Last Updated on February 23, 2023 by lukesguide
Deciding whether you should hire an online business broker to help sell your online business can be tough.
There are so many online business brokers out there to choose from and they all offer varying features and levels of service at different price points.
Over the last 10 years, I have worked alongside a number of business brokers and M&A advisors.
During that time, I have worked out what makes a great online business broker and what to look for when choosing one to help sell your business.
In this guide, I am going to share everything I’ve learned and will cover:
- what an online business broker is;
- top things to look for when choosing an online business broker;
- the process for buying or selling a business through a broker;
- what types of businesses you can sell through an online business broker;
- who the best online business brokers are; and
- how much online business brokers charge.
Let’s get into it!
What Is An Online Business Broker?
An online business broker is an intermediary that brings together buyers and sellers to help facilitate a hassle-free transaction. Brokers typically represent the seller by bringing a pool of buyers to the seller and help them strike a deal.
Online business brokers are a popular alternative to selling your business via a private sale or selling your online business to an aggregator.
The term ‘broker’ is often used to describe online business ‘marketplaces’ like Flippa, Empire Flippers and BuySellEmpire (think eBay for online businesses).
These ‘marketplace’ sites act as an intermediary between parties that are buying and selling online businesses in much the same way as a traditional broker.
To keep things simple, we are going to use the term ‘online business broker’ as a blanket term to describe all online platforms that would typically be described as ‘marketplaces’, ‘managed marketplaces’, or even ‘full-stack marketplaces’.
As mentioned in the introduction, online brokers adopt varying business models. Typically, what differentiates them is the level of service they provide to their clients. Online business brokers will usually fall into one of the following three categories:
Not Managed (Peer-to-Peer)
This type of broker is usually an online platform that allows sellers to list their businesses for sale on their platform for a fee. They are best described as peer-to-peer or community-based marketplaces.
There is minimal ‘value-add’ beyond the introduction of buyers and sellers through the platform. Although, some brokers will offer basic online tools such as online ‘valuation’ estimates that will give sellers a rough idea of what their business might be worth.
They may also offer ‘add-on’ services that may not be provided with the standard package at an additional cost. This could include legal services, due diligence services, and sometimes even buyer financing.
Examples of ecommerce business brokers that are not managed include AcquireBase, SaaS Place, and Tiny Acquisitions.
The lightly managed ecommerce business broker will normally provide additional service on top of providing their online platform to help entrepreneurs buy and sell businesses. The level of additional service will vary depending on each broker.
For example, lightly managed brokers may provide buyers with a curated selection of listings. They will do this by vetting a business before it is listed for sale on their platform. In some cases, the broker may even offer to buy the business from you directly, saving you the hassle of going through the listing process.
In addition, they might also support the migration process once the business has been sold.
Additional services may be built-in (and will typically attract a premium seller fee) or provided on an ‘as-needed’ basis for an additional fee.
Examples of lightly managed brokers include Empire Flippers, Motion Invest, and Flippa.
Fully managed brokers provide buyers and sellers with a vastly different experience than the previous two categories.
The fully managed online broker will take care of everything involved in selling a business. These brokers will usually have a book of qualified buyers ready and willing to purchase high-quality businesses.
Fully managed brokers will take care of the whole sale process from initial outreach/marketing to potential buyers and managing a competitive bid process, all the way through to the closing of the sale.
Examples of fully managed brokers include The FBA Broker, Digital Exits, and FE International
Now that you know what an online business broker is, you are probably wondering what the sale process looks like.
If so, read on.
9 Things To Look For When Choosing An Online Business Broker
Because they all offer such different levels of service, it can be tough doing a head-to-head comparison of brokers.
In saying that, whether it’s an Amazon FBA broker, Shopify broker, or a specialist SaaS business broker, there are a few questions that you will always want to ask before choosing the right broker to help sell your business.
The questions below provide a useful checklist of things to look for and should be answered by you in the context of your business!
What are the valuation principles used by the broker/marketplace to value your business and how much input you will have in setting the asking price?
Does the broker/marketplace specialize in the sale of a particular business niche and/or platform and can they provide specialist valuation input based on your type of business/site?
Do they take a thorough approach when providing a valuation range for your business or is it more of a ‘one size fits all’ approach?
What is the level of vetting and curation conducted by the online broker/marketplace?
Do they want you to provide a lot of financial information upfront and undertake an interview process with you before you can list or is it more so a ‘self-service’ platform?
What are the types/sizes of businesses typically sold by the broker/marketplace? For example, are they a specialist Amazon broker that has little experience selling SaaS companies?
What is their past sales history like? Do they consistently achieve great results for their clients?
Do they cater to the top end of the market, microbusinesses, or somewhere in the middle?
Fees and Commissions
What are the fees/commissions charged by the broker/marketplace for buying and selling a business?
Is there a listing fee payable when you list your business sale or a final value commission or both?
Are you required to list exclusively with the online business broker or can you also list your business for sale elsewhere?
