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3 Creative Financing Options For An eCommerce Acquisition - Week ending Saturday, June 9th, 2022
Hello Friends!
Here Are 3 Creative Financing Options For An eCommerce Acquisition
Inventory Financing - It's possible to borrow for up to 80% of the value of a company's inventory. But before going down this route, calculate the carrying cost and ensure that it's not more than financing the inventory.
Seller Financing - This is when the business seller becomes your lender, and you pay them back from the cash flow of the business that you're acquiring. Seller financing helps the buy-side get all the cash that they need to close the deal while allowing the seller to avoid the capital gains tax on one large lump sum payment.
Sponsors - This might not apply to Amazon businesses, but if you're direct to consumer (DTC), you can easily insert flyers promoting sponsors into your packaging, send email shoutouts, and leverage any other web traffic.
Source: https://www.acquirescaleandexit.com/3-creative-financing-options-for-an-ecommerce-acquisition/
While we're on the topic of eCommerce, ASE virtually has the perfect sell-side mandate for a strategic buyer in the feminine health space.
We have an Amazon FBA business with a:
A $3M ask
$1M in SDE
$1M in seller financing
And our second smoking hot deal is a buy-side mandate for a $5.1M IT service provider.
Reach out if either interest you.
Lastly, if you're wondering how the current economic climate is affecting the M&A market, here is a great post from The Acquisition Aficionado Magazine:
The Spike in Boomer Business Owners Retiring Opens Huge Opportunities For Business Buyers
Announcing The Once In A Lifetime M&A Market
This infographic explains why the 2020s will be the best time in recorded history to acquire companies:
The COVID-19 pandemic contributed to business owners' burnout.
More baby boomer businesses need to change hands than there are buyers, with the peak of retiring boomers projected to happen between 2020 and 2040.
An average of 303,000 businesses are closing down or hitting the market every year this decade, and most of what's listed will never sell.
Private equity firms have 3.4 trillion U.S. dollars in global dry powder (idle money).
Lastly, the looming economic downturn is starting soon or already started, based on your perspective, will lower business multiples and increase the number of motivated business sellers.
Whether or not you've acquired a company already, you'll regret not taking action this decade.
Gain the competitive edge by downloading the latest copy of The Acquisition Aficionado Magazine for FREE!