Evaluating an e-commerce subscription box deal, they make about $1M in EBITDA, have about a 15% margin. As a sub box, they basically package up 3rd party brand's products and sell them to their audience.
It caught my attention because it does operate in an industry I have several years of experience with, have some connections with influencers, press, vendors, etc.

The team is the 3 cofounders plus one employee, and all 3 want a clean exit (leaving the one poor guy plus the new incoming buyer in charge). They also currently make most of the social/video/blog content for the brand so a replacement will be needed. The broker said they each want to leave with $2M in their pocket, so the minimum they say they'll accept is $6M, and if they don't get that, they'll just continue to operate it, grow it and sell later at a higher multiple.
Reason for selling is that they had an exit a few years ago in another industry, their non-compete and golden handcuffs expire this year, so they want to go back to that industry and do it again (sorta makes sense).

Some red flags I saw: The average LTV is only 6 months, and the churn rate is in the teens (according to benchmarks, avg churn should be 5-10% or less, and some other sub boxes I saw had LTVs ofredactedmonths). They have lost more than half of their total paying users since 2021, and only had a small upward trend in Q4 of 2023, although they explain it by the fact that they have been replacing the lower-tier subs with higher-tier subs, so the overall revenue decreased only slightly.

I've analyzed 12 other subscription box deals that transacted in the last couple of years that i was able to find publicly in the internet archives. Including their main competitor which was sold recently. -The average ask multiple was 4.66 EBITDA with their competitor specifically at 4.25; which is lower than their target of 6X -The average Profit Margin was 20% which is higher than theirs at 15% -The comparable team headcount, required to operate a business of their size is about 6-7 people, not one or two as they claim. So to properly operate it, hiring an additional 3-4 additional staff will be necessary;

What do you think of this deal, and how could this deal be arranged to work, given these circumstances? Thanks in advance!