Back in 2016, the team here at The FBA Broker began researching and assessing as much market data as we could get our hands on!
In this report, you’ll see that we search for ALL listings available online but we are limited to publicly available data. We do rely on brokers and websites to update when listings are sold, the current price, and other details.
Note: Where it’s relevant we refer to market pulse data by the International Business Brokers Association (IBBA). It’s sourced from IBBA and M&A Source members who participate in quarterly surveys.
Further details and reports can be found here: IBBA Industry Research. Now that that’s out of the way, let’s dive into the numbers!
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2021 Half-Yearly eComm Business Sales Review
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- How has 2021 held up following the pandemic?
- How has the marketplace changed post-COVID-19?
- What was the largest eCommerce business that sold this year?
- How high have the multiples climbed so far?
- Which categories rose to the top of the sold chart?
All these questions and more will be answered in our 2021 Half-Year In Review.
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Introduction
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An Overview of the Numbers!
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This 2021 Half-Year In Review focuses on businesses with a $500k+ list price (or the potential to be $500k+ if they don't have a price noted).
Between January 1 and June 30, 2021, we tracked 465 eCommerce businesses listed for sale.
This includes 222 listings carried over from previous years, plus 243 new business listings we found during the first half of the year.
There were more deals listed and sold in just the first 6 months of 2021 than there were in the 12 months of 2020 and the same can be said for the entire year of 2019 (see table 1 below)
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Our data correlate with that of the IBBA who stated in the Q2 report that:
“The current M&A market is incredibly active, with North American deal volume hitting near-record peaks”
Source: IBBA Q2 2021 Market Pulse
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Here’s how the year started off in regards to YTD results.
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As a percentage of listings, both the sold and pending categories are higher than in 2020. We’ll break this out further below.
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New Listings (Businesses listed for the first time in H1 2021)
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In H1 2021, there were 243 new listings, which is almost double the same period last year.
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This year, March took the top spot away from April as the busiest month for new listings. April is usually the busiest month, right after tax season. This tells us that sellers were not waiting on tax filings needed for SBA pre-qualification because the buyers are more cashed-up than ever before.
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Here’s how the 465 listings breakdown based on their list price
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Notably, in the first half of 2021, there were 159 more listings than in the entire year of 2020 (465 vs 306 respectively).
Main Street (businesses in the $500K - $2MM range) represents 51% of the listings while 45% represent businesses over the $2MM+.
The total number of listings has grown significantly for all the price segments in the first half of the year.
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As you can see above, H1 numbers already tower over all of the previous years’ listings in every price segment. In the >$5MM price segment we see that the number of listings has already nearly doubled what 2020 saw...and we’re only halfway through the year! For further context, this is triple the number of listings we saw in the entire year of 2017 and 2018 combined!
Another significant spike took place in the $1-2MM price segment, which jumped from 78 listings in 2020 to 134 in just the first 6 months of 2021. This has been and continues to be a really strong time to sell eCommerce businesses. This is especially true because funds and investments have increased drastically in an effort to acquire more profitable businesses following the pandemic.
2021 is shaping up to be the biggest year yet for deals that sell via a bid process due to an incredible increase of buyers in the market. With the increased competition to buy specific brands, sellers have a greater advantage when it comes to the negotiation process. We are seeing higher multiples and cash at close for that reason. We have always encouraged our clients to get multiple offers via a bid process and dissect where they can negotiate so don't leave money on the table by skipping this step.
Monthly Movements
If we look at the listings by month (see graph below), you can see that there was a strong increase in new listings in March and June with April taking the cake with the highest number of businesses sold. Although June did see a larger uptick in new listings, it also saw an increase in Pending and Delisted businesses that month.
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Of the businesses listed for sale during the first half of 2021, 83% were noted as earning $1 million or more in annual revenue (201 of 243).
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Sold Listings Data
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Of the active listings thus far, 101 were sold and 105 are pending as of June 30, 2021, meaning a potential 44% of listings will be bought. Year-to-date we’ve seen more sold listings than any of the previous years (and it’s not slowing down)!
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The market is bigger but in relative terms, the percentage of sold listings (22%) is still similar to those of previous years (22%, 24% & 19% respectively). This is due to a number of factors but one being that the criteria for acquiring eCommerce businesses have become more robust, keeping many listings from moving to a sale. Despite buyers desperately seeking businesses to acquire, they still have minimum criteria requirements they desire.
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There were 101 listings sold during 2020. Of these, 52 were ‘2021 new listings’ and the rest, 49, had been listed in previous years.
Year-to-date the businesses reported as sold equates to $501.2 million in list price value.
For comparison, in 2020, there were 81 businesses reported as sold, which equated to $465.6 million in list price value. And in 2019, there were 72 sales noted with a total deal value of over $292 million.
Can we talk about this for a second?!
The first half of 2021 has seen more sold businesses (which you already knew from the above data) that equated to $36 Million more than the ENTIRE year of 2020.
Yeah, let that sink in.
