Here’s a glimpse of what you’ll learn:
- Yael Cabilly and Michal Baumwald Oron explain the differences between an investment banking firm and an FBA broker
- What are the benefits of using an investment banking firm?
- Why FBA private label businesses have increased in popularity, and how the market for these businesses will continue to evolve
- Yael and Michal share examples of forward-thinking businesses created by private label sellers on Amazon
- How do investors achieve success when buying multiple FBA businesses?
- Yael talks about buying versus building a brand on Amazon
- Essential software, tools, and resources for private label sellers
- Michal discusses the future of e-commerce in the age of COVID-19
In this episode…
How do private label sellers on Amazon go about selling their businesses? What resources and tools do they need in order to prepare their business for a sale? And, once they are ready to find a buyer, how do they choose between an FBA broker and an investment banking firm?
Selling a business requires a thorough analysis of its value, competitors, and the story that differentiates it from the rest—so sellers need an expert that is not only a great broker, but also an effective analyst and advisor. According to Yael Cabilly and Michal Baumwald Oron, this is where investment banking firms come in. E-commerce investment bankers, such as the ones at Fortunet, provide valuable services for private label sellers, including business analysis, price negotiation, and the facilitation of the sale. With this help, sellers can remain confident that their sale will be a success.
In this episode of the Buy Box Experts podcast, host James Thomson interviews Yael Cabilly and Michal Baumwald Oron, the Co-founders of Fortunet, about the valuable role of investment bankers in the sale of an FBA private label business. Yael and Michal talk about the increased popularity of FBA businesses and their advice to private label sellers on how to successfully make a sale. They also discuss their projections for the future of e-commerce amidst the COVID-19 pandemic. Stay tuned.
Resources Mentioned in this episode
- Buy Box Experts
- Controlling Your Brand in the Age of Amazon: The Brand Executive’s Playbook For Winning Online by James Thomson and Whitney Gibson
- Michal Baumwald Oron on LinkedIn
- Yael Cabilly on LinkedIn
- Disruptive Advertising
Sponsor for this episode…
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com.
Podcast Episode Transcripts:
Disclaimer: Transcripts were generated automatically and may contain inaccuracies and errors.
Welcome to the Buy Box Experts podcast. We bring to light the unique opportunities brands face in today’s e-commerce world.
James Thomson 0:18
Hi, this is James Thomson from the Buy Box Experts podcast. Today’s episode is part of a special series of interviews that we’ve done to dive deeper into the recent phenomenon of private equity companies and FBA aggregators investing in private label brands that are leveraging the Amazon sales channel. As part of this series, we interview a wide range of investors, brokers, consultants, and entrepreneurs that have recently sold their private label brands. we peel back the layers on what’s happening in this new investment space, and look at how private label brands are finding financial success through the building and eventual sale of their online businesses. For three weeks from mid February through early March, we will release a new episode every weekday on this topic, sit back and enjoy today’s episode. Hi, I’m James Thomson, one of the hosts of the Buy Box Experts podcast. I’m a partner with Buy Box Experts and the former business head of the selling on Amazon team at Amazon, as well as the first account manager for the Fulfillment by Amazon program. I’m the co author of a couple of books on Amazon including the recent book, Controlling Your Brand in the Age of Amazon. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts you receive the strategy optimization and marketing performance to succeed on Amazon. Go to buyboxexperts.com to learn more. Before I introduce our guests today, I want to send a big shout out to the team at Disruptive Advertising. For off Amazon advertising, Disruptive Advertising offers the highest level of service in the digital marketing industry, focusing on driving traffic, converting traffic and enterprise analytics. disruptive helps their clients increase their bottom line month after month. Check out disruptiveadvertising.com to learn more. Today I’m very pleased to have two guests joining me, Yael Cabilly and Michal Oron, the co founders of Fortunet, an e-commerce investment banking firm that helps with the sale of FBA businesses. Yael is an e commerce attorney helping Amazon sellers with legal issues including listings and account suspensions, intellectual property enforcement and e commerce transactions. While Michal is an attorney who has managed and led m&a, joint ventures, and public offerings in the US and in Israel, Yael and Michal. Thank you both for joining me today on the Buy Box Experts podcast.