If there is an exclusivity period, how long does it last?
What are the support services provided by the broker?
Is the broker/marketplace a one-stop shop for completing an end-to-end sale process of you ecommerce business (i.e. valuations, legal, and migration) and if so, what fees are involved for this added value?
Does the broker/marketplace qualify its buyers before they can bid or are there a lot of tyre kickers?
What is the sale success rate for your type of ecommerce business and how close are the final sale prices to the prices in the listings? Simply put, what are some of their success stories?
Most marketplaces make these statistics publicly available to assist your research so it’s worth doing some digging before choosing who to list your business with.
What seller protection services are provided?
For payments, are there secure options available or is there an escrow service available?
What buyer identity verification procedures are in place and how much information about the buyer will be shared with you as the seller?
To the extent there are any post-completion matters that require support (e.g. migration, payment of earn-outs, etc), will the broker assist with the enforcement of these buyer obligations if there are any post-sale disputes?
Does the broker/marketplace provide you with template legal documentation?
As you might imagine, a comprehensive sale process requires legal documentation to formalize the terms of the sale and protect the interests of both the seller and the buyer.
For a typical sale, the legal documents you may need include:
- a Non-Disclosure Agreement;
- a Memorandum of Understanding (also known as a letter of intent, heads of agreement or terms sheet);
- an Asset Sale Agreement or Stock Sale Agreement;
- a Non-Compete Agreement; and
- a Transition Services Agreement.
If the broker/marketplace does not provide assistance with the required legal documentation, there are many reputable online law firms that can help you.
How To Buy And Sell Online Businesses Through An Online Business Broker?
Although the services provided by brokers/marketplaces vary, the sale process that is followed is broadly the same.
The key stages of the sale process include:
1. Sign up and build a listing
2. Due diligence
3. Legal documentation and negotiation
4. Signing and exchange
Each of the popular marketplaces has comprehensive guides on their websites that set out the sale process in detail and it is worth spending some time going through the relevant guidelines of the broker/marketplace of your choosing to familiarise yourself with the process before jumping in.
Here’s a breakdown of a typical sale process run by most brokers/marketplaces.
Stage 1 – Sign Up And Build A Listing
To sell your website or business through a broker/marketplace you will be required to complete a sign-up process.
The sign-up process is typically used by the marketplace as a quasi ‘vendor due diligence’ exercise where business owners, provide as much information about their businesses as possible so that any prospective buyers can complete their own due diligence and make an informed decision about whether they should buy your ecommerce business or not.
This process can be quite beneficial for a seller as it may reduce the amount of time spent responding to information requests from prospective buyers as the information about your business is provided upfront during the sign-up process.
In terms of the steps involved and information required, every marketplace is going to be different but the type of information requested will likely mirror the types of information you will be asked for as part of a typical due diligence process when selling an ecommerce business.
You will also be asked for your personal information in order to create an account. How much information is requested will depend on several factors, including whether the marketplace undertakes a comprehensive seller vetting process.
This can be a time-consuming process but as mentioned above, spending the time upfront should save you time down the track.
Some marketplaces help speed up the process by allowing sellers to link any third-party integrations to their listings (i.e. Google Analytics, Stripe, Quickbooks/Xero, Google AdSense, PayPal, for Amazon FBA brokers, Helium 10, Jungle Scout etc).
Some of the information you may be asked for include:
Your name, email address, phone number, etc.
Business name, age of the business, monetization methods, industry, etc, and/or link to your storefront or website.
Income / Financial Information
Evidence of at least 12 months’ revenue, profit, etc.
Links to integrations/tools that provide traffic analytics and other store metrics (e.g. Amazon FBA tools).
Detailed Listing Information
This may include:
- Assets included in the sale
- Your industry
- Opportunities for growth
- Potential risks to the business
- Any specific skills required to operate the business
- Social media channels
- Level of post-sale support
- Reasons for selling the business
- Whether you want to sell via an auction process or by listing a fixed ‘buy it now’ price
Stage 2 – Post-Sign-Up And Buyer Due Diligence
This is the stage where broker/marketplaces really shine!
After you have completed the sign-up process, built your detailed listing, and received signed non-disclosure/confidentiality agreements from prospective buyers you can pretty much sit back and monitor any incoming inquiries and/or offers from potential buyers.
At this point, buyers will (hopefully) browse through the information you provided in order to complete their own buyer review.
Depending on the broker/marketplace you choose, your listing will receive a certain level of marketing and promotion from the marketplace.
This may include the promotion of your listing through the broker’s/marketplaces:
- Email list / newsletter;
- Social media channels; and
Some online brokers may offer to interview you as a seller on their exclusive podcast/YouTube channel and give you an opportunity to tell a potential buyer more about your business in your own words.
Although there is an element of ‘set and forget’ with these listings, it is still important to be active on your listing and regularly engage with potential buyers.
