When calculating the value of your FBA business, we use the average of your monthly net profit. A good starting point for determining the valuation is triple your annual earnings. That said, you might find a 1-2 fold or lower variation depending on the type of product (s), the category or categories you sell in, the total number of SKUs, and so on. Like all Internet-based businesses, there are many factors that affect the value of an Amazon business.
However, the most important variable is the last 12 months of Seller Discretionary Earnings (SDE), as Amazon businesses are valued using a profit-based multiplier rather than a revenue-based multiplier. In short, SDE is the money left for the owner after all the main expenses of the company have been paid. For more than a decade, the FE International team has advised on the valuation and sale of hundreds of profitable e-commerce stores, including Amazon FBA companies. FE International has extensive experience advising Amazon FBA business owners on valuations and throughout the checkout process.
Since you are limited to FBA companies only, and therefore you can consider metrics that apply specifically to FBA companies. The best advice might not be to sell right now, but to do three things to raise the valuation of your FBA business and return within 3 to 6 months with a more valuable business for sale. When you have a better idea of FBA valuation factors and some ideas for an exit strategy, it's time to consider selling itself. Many larger FBA businesses are sold to aggregators, which are consumer goods companies that only acquire existing Amazon FBA businesses.
Leave a Comment