Michal Baumwald Oron 2:42
Thanks for having us. You.
James Thomson 2:44
I want to start with with a just a clarification on what is the difference between an investment banking firm and an FBA broker. Many of us know FBA brokers, but what what is an investment banking firm?
Michal Baumwald Oron 2:57
Yeah, so so one would say that investment banker is just a fancy word for broker but actually covers a much deeper level of service. So we make sure that we accompany our clients and every investment banker we accompany their clients from the very first step that they do in respect with respect to potential sell the business and until the very last moment that that deal is closed. That the level of services that we provide include the strategic consulting, consulting during the process and assistance with everything that comes with the process and here, it depends on each which sellers needs. This could be a dispute between partners, that’s a consideration okay question about the right time to sell a different consideration about how to prepare the business towards the sell both on the business performance and about the general readiness of the business to being for being for handed ndca over to a buyer as well as advising on their other consultants that should accompany the process not just the right lawyers and tax advisors.
James Thomson 4:25
Michal Baumwald Oron 4:26
and we also and it also includes a company that the sellers and supervising the whole process any any steps in the in the process we are we are hard to eat. So that’s that’s the big difference. brokering is part of the service and finding the buyer negotiating with the bar is part of the business. Yes, we’re doing it in a different way more in the traditional investment banking get away. But but this is you know, to other services.
James Thomson 5:01
So if I’m a private label seller from Amazon, and I’m starting to think about selling my business, why would I go to see your firm versus going to see a traditional FBA broker? You talked about all these other services that you offer. But realistically, if my business is in pretty good shape, I’ve got, you know, the right kind of documentation in place, my accounting is in good shape. I don’t have any owner disputes. What Why would I use one service versus the other?
Yael Cabilly 5:31
So first of all, it depends on the size of the business, we, you know, as an investment banking firm that, you know, Michal said, The, the the work and analysis that is done, we focus on mid to large sellers, mainly, and when it’s not a small business of, I don’t know, 500k, it does require more than just, you know, putting the the account on on the website and, and waiting for buyers to come. It requires really understanding the story of the business, we work over a month to to analyze it to prepare the, you know, the financial side, to prepare a presentation about the business showing all the, you know, the advantages of the business, talk about the competitors, the landscape, everything around the business and, and the story behind it. Because, you know, sending the link to an account doesn’t doesn’t tell the story of the business, it’s not just an Amazon account. So that’s, I think, you know, the end result of it. And and what we hear from buyers is that the materials that we prepare are completely different, which brings your higher value, and basically, you know, higher multiples higher valuations and brings the real value of the business, I believe. So.
Michal Baumwald Oron 7:00
I’m sorry. Yeah. So we’re just maybe to add to be another part, they think, which is different than when you approach guys like us, is the experience and proficiency which is related to structuring again. So when you negotiate a deal is not only about price, and then what is the right multiple, for example, the multiple overwater and what what is the structure and the structure? And how do you build it exactly. And here, there are different solutions for each case. And this requires a vast experience in the m&a, mergers and acquisitions.
James Thomson 7:47
So I hear a lot about the smaller brands, the guys that are selling for four to five $6 million trying to sell their business and you’re working with considerably larger businesses, to tell me a little bit more about you know, the kind of flow deal flow you’re looking at right now. And the typical size of the firm’s that you’re dealing with.
Yael Cabilly 8:08
Yeah, so we right now we represent about 18 or 19 businesses, I think we we focus on, you know, any business above a million dollar, you know, the average is around five or $6 million.
James Thomson 8:25
But we have a story that’s, that’s top line sales or valuation,
Yael Cabilly 8:29
valuation valuation. Yeah. And, and so that’s the average. But you see deals of you know, we had we had to deal in February with, with a revenue of $30 million. We’re dealing and we’re now seeing more and more larger businesses. This industry has has really changed. I mean, two years ago, we’ve seen one type of businesses and now we’re seeing a whole new type of businesses, they everything evolved in the antivirus with the industry.
