Selling an E-Commerce Company

Dec 12, 2014

December 1, 2014 was the 10th Cyber Monday in E-Commerce history. This online equivalent to Black Friday for traditional retail stores started in 2005 with retail sales of $486 million. Cyber Monday 2014 had revenues of over $250 billion with the volume of total orders up over 15% from 2013. Inside the numbers analysis found purchases from mobile devices in 2014 increased to approximately 22% of orders from slightly less than 16% in 2013. Email marketing generated 23.1% of online orders, organic search 19.4%, paid search 17%, social websites less than 2%, with the balance being generated from specifically visited websites. This information is shared because it is informative and beneficial to E-Commerce entrepreneurs. It also demonstrates the level of knowledge of the E-Commerce industry that IBA brings to the table in its representation of E-Commerce entrepreneurs in the sale of their companies.

IBA has successfully represented E-Commerce entrepreneurs in the sale of their companies since the 1990’s, when catalog & retail merchants first started to pursue customers on the Internet. Today, E-Commerce entrepreneurs employ online sales venues to support brick & mortar stores, to sell products from warehouse locations without retail storefronts, to drop ship product directly from manufacturers and wholesale businesses without taking possession of product, and to sell knowledge and services. IBA has successfully represented companies employing each of these business models. Our completed transactions have ranged from E-learning venues to E-Retail businesses selling as diverse products as jewelry, music boxes, and metal detecting & prospecting equipment.

Factors that can impact the value of an E-Commerce company include barriers to entry into competition, revenue & profitability trends, uniqueness of the product offering, organic search engine placement, client acquisition cost, and domain name real estate.

Screening & prequalification of potential buyers prior to distributing specific information about the business model is uniquely important in the E-Commerce niche since business models can be duplicated rapidly and competition can originate from a low overhead home based location or internationally. It is important to have procedures in place that insure that information is only distributed to parties who have the capital & motivation to negotiate in “good faith” toward the purchase & sale of a privately held company.

The sophisticated process involved in selling a privately held company or family owned business requires knowledge, experience, and a strong negotiation/facilitation skill set. It is our firm’s strong recommendation that an experienced mergers & acquisitions professional be employed by an E-Commerce entrepreneur to maximize the value they receive for their company while minimizing the associated risk & liability created when a business is sold.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation in terms of successfully negotiating transactions that are “win-win” in an environment of full disclosure between the parties.