Understanding how buyers value e-commerce businesses helps you build a more valuable business, whether you plan to sell or not.
The Multiple
E-commerce businesses typically sell for 2x to 5x annual net profit (Seller Discretionary Earnings). The multiple depends on size, growth rate, diversification, and transferability.
What Increases Value
- Growing revenue: Buyers pay more for businesses trending upward
- Diversification: Multiple products, channels, and traffic sources reduce risk
- Brand: Brand-registered, trademarked, and recognised brands command higher multiples
- Systems: Standard operating procedures and automated processes make the business transferable
- Customer data: An email list and repeat customer base is valuable
What Decreases Value
- Reliance on a single product or platform
- Declining revenue
- Owner doing everything (not transferable)
- Thin margins
Curious about your business value? Get in touch for a strategic discussion.
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