James Thomson 9:03
FBA private label businesses or odd commodity no question, what what do you believe happened to generate this new interest in acquiring these types of businesses? Given that these businesses have been around for years and years and years, there have been private label sellers since the very first days of the Amazon Marketplace 20 years ago, what’s going on?
Michal Baumwald Oron 9:27
With that concept that has proven itself and you can see the sustainability of those business days and you can understand today more easily what is the long term value that they created, the modes that they have built, to allow them to enjoy from a competitive advantage for the long term. And the path for additional growth is clear today. I think that in addition, the overall market is extended. You know, we’ve been Amazon penetration, growing penetration into the market and ecommerce in general and private label are growing as well. So, and seeing more and more such players, which, which create, we can see a fragmented market with different successful players that’s on one hand are very successful, on the other hand that they do share some level of free. So buying all these businesses or selling them to buyers, seems like a win win solution. Because from the buyer side, this is a great opportunity for a roller aggregating different businesses, and then we have the right synergies, the creation of higher value. And for distillers, this is a good opportunity to mitigate risks, to monetize the value that it created. And and to sell them today. And by the way, risk of off single of a single seller, and he doesn’t own the sufficient resources are to some extent, and becoming becoming hired you to be such a more sophisticated and larger players into the market. So again, it makes sense things that are already there to sell the businesses that need them.
James Thomson 11:38
A lot of the companies that I’ve talked to who are in the process of buying these, these private label brands, and one of the things that they see themselves being able to do is typically inject a lot of extra capital to help these companies grow. And when you’ve got these private label sellers, they’re bootstrapped. They’re paying for the whole thing themselves, but they don’t have an extra million dollars to build the business, even though an extra million dollars will put them over the next hump, and allow them to enter new markets or be able to drive down their acquisition cost production by by buying more product at the same time. A lot of these are well funded investors, it’s not a big deal if they have to put up an extra million dollars in operating capital. So I’m curious what you’re seeing from some of the companies that are buying these firms. Are they giving you any insights and stuff into how they expect to extract the value out of these companies?
Yael Cabilly 12:33
Yeah so they they are looking at when they’re looking at an account, they’re looking how to expand it, and as you’re saying, create value. And it’s funny, because we’re always speaking with sellers, you know, they’re saying, for example, should I start selling in Europe, maybe before I sell it, I have a year, we were offering speaking with the sellers, and we start representing them a year before they just said, Gosh, should I go to Europe, should I start selling on the Walmart, they do this and that, and we’re reminding them that it’s okay not to do everything, because the buyer at the end, wants to find you know how to expand the business easily. So just by opening candidate just by opening Europe, by doing several things, they can expand the business by, you know, sometimes 20 30% just by doing that, so it’s it’s okay not to do everything B before you sell the business. But they are, of course, injecting money. What’s interesting is that, you know, if you ask most of the sellers, when they they reached, I don’t know, $4 million $3 million. If you had, you know, do you want $1 million now, so that you could grow the business? Do you want an investment? Yes, any of them would say no. And many of them would say No, they don’t necessarily want to grow that fast. They don’t necessarily want a partner, a new partner in their business. they’re okay with the bootstrapping. So, so So it’s, it’s interesting, because even if, you know, you gave them the money, some of them would do it. And we’re seeing now more and more, you know, larger players that are willing to stay and want to stay and want to grow. But a lot of them just want to, you know, to sell the business and then do it again. That’s the that’s the key. And I think this is the, the main reason of what we’re seeing now sellers understand, okay, I got to a point where, you know, I’m my valuation right now is $5 million. What I bring home every year is not a million dollar profit, really. If I bring 200K, that’s amazing. You know, they usually use the money to grow. So they’re saying I have the opportunity now to sell a business and get $5 million. And then I can just, you know, do it all over again, within a year or two or three, I’ll just do it again. We’re now we’re now in the cycle of representing sellers that you know, so sold three years ago, and they’re now reselling their second business the second time, they’re doing it much faster. So there’s an interesting, you know, Win Win, as Michal said, it’s, the buyers are waiting for their brands. And, you know, and and the cells are creating the brands and growing them, and then they’re okay to, you know, to give away their, their babies.