Now, be ready to pick your jaw up from off the floor (we’ve given you a fair warning)...
Furthermore, when comparing H1 2021 with 2019, that’s $209 Million more in the first half this year than the ENTIRE year of 2019.
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The deals with a list price over $5MM had the most activity. 31% of deals were noted as sold, which tells us that buyers are seeking larger businesses to acquire.
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The market has most certainly turned around from the COVID slump from last year.
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Largest Sold Listing
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A $40MM eComm retailer in the women’s apparel niche takes the honor of being the largest business known to sell in the first half of 2021. It was listed at a 6.7x annual net profit multiple.
The deal was quickly snapped up! According to our tracking, it was off the market and sold in a mere 59 days.
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Days on Market
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Taking a closer look at the sales by month we can see a few things:
- April was the month with more sold listings
- January saw the longest days to sell at an average of 128
- May was the shortest at 91 days to close
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The average days on market were much lower for all price points. There are a number of new buyers (especially aggregators) competing in the market, which is clearly a reason why deals are selling sooner.
To access additional capital, buyers such as aggregators who use debt to acquire FBA brands need to deploy existing funds before more tranches are released. Meaning, there is a sense of urgency at times with these buyers to secure deals and stack revenue on their balance sheet.
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Days to Close (From Pending to Sold)
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The average days to close a sale in the first half of 2021, or the days that pass between the date the listing goes under offer or contract and the sold date is 71. Although the term is shorter in the Main Street range (52 days) and just a bit longer for listings in the Lower Middle Market.
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Top Amazon Categories
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The moment you’ve all been waiting for...the top sold categories! Of the 101 sold listings in H1 2021, 80 were listed at $1MM or above, which is where we focus our time. Below are the most sold Amazon Categories during the first half of 2021.
Sold Listings by Category
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List Price Multiples (Active Listings)
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Once again, those businesses that sold had a slightly lower multiple than the market average. This is a factor we see each and every year in our annual reviews (see 2018, 2019 or 2020). It is not surprising that buyers are seeking the best deals and those with a lower multiple appear more attractive.
However, despite this, ALL multiples have increased which is fantastic news for sellers. Based on our own deal flow we can tell you that these multiples are already out of date, with many listings going for above these medians in Q3.
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*Multiples are based on annual SDE (Seller Discretionary Earnings)/Operating Profit.
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Some fantastic news for eCommerce brands is that, according to our data, the industry sales are outperforming the overall SME market. The IBBA reports the following medium multiples on all deals, across all niches, for Q2.
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Source: IBBA Q2 2021 Market Pulse
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Of the sold categories mentioned above, here is how they rank in order of highest median multiple of annual net profit.
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The sold companies in the Toys & Games category achieved the highest median multiple. Sports & Outdoors brands got a handsome median net margin of 32%.
All of the categories have a 22% or higher median net margin. If you’re looking to sell your brand in the near future, know that buyers will be comparing your deal with others that meet or exceed this average margin for your niche.
*Includes a lot of sub-categories. For our data, we use Amazon’s Best Sellers list to categories each listing. You can review the Amazon Best Sellers by Departments here.
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Aggregators in the Marketplace
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We’ve seen, and continue to see, a significant increase in the number of aggregators in the market. Many have larger budgets to spend and for that reason, they have ramped up their outreach to sellers directly.
A whopping $8 BILLION was the latest total funding raised combined when we last checked, but really who can keep up!
If you’re a seller and receive emails or offers from aggregators; you can fill out this Free Valuation Form to see if their offer is a “fair” offer given the market data, your size, and category.
If you have further questions on when is the right time to sell or how to vet these buyers as they reach out to you, shoot us an email at [email protected] and we can help you navigate these areas. You deserve to feel confident in selling - this includes the price you sell for and who you sell to!
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Summary & Predictions
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The first six months of 2021 are already better than the last 3 years (more listings, more sales, and higher multiples).
We don’t know what will happen during the second half but we have high hopes for the remainder of the year. The summer months look a bit slower, but there’s typically a big push in Q4 (particularly December) to use it or lose it when it comes to committed capital.
That’s it for this 2021 half-year in review. We’ve hit the ground running in the first half of the year and we anticipate a strong close. Our prediction is that 2022 will continue building on this momentum as more sellers work hard to bring their sales up and prepare their business for a strong sale in 3, 6, or 12 months. And heck, maybe we’ll see a SPAC or two thrown into the mix as well from the aggregators.
Following the pandemic, an enormous number of shoppers became more comfortable shopping online. This includes less tech-savvy individuals who didn’t have to get comfortable online until they were forced to. We predict we will continue to see more buyers enter this space as well. The strongest businesses will have even more leverage than they would have had in years prior.
If you’re looking to sell for the best price and at the best deal terms, reach out to us today at [email protected] and let’s chat about your options. Even if you just need clarity on your direction, we have numerous resources (both free and paid) that can get you closer to your “Hell Yes” number and answer all of those looming seller questions.
Cheers to you and your future sale!
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