Open to discussing your experience acquiring an E-commerce Platform?

January 19, 2023

by a searcher in Dallas, TX, USA

Does anyone have experience acquiring an e-commerce platform?

1. How should I think about a multiple in this space?
2. How should I think about a bolt-on multiple...less products, better margins?
3. How should I think about post acquisition operating metrics?

Please let me know if you would be open to discussing your experience?

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

We're a holdco for eCommerce brands. We own 8 today.

1. How should I think about a multiple in this space? - varies from 2x-5x depending on business model, traffic sources, channel diversity, product catalog, team, CaC, nCAC, AOV, Gross Margins, LTV, and more

2. How should I think about a bolt-on multiple...less products, better margins? Very little is truly accretive. We'll do multiple 8 figures this year and for everything we save on shared services there is an offsetting cost. Assume bolt-ons are flat and hope to be pleasantly surprised.

3. How should I think about post acquisition operating metrics? You need to be a marketer to run eCom businesses. Full Stop. You don't have to be passionate about the product but you do have to eat, sleep, and breathe digital marketing. Until you do you'll have no context on the operating metrics. I know this because for the first half of my career I was making it up as I went every day and got really beat up along the way.

Reply by a searcher
in Lehighton, PA 18235, USA

I'm interested in and following this. My experience may not be entirely relevant. We purchased a manufacturer that sold through ecommerce (B2C) in a fire-sale situation. The only financials I had access to were paypal sales statements for the last 12 months. We purchased based on a combination of equipment value, our best guess at potential profitability, and awareness of the potential worst-case scenario. In hindsight, I would be willing to pay 3x-5x of what I estimate the profit to have been, simply because of what I now know was the upside potential of the business. But buying it at under 1x with an earn-out worked out so much better.

Above comments are dead-on that you MUST have (either yourself or hire someone who does) expertise in online marketing. Ecommerce gives you access to a massive group of customers. In our case, fine-tuning online ads and coupling the website with live customer support brought us to a sweet spot that's been successful.

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