James Thomson 15:25
So So what happens in the next two years when you’ve got all this new money coming in? What’s going to happen to the way that people today deciding they want to do private label on Amazon? How is the mentality likely to change? How is the market for these businesses likely to change in the next couple years?
Michal Baumwald Oron 15:44
That’s a great question. And maybe it relates also to the previous question that you asked, with respect to the buyers, what they are do after what they do with those businesses after they buy them? Yes. Which, you know, it’s all at the end of the day, it is one ecosystem system, quite transparent, and everyone looks at everyone’s and tries to compete. So maybe, maybe just to add new words, to what you’re describing foreign buyers, and what they do after they buy the business. And then we can look again, at New sellers, and how this impacts on them. So we see, first of all, we are trying to follow, follow after businesses between sold and, you know, whatever we can see through Amazon to try and understand how those businesses are managed by the buyers. And this is very interesting, mainly, when, when we’re dealing with this, that includes some deferred payments that are subject to future performance. So overall, we see most of the buyers are performing very well on their on their acquisition, which of course will need to be measured over time. And because this 2020 was a wonderful year for almost everyone. So it’s not it doesn’t necessarily represent their level of performance, it is even more important when we look at higher larger deals, that sellers maintain minority rights in the business and and keep on the company to buyers and in the long term management of the business. So for example, we are working now on a deal at worth of $20 million, and the seller will remain partners in the business itself. And keep on a company in this business to make sure that the business is really growing. And you will then be compensated in the future for for the chittor achievements. So in this case, we see that buyers, first of all, make whatever they can in order to keep on expanding their business in Amazon and making those brands real brands and taking them to other markets and wider channels. they expand them out of out of Amazon, Shopify, they take them to Walmart, they are part of the buyers have their own marketplaces, which were recently launched and I will not name anyone now. So if we look at tomorrow’s, then tomorrow’s new sellers, yes, they will have to take all this into account. So on one hand, they can be the incubator for new rents for those future buyers that are like I heard one of the buyers stating that they see those sellers as their r&d r&d department. They invest in the development of those new brands, they make all the experiments experiments and when they’re proof of concept out there, they can buy the businesses. So, I can only guess that we will see more and more new sellers coming into the game with the idea that they will sell the business eventually. So, they will try to develop the right brand with the right book with a certain number of SKUs they will be probably more prepared on the tax structure part of them having thought about it in advance now, but in the second round, they will do all with the education of the total seller market they will take it as as a serious they’re serious route potential route for the future, which which they should consider the first stage but eventually deemed the The Amazon opportunity will keep on bringing on new entrepreneurs. And, and they will express their business capabilities through this wonderful platform. This is my guess.
James Thomson 20:18
What do you see, as you know, I’m not a private label seller, neither of you grew up on Amazon as private label sellers. And yet, there are people doing all sorts of unusual, strange, wonderful things, building businesses, quite frankly, some of the things that I’ve seen sellers doing, have to scratch my head because it doesn’t intuitively make sense. And yet, they found a way to make a business and put a moat around their business. And one has to admire the fact that they found these unusual business models. I’m, I’m curious what you’ve seen to date working with Amazon businesses, where you’ve had to step back and say, Wow, I didn’t see that one coming. That’s pretty amazing what they did, Can Can you share some redacted stories, they’re around unusual things that kind of caught you off guard, and yet somebody has built an impressive business,
Yael Cabilly 21:10
or, yeah, we’re seeing so there are many examples. One of them that comes to my mind is that, you know, when, when we started and got in this industry, in 2015, all we saw was, you know, look alike. products, as you call them, now we’re seeing, you know, a lot of sellers, especially the larger one, they start understanding the value of intellectual property, they start understanding that if they build something that’s new, that you know, has not been there, they can own a patent, they can own a design patent, they can own rights, and then remove others and prevent others from taking their idea. So we’re seeing now larger cells, and it’s actually interesting, even those who sold the businesses of 2015 when they’re creating a new business now, after they’re talking, they’re speaking with us about you know, the next business will be different our you know, our create, IPL creates something new. So we are seeing and we’ve seen several business, sometimes they really blow our mind with, with interesting products that, you know, nobody’s done and they’re really thinking forward. And it’s hard to compete with, with those products. That’s maybe one example that comes immediately to my mind.
