager to sell at this point, and will seriously consider any offer that comes to the table at a 2x multiple or above.



Reflecting on the interviews this week, I was much more calm. I made a cup of Rebuplic of Tea - Ginger Peach before each call, and it definitely reminded me to be chill. I was not feeling the pressure on either call, and just talked as if I was talking to a friend, trying to come off as honest and easy-going as possible. No questions caught me off guard.
 

Scot

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Fingers crossed for a bidding war. Good luck!
 
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amp0193

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Buyer #3 interview on Friday had me on edge the whole time.

The buyer was super French, and just about impossible to understand.

I was toe-ing the fine line of "Do I answer the question I think he might of asked me, or do I ask him to repeat himself for the twentieth time?"

I couldn't relax, and I know it came through in the conversation. It would've been better to talk to someone like that in person.


However, a ray of sunshine came in an email from my broker this morning. One of the buyers was asking if I had access to Amazon Lending, and if so how much. They were considering putting in an offer, and having this would be a plus, as they could use this as part of the purchase price.

Why yes, I happen to have a shit-ton being offered to me from Amazon. Nearly the purchase price, actually.


After nearly 3 months of this process, I've all but stopped getting my hopes up... however, this email got my hopes up.


Not a done deal yet, because there's still due diligence and all of that, but man, I am just really wanting at least an offer to come through from someone.
 
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amp0193

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Yesterday I got 1 serious cash offer on the business!

It was lower than the minimum I wanted to accept, so we are sending them a counter today. Our counter was a 10% increase in upfront cash, and an additional 10% carried on a 12-month seller note.

I thought this was a good compromise by the broker to raise the overall price, without asking for 20% more upfront than what they offered.

Waiting to see now if they bite.
 

amp0193

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After a couple of back and forth counters, we ended up at a final price. We landed somewhere in between my asking and their initial offer (I met them a little more than halfway). We dropped the 12-month seller note, and are just doing a cash deal.

I expect to get the LOI today, and then we'll get into it from there.


Other interested parties fell by the wayside, and these guys are my only offer at the moment.


After LOI received, the business listing will move to "pending sale", but will still be visible on the broker's site. So, we will still be receiving contact info from interested buyers in the mean time, should the deal fall through in the next month.
 
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Scot

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After a couple of back and forth counters, we ended up at a final price. We landed somewhere in between my asking and their initial offer (I met them a little more than halfway). We dropped the 12-month seller note, and are just doing a cash deal.

I expect to get the LOI today, and then we'll get into it from there.


Other interested parties fell by the wayside, and these guys are my only offer at the moment.


After LOI received, the business listing will move to "pending sale", but will still be visible on the broker's site. So, we will still be receiving contact info from interested buyers in the mean time, should the deal fall through in the next month.


BOOM! That's awesome man. Hope this goes smoothly and swiftly so you can tackle the next milestone.
 

amp0193

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2 weeks into due diligence.

The buyers just booked plane tickets to come meet with me for 3 days at the end of the month for training on the business operations. These flights are after our scheduled close date of Sep 22nd. I'd say that's a good sign.... but I'm really trying not to get too hopeful. "Don't count your chickens before they hatch" my mom would always say.


I've been on edge for 2 weeks. I can't get much work done, because every time a buyer asks for clarification on something, or for me to go dig up some documents, I drop everything else and get it done immediately.

They had some issues re-building the Profit & Loss statements based on the reports and such that I had. So we did an hour call last week and I walked them through the break down of Shopify/Amazon/Paypal and how all those numbers were added up.

Yesterday, they asked me to send the last 2 years of business tax returns. Oops... haven't finished 2016 yet, we did an extension, and then I got busy. CPA is going to crank it out though.

Tomorrow we are doing a 2nd call to go over some "questions". I think it will be mainly operational questions about how things work in the business. It's possible there could be some serious questions, that they don't like the answers to, and then they back out of the deal. I think if I make it through tomorrow's questions... we'll be on our way to a successful sale.

In the mean-time, I've also been working on making training videos of me doing all of the things that I do on a weekly/monthly basis. I'm just trying to think of everything I can to make this a really easy transition.

The broker is sending out the initial draft of the Asset Purchase Agreement on Friday. It will go to the buyers, they will review with their lawyers and make any changes, then it will go to me, and I'll do the same, repeat until we have a contract both parties agree to.

The buyers are scheduled to fly and meet with me in one week. I am hopeful that the meeting concludes with the signature of a contract.
 
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amp0193

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On a side note:

@CareCPA is a boss. I sent him over my August income/expenses/docs this morning, and he stayed up passed midnight to crank out the Quickbook entries for me, because he knows that my buyers want those numbers.

No CPA I've ever worked with has hustled like this guy hustles.

When I first started prepping this business for sale, he cranked out 2 years of historical books for me in less than 30 days. This is something other CPAs failed to get me in 4 months.

If your CPA/bookkeeper sucks... send @CareCPA a PM.
 
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amp0193

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One more side note:

My 30th birthday is on the 16th. Also that weekend is my life-long friend's bachelor party.

It would be wonderful to go into that weekend with the ink dry on the contract and the escrow funds being transferred to my account.

We'll see if it plays out that way.


Anyone got any recommendations for a fine bottle of scotch and/or whiskey? The kind worth getting to celebrate the sale of a business, aging another decade, and seeing a best friend soon to be married?
 
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G-Man

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Missed the last few updates. Awesome progress!

Anyone got any recommendations for a fine bottles of scotch and/or whiskey? The kind worth getting to celebrate the sale of a business, aging another decade, and seeing a best friend soon to be married?

Oban 18
 

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