Stage 3 – Legal Documentation
If you receive an offer that you are happy with, it’s now time to formalize the terms of the arrangement by drafting the relevant legal documentation.
This is an incredibly important aspect of the whole sale process and it is important that you take care when making a decision of whether you will be engaging a lawyer or not.
Many brokers/marketplaces offer a standard template sale agreement (usually for an additional fee) whereas some offer a fully-fledged legal advisory service.
In most cases, it makes sense to engage a lawyer to assist you with the legal documentation, especially if you are expecting to sell your business for a significant sum. In saying that, there are many sellers that like to go it alone but the increased risk cannot be ignored so it’s worth taking the time to consider your decision.
Stage 4 – Signing And Exchange
At this stage, the buyer and the seller will sign the finalized transaction documentation and exchange signed counterparts.
In some cases, this is when the buyer may pay a deposit to the seller.
Stage 5 – Completion
Usually, there is a period of time between the signing of the transaction documentation and completion of the deal but signing and completion can also occur simultaneously in some cases.
The amount of time between signing and completion usually depends on whether there are any conditions precedent to completion of the sale and/or any other obligations that a party must satisfy before completion of the deal.
For example, a buyer will usually want some assurances that the terms of any supply arrangements the outgoing seller has with suppliers will be offered to the incoming buyer as the new owner of the business. This usually takes some time to hold discussions with the sellers and/or negotiate new agreements.
If an escrow arrangement is being used for payment of the purchase price, this will usually be organized a short time before closing, and proof of the funds being held would be provided by the escrow agent to the seller at closing.
Stage 6 – Closing
Because the incoming buyer is new to the business there is usually a transition period, during which the seller will continue to work in the business and help the new owner find their feet.
The duration of the transition period is a key term that will be agreed upfront. Typically a transition period will last 2 to 4 weeks but longer or shorter periods can be agreed upon depending on the buyer’s needs/experience.
During this time, the buyer will work with the seller to effect migration of accounts, arrange introductions to suppliers and get to know the day-to-day operations of the business.
Once the seller has control of the seller’s account, the funds can usually be released from escrow within a few weeks of closing.
How Long Does The Sale Process Take?
On average, the process from start to finish can be between 30 and 60 days.
Sometimes the process can be quicker than this, but it can go on for a lot longer. It all depends on the complexity of the business and the timely manner in which the parties can agree on terms/provide requested information to each other.
What Types Of Businesses Can You Buy And Sell Through An Online Business Broker?
While there are some brokers that only deal with acquisitions in certain types of businesses, the great thing about most marketplaces/brokers is that there is virtually no limit to the types of ecommerce businesses that you can buy and sell through an online business broker.
A popular site like Empire Flippers or Flippa, will have hundreds of online businesses that are selling at any one time.
Some examples of that types of businesses that you could buy and sell through a marketplace/broker, include:
- Amazon FBA, KDP or Affiliates
- Shopify store
- Blog or content website
- SaaS company
- Web apps
- Domain names
By far, some of the most popular businesses that can attract a high valuation/multiple are established Amazon FBA stores that can consistently demonstrate high net profit, are in an evergreen industry, and have strong sales history.
List Of The Best Online Business Brokers
If you are wondering which business brokers to go with, it would be worth having a browse of our list below and doing some research on the options.
- Empire Flippers
- Tiny Acquisitions
- Investors Club
- SaaS Place
Full Service Brokers
- FE International
- The FBA Broker
- Ecom Brokers
- Digital Exits
- Quiet Light Brokerage
How Much Do Online Business Brokers Charge?
On average, the commission charged by an online business broker will be between 3% all the way up to 30% in some cases. The amount the seller is charged by the online business broker will depend on a number of factors, including: the online business broker you choose, the level of service they offer, and the value of your business.
How Do I Sell My Online Business Fast?
The key to selling any business fast is preparation. One of the most common reasons for a business sale to drag on and be delayed is that the seller is not in a position to provide the information about the business requested by potential buyers.
Not only does being unprepared slow down the sale but it can instil a level of distrust between the parties. For example, if a seller has not been keeping accurate financial records and is hesitant to share this information with a buyer, the buyer will become suspicious and may walk away from the deal.
In most cases, an online business broker will guide you through the information gathering process and make sure everything is in place before potential buyers are given access to your listing.
Using an online business broker can help buyers develop a strong level of trust in your listing from the outset, which can often lead to a fast sale.
Although the sale process outlined above appears to be complicated, with a little preparation and planning, it’s likely you’ll find success in buying and selling businesses.
If you are an ecommerce business owner that is considering selling your business at some stage in the future, it definitely helps to plan ahead and make sure you have all of your financial information to hand, including sales history, net profit, etc so that you can show potential investors the strength of your ecommerce business.
The payoff for educating yourself is a quicker sale which may result in significant savings when it comes to lawyer’s/advisor fees since you’ll be in a position to move quickly.
We hope you have found this guide helpful.
Have you sold an ecommerce business through an online broker before? Let us know about your experience in the comments.
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