Michal Baumwald Oron 22:37
I want to add to add another example, which is super, I find it to be super innovative in that and very successful and important. So this is the stellar that developed three brands in the same category at the same time, okay, three of them are actually you know, each of them is highly successful in the three of them actually dominate this category. And this gives them a huge flexibility over the launches of new product, they control a lot of different price, the price the strategy, and other and other advantages. This is I think, this is an amazing story. I mean, I I came from a larger corporation that that, you know, a corporate they’re always not the managers that brand rebranding the real world judgments, whether you should create a house of brands or one brand that sell to all a price points, different audience that exists out there in the market, and here you know, just one person all by himself created three brands under the same category and is doing just great. And so, this is a very unique example I we also have an example to sellers and they are competitors. And they they have understood the power in the combination of both of their businesses. So they have decided to combine forces towards mutual sell your business. So this is another out of the box, thinking which, which I cannot not admire, right.
James Thomson 24:30
But I’ve actually seen certain types of, and I don’t, whether it’s a broker or banker, I’ve seen people in the space approach sellers and say, three or four of you come together. If we do the right legwork. Now, we’re going to get a higher multiple by simply combining everything. The investor doesn’t want to do due diligence four times, and they’re happy to pay a higher multiple. Do you see that becoming more and more commonplace, or when I think of so many of these products? Label sellers, they are an island onto themselves, they’re doing their own little thing, someone’s gonna pay them two $3 million. That’s life altering for them. And they’re happy with that, versus Who are these random strangers I’m going to start combining my business with, give me your thoughts on how that works. And where you see people going.
Michal Baumwald Oron 25:18
Do we advised several times on such initiative. And overall, we think that roll up is a great idea. There’s a lot of sense in a in it, and it can can bring huge value. But the success lies in the in the level of performance and execution of snatcher. Such an idea. And this, this will make the difference between a successful idea and failure. It’s not that it’s not just a word, you know, I’m rolling up but you need to be able to create an integration. If you want like you surgeons to avoid multiple due diligence processes, then you are you distillers should be the ones who combine their businesses and afford the one process of diligence for all them. It also makes sense to understand the synergies and whether all of them meet certain investment criteria that makes sense in investing in both of them together, or in buying goals together. And so there is a balance here of complication on one hand, and on the other hand, potential to get a higher, higher values for the overall accumulated them business. So again, it’s a very interesting idea, I think a lot of logic in rationally making it happen at the same time, he does include some bit. So I’m not sure if I would go through a very thorough process, which requires a lot of a lot of resources just with the idea to quickly flip all of them together. But when there is a business rationale, gathering all those businesses together, and if the seller can align their interests and find out the right method of operation brought them together, then this would make sense and, and all of them can enjoy from a greater value.
James Thomson 27:28
So we’ve talked about FBA businesses being sold, and an investor buying multiple companies. I’m curious, where do you see these investors? How do you see them actually getting the value out of what they’ve created? When you look at a company like thrass Seo? For example, one of the best known aggregators that they have is billion dollar valuation? How are they going to get a billion dollars actually out of the business? Are they going to chunk out parts of the business and sell it to bits and pieces here and there? Or are they going to go public and become essentially like a mutual fund of brands? How do you get this value out? Because often, these investors are buying a bunch of I hate to use this word, but they’re buying a lot of businesses that don’t naturally have mutual benefit common. Yeah. And so you end up you own a shoe company, and you own a kitchen company and you own an apparel company. Okay, what am I going to open up a general merchandise store? I mean, how do you take that and actually realize the value so you can put cash in the bank?
Michal Baumwald Oron 28:34
Yes, first of all, you know, you’re in trouble. Because if I need to provide advice here too big. I need to call Josh in Paris before to get information but
James Thomson 28:47
just just just investors in general.
