Buyer representation for purchase of ecommerce business?

October 06, 2021

by a professional from Bentley College in Miami, FL, USA

Asking this question for a friend...

My friend is exiting a (8-figure) restaurant business and looking to acquire an e-commerce business to supplement his income in the short term. He doesn't have a lot of experience with e-commerce but he's overall very business savvy. He has been in talks with a company called eCommerce Lending to work with their buyer representation side of the business. The idea is that they will present him with e-commerce acquisition opportunities. The fee for this is a monthly retainer ($2k - $3k) plus 5% fee on the purchase price of the business.

He knows that the e-commerce space is very competitive so he asked for my thoughts on whether this type of service would give him an edge compared to other buyers. He also wanted thoughts around the fee (retainer + 5%).

I did not have a great answer so I'm hoping to tap into the collective wisdom here. Does anyone have some thoughts or experience that they can share? I'll pass on to him whatever I learn.

Thank you!!

Reply by a searcher
from Cleveland State University in Akron, OH, USA

^redacted‌ is correct. I run a hold co of eCommerce Brands. The brokers who cover the $250k - ~$1M EBITDA space broadcast everything to their list. Once you go past $1M some brokers are more selective in matching deals to buyers confidentially but most are still publicly available. If your friend wants a retained search for off-market deals that's one thing. If your friend wants an advisor to give guidance on a deal have him call me and I'll do it over lunch for fun and a nice bottle of bourbon at close. eCommerce Lending is known as a loan broker that is active in the space. I don't know if they have a good proprietary search service or not but there are plenty of those floating around the internet to compare it to and my hunch is 2-3k/mo + 5% is the TOP END of the price range on that.

Reply by a searcher
in Austin, TX, USA

I don't have a ton of experience in that space but my understanding is that the vast majority of the opportunities from the major brokers (Quiet Light, Empire Flippers, Website Closers, etc) are blasted out to anyone that signs up for their marketing emails. For that reason they are EXTREMELY competitive. For that fee structure I'd want to know how they were going to get me looks at good opportunities that I couldn't farm myself before there's a cattle call. PM me if you want to pass along my info to your friend, I'd be happy to chat more.

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