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SINGAPORE: Last month, our Director & Regional Head of Acquisitions, Luke Ong, boarded the Singapore Commerce Voyage to discuss navigating the ecommerce space locally and internationally.
👇🏼 Check out this short video roundup of our experience on the Singapore Commerce Voyage 👇🏼
As a member of the Founding Team, Luke shared about his experience building Una from the ground up and some of his proudest moments seeing through major acquisitions across all our markets of operation. We also had the opportunity to meet and learn from other industry leaders like Shopify, Jumpstart Commerce, Dotdigital and Atome.
In this exclusive piece, we bring you some of the insights Luke covered during his panel presentation, Maximising Your Exit, where we peer into the minds of ecommerce aggregators to unveil what goes into an acquisition.
What Factors Will Acquirers Consider When Evaluating Your Brand?
When you're ready to exit your ecommerce business, there are a few key factors that potential acquirers will consider.
First and foremost, they'll look at your business's profitability. Ecommerce aggregators do not typically acquire businesses that are unprofitable or breakeven. At Una Brands, we evaluate profitability in the form of Seller’s Discretionary Earnings (SDE), which considers your EBITDA as well as other factors like founders’ salaries, remaining inventory, and in some cases, marketing costs. This allows us to ensure a fair valuation as we add any costs that we expect to be eliminated post-acquisition (e.g. salaries) back to your SDE. If your SDE margin meets our criteria of at least 15%, we then generate a reasonable multiple of your final SDE value to make our acquisition offer.
The second factor aggregators assess is your operational efficiency. This looks at whether you have successfully figured out how to reduce indirect, non-monetary costs arising from complexities, which signals potential for a smooth takeover. We also consider whether you have recently experienced any stockouts and whether your current shipping methods have been cost optimised.
Third, aggregators will evaluate your brand equity. This includes factors such as the quality and quantity of reviews, as well as the strength of your communities on social media. High quality reviews are a strong indicator of brand equity as they demonstrate that your brand has successfully built a moat around your business to defend against stiff competition and price wars.
Last but not least, aggregators will also consider the growth potential of your brand. This goes beyond your brand’s past organic growth, but also includes your brand’s potential to capture more unmet demand in the future. For example, a brand that has achieved great success through a single channel and market is inherently more valuable given its potential to grow overseas and across different channels. This also plays well into Una’s core value proposition, where our multi-channel, multi-market expertise enables category-leading brands to capture new customers both within and across different markets.
How Can You Prepare Your Brand for a Sale?
So you've decided it's time to move on from your ecommerce business? Excellent decision! Exiting a business can be a daunting task, but with careful planning and execution, you can ensure a smooth and successful exit. There are a few things you can do to help prepare your ecommerce brand for a sale. First and foremost, simplify your standard operating procedures (SOPs) to facilitate a smooth handover and transition. This will ensure that the new owner can hit the ground running and continue to grow the business.
You'll also need to maintain disciplined bookkeeping so that potential buyers have a clear understanding of your finances to facilitate a smooth due diligence process. Keeping up-to-date with your inventory will also help you ensure that your products are in stock, and will also show buyers that you're prepared for increased demand.
Finally, think about your brand's future and what you'd like to see happen once you're no longer involved. Would you like the new owner to maintain the same vision and ethos, or are you open to a change in direction? Planning for this ahead of time and being open and upfront with your needs will help to avoid any surprises down the road, and facilitate win-win outcomes.
What Are Some Ways to Maximise Your Valuation?
When it comes time to sell your ecommerce brand, you'll want to do everything you can to maximise your valuation. Here are a few tips:
1. Organise your data: Tracking and analysing important metrics, such as sales, traffic and conversion rates will allow you to showcase your brand in the best light possible when the time comes. This data will also help you understand how your business is performing to allow you to make better business decisions.
2. Be meticulous with quality: Update your product images, optimise descriptions, and update your website to boost your sales metrics. The better the quality of your products and website, the more confident potential buyers will be in your brand.
3. Check out your reviews: Understanding what your customers are saying about your brand and showing that you've taken concrete steps to improve can boost confidence in your brand and help you command a higher valuation.
How Can You Stay Involved With Your Brand Post-Sale?
If you're considering selling your ecommerce business, it's important to understand the potential outcomes and how you can stay involved with your brand post-sale. At Una Brands, we offer a number of options to help keep you involved and make sure that both of us are happy with the deal.
For starters, we welcome you to join us as a brand manager and continue running your business with our support. We also offer profit-sharing options, so you can continue to earn a return on your investment as we help to grow your brand. Last but not least, we provide regular updates from our team so you can track the progress of your brand and see how it's being built for the future.
Keen to find out what the future looks like for your brand? Join us as we build the next-generation consumer goods conglomerate! Book a meeting to find out how we can enable your brand to scale, and receive a free valuation.
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