Michal Baumwald Oron 28:49
Yeah, but the general idea so you know, at the end of the day, and business rules are remain valid always. So as much as their each issue is not an aggregator is able to create a business that generates growth and a sustainable, positive cash flow over time. And they demonstrate their immune towards competition and different challenges. And then this would be a great investment and a great opportunity for any new money that is looking, looking for, for opportunity. If they do so, then then potential exit, if you’re talking about what is what could be their exit strategy, actually, what’s your question? It’s endless, I mean, so they will be able, as long as they really created a sustainable value business and they will be able to sell the business to private equities to strategic investors to make IPOs you know, to do properly, like any other business. So with all eyes, their level of performance and their ability to take all those brands to the next level and to control and develop them, control them right and to develop them. In the right manner,
Yael Cabilly 30:14
one of the things we’re all you know, we’re asking ourselves and discussing very often is that, you know, if one of the companies one of those aggregators, one of the buyers will create some, you know, real IP, a real software or something more, I mean, we’re hearing from a lot of them are talking about AI, you know, we’re, you know, it became like a buzzword. But it’s, it’s, and at the end, you’re seeing that a lot of them are just managing the accounts, just like the sellers are managing the accounts. So some of them have some capabilities and in, especially in the analysis part, but the big question is, well, one of them are most of them five years from now, will they have, you know, other capabilities, something that you can just, you know, add another brand, and it won’t change anything? And, and also to kind of predict which brand will grow and and what exactly to buy at what valuation, there is one public company. That is, that is, you know, going to that direction, but it’s really soon to sell.
James Thomson 31:31
I’m curious, all these investors are buying existing companies. And yet, I’ve started to hear that some of them are thinking about, wait a minute, why can’t I just build the brands myself? Why do I have to go buy something for x million dollars? why not bring the talent in house to know how to start something from scratch? And yes, it’ll take me a little bit of time to experiment and figure out how this works. But honestly, there’s still an awful lot of products that I’m seeing, sorry, an awful lot of companies that I’m seeing being made available for sale, where you can literally type into Alibaba, and you will find a white label version of exactly the same product. Basically, somebody has figured out how to go through the process of playing the Amazon game effectively building a so called brand. But but it’s not clear, there’s really a lot other than a consistent cash flow. There’s not really any, there’s no IP at all. So I’m curious, your thoughts on the build versus buy model for some of these investors. It’s right now it’s all about buy, buy, buy. And yet I see some of them starting to ask the questions around do we build our own stuff from scratch?
Yael Cabilly 32:37
Right, so we so capably, by the way,
James Thomson 32:41
I know that’s not good for your business. But but I see that potentially happening.
Yael Cabilly 32:46
I’ll tell you what, I think. I mean, it goes back to capabilities and and building a good brand on Amazon is not that easy. And we’ve seen, you know, companies who just said yeah, let’s just, you know, let’s just hire, let’s just buy a brand and then ask the D entrepreneur to just join us and then build brands for us. And that’s not easy. A seller, you know, people need to understand who are the sellers and what is their mind and how independent they are. And just telling someone who’s extremely talented, who’s doing $10 million now on Amazon comm you know, I’ll come I’ll pay you whatever salary that you want, and then just build brands for us. That’s not how it works. So, so first of all, many of these brands still don’t have those, those talents, and the you know, they’re working on it, and they have, they have great teams and as they purchase the brands that are already successful there, I’m sure their team are going to become as amazing as these entrepreneurs. And but and also what will happen is that the the sellers are with time, we’re seeing them interested in the in the larger companies interesting in the larger future than then just $5 million of $10 million. So so it’s a process you know, just saying I’ll ask and I’ll publish something and then I’ll have amazing talent bringing brands for me that’s not as easy as you think. But I’m sure that with time they can purchase brands and some some of the sellers will join with the with the right you know, benefits from from joining and we are going to see for sure, buyers that are building their own brands in part. There’s also what you know Michal mentioned earlier, even an experienced seller, as amazing as he can be or she can be there is still a certain percentage and success rate. And you know, we’re seeing we’re seeing amazing sellers sometimes when they have their their second business. We haven’t example of one of our clients who, who started the second business and he said on the first year or two, he failed completely, and then he started all over. And then he succeeded. So building a strong brands finding the right product, it’s not just a formula. So it is about, about trying and, and airing and continuing and growing and then getting to a certain point. So when you buy a brand that’s already successful, it’s, it’s successful already, it’s 100%. There, when you’re starting something you don’t know, and if you’re super experienced, maybe it’s not, it’s not 10% success rate, but maybe 90% or 80, but still, there’s a room
Michal Baumwald Oron 35:45
Yael Cabilly 35:46
So I think this is where it goes. And I’m, I’m 100% sure that we’ll see some of the the borrowers developing their own brands, it must be,
James Thomson 35:56
let me ask you, with brands getting ready to sell, talk to me about some of your favorite software, tools, consultants, companies that are in this space, helping to get companies to the point that they’re actually ready for you to do what you do best.
Yael Cabilly 36:18
I think that, you know, there’s, first of all, they, they must understand financially where they are, so a lot of the sellers, especially the larger ones, they’re using some tools to, to kind of follow their financials. So for example, SellerLegend, or, you know, sellerboard or any of these, you know, these software, I think they’re great to, to, to understand where you are, which product is growing, which is not where you should invest your time or issues and, and an understanding where you are, besides that, to be ready, you have to understand where you are in the in the tax area. So before even a year, before you want to sell your business, you have to go to your accountant, and discuss the sale and understand, you know, what type of transaction are you going to do and how it’s going to work and what will be your taxes, and if there’s anything that you should do or change in your. So that’s another thing you should do, you should definitely meet with your attorney to get ready for that. And other than these things, what you must do is really focus on the business, the business must be as you know, as best as it could as you know, as growing as you can, you can grow it. And and here again, you know, we’re we’re often asked if you know what they should do in order to, to maximize the value. That’s, you know, one of the most common question that we always say what you should do to maximize the value is what you do best, if you’re best at launching new products, or launching new variations, then do that if you’re, you know, your best at starting in the new new markets and starting in Europe or, you know, launching in other markets then do that. Yeah, if you were an amazing Sharpie fire, and you know, and you know how to build a brand outside of Amazon, then do that, if you don’t, then don’t, especially if you’re gonna, you know, sell it in a short period of time. So, so these are the things that you know, you should really do to prepare. Most of the sellers that have good businesses are already doing that. It’s just about, you know, guiding them through through the process. And making sure they they’re ready in all fronts that the day they want to sell it. It’s just about preparing the financials during the the kind of presentation marketing deck and starting the process.
James Thomson 38:58
I want to wrap up our conversation with one question about COVID. Certainly in the last eight, nine months, consumers have moved online, lots of e commerce growth as a result of people shifting into the e commerce channel. As we get out of COVID, and the world comes back to some new normal. Now there’s there’s questions around what the e commerce adoption rates will be in a year from now. That’s obviously going to have an impact on the type of growth that some of these companies might have in the next year to two years. How do you advise companies thinking about selling now versus waiting a year from now, it may impact their ability to continue to show rapid growth over one to three years. What do you think about these issues?
Michal Baumwald Oron 39:44
We actually believe that basically, it’s always to be measured on a case by case basis. generaal we can reflect the common perception of the impact of COVID as this time goes by. So as a student Well, we are almost full year into this event, I seems as if the overall market perception is that probably the impacts will stay for the longer run and the changes that have have achieved in the different businesses that were managed during this period will maintain the new position also for the long run. So, for example, if there is a business that sold today, but at the same time obtained additional many reviews, then it is better positioned to keep on competing for the long term. So, we seem to today except for for specific cases, when you can really see for the COVID the direct impact on the performance of the business by the way, positive or negative impact. In all other cases, the performance achieved so far are considered as as what is as reflected for the business and and this is the baseline for the valuation of the business. Yes. And so. So with this understanding, I am in in general general as a general rule and not really referring to any specific business. I would not give any specific recommendation to anyone waiting to sell very quickly today because maybe you will not grow your business tomorrow or wait and keep on enjoying from from from additional growth before you sell the business. I think this is something that should be examined on the on a case by case basis. That’s, that’s in general.
James Thomson 41:59
Michal, Yael, I want to thank you both for joining us today on the Buy Box Experts podcast. For those of you interested in learning more about Yael and Michal’s brokerage, please visit www.fortunet.net, that’s fortunet.net. Thanks. And we’ll see you again on the next Buy Box Experts podcast.
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