Aggregator Financing | Winter Has Come, Will Spring Be Far Behind?

Aggregator Financing | Winter Has Come, Will Spring Be Far Behind?

Blog Summary

In this blog post, we examine the current state of the eCommerce aggregator industry and its financing challenges. Following the financial crisis and the COVID-19 pandemic, the landscape has drastically changed, with inflation, interest rate hikes, and supply chain issues impacting valuations and funding prospects. We explore the implications for aggregators and discuss potential financing options, including debt refinancing, equity dilution, asset divestment, and merger opportunities. While the market remains tough, there are encouraging signs of resilience and strategic shifts among some aggregators, indicating a path forward amid the uncertainty. Join us as we delve into the intricacies of aggregator financing and the potential for a rebound in the near future.

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Key Takeaways From The eCommerce Acquiror Conference – NY 2024


Our 2024 eCommerce Acquiror Conference took place Jan 16th in New York, hosting eCommerce acquirors and eCommerce operational experts from around the world. The agenda was to discuss key trends driving eCommerce valuations and discuss operational areas within eCommerce acquirors. We thank our title sponsor Airwallex and all our other sponsors for making this great event a success and we look forward to seeing you all and some new faces at our next annual eCommerce Acquiror Conference.

1.eCommerce Environment

Participants: Furhaan Khan at UBS, Bill Pecoriello, CEO at Consumer Edge.

Key Takeaways:

  • UBS and Consumer Edge kicked off discussions reviewing the macro landscape impacting eCommerce valuations.
  • Based on public company comparables, eCommerce valuations have softened. Consumers spend is forecasted to transition from post covid high sectors such as travel however consumer spend in general remains subdued by caution towards inflation and interest rates.
  • Medium view (2025-2027) is that M&A volumes will be expected to increase once again as inflation starts to curb and the cost of capital stabilizes.



Session 1 Panellists:

    • Philipp Triebel, CEO at SellerX.
    • Mark Goldfinger, VP of Growth at unybrands.
    • Ben Cogan, Co-Founder at Agora.
  • Insight provided separately by Tushar Ahluwalia, CEO of Razor, who have a successful record in consolidation of aggregators [Stryze & Valoreo].


Session 2 Panellists:

  • WTB Co-CEOs, Jaschar Hupperth and Nicolai von Enzberg.
  • Olsam Group Co-Founders: Ollie and Sam Horbye.

Key Takeaways:

  • Announcing 2 New Mergers Of Aggregators: The Fortia Group was proud to announce the merger of We The Brands and Mantaro Brands, two German based aggregators, a deal that The Fortia Group had been appointed M&A advisors.Weeks before the conference the eCommerce world learned about the successful merger between Olsam Group [UK based] and Dwarfs [NL based].It was noted that while these are logical strategic moves and something many in the aggregation space will be considering, these deals do take longer due to the complex nature of appeasing a larger group of shareholders. Deal timelines were from 6 to 12 months in duration.


  • Consolidation (MoA) and Acquisition Trends: Acquirors in the space are communicating more discussing topics and solutions to issued being created. Consolidation within the market is an important topic.The macro implications of cost of capital in the current environment consolidation are a lot more complex than straight M&A due to the fact they are share deals with limited cash changing hands.The main reason for consolidations are as follows:
    • Strengthening Balance Sheet
    • Scale
    • Cash
    • Leverage
    • Group EBITDA


  • Challenges of Market Conditions: Panellists discuss the challenges faced over the past year, including lower consumer spending due to inflation, pressure on margins, the rise in interest rates, and the general move towards a survival mode among companies.
  • Direct-to-Consumer (DTC) Focus: The preference for DTC over Amazon (FBA) due to control over customer data, customer support, marketing, and the overall customer experience (CX) is emphasized.Amazon remains a focus, but many are becoming more interested in diversifying into DTC or gain back more control through this channel, particularly as increasing Amazon operational fees are forecasted for 2024.


  • Integration of AI and Technology: eCommerce players have a range of tools available to help them achieve success in the markets.AI is delivering solutions for cost savings removing resource requirement on content, customer service benefits by reducing SLA’s pricing and demand planning.



Participants: Alex Lukashov, CEO at Fintent, Muddy Mat, Johannes Rossner [on behalf of Alpin Loacker and BBG), Daniel Mc Carthy, Co-Founder at Theta, Paul Hanley, Co-Founder at The Fortia Group and Withum CPAs.


  • Our Shark Tank Brands Were A Big Success:
    • Introducing Muddy Mat – Impressive omnichannel pet brand coming to market in Q1 2024. Matthew, Andrew and Ikho gave a fantastic demo and financial performance overview of the brand.
    • Alpin Loacker – EU based tech hiking clothing and equipment omnichannel brand.
    • Berlin Brands Group – US portfolio. BBG wish to refocus efforts and as such are open to offers for their current US portfolio.

To learn more about any of the above deals, please contact The Fortia Group directly.

  • Daniel Mc Carthy, Co-Founder at Theta educated the crowd on valuations with this talk on “Uncovering Hidden Valuation Insight through Predictive Customer Value Analysis”, followed by a poll on current valuations observed in the market.

Poll no.1: What is the typical valuation range you are seeing for profitable Amazon FBA led brands?

  • Average valuation range: The average lower bound of the valuation range is approximately 2.86x, and the average upper bound is approximately 4.13x.
  • Lowest valuation range: The lowest valuation range given was 1x.
  • Highest valuation range: The highest valuation range provided was 8x
  • Please note all valuation ranges are EBITDA multiples.

Poll no.2: What is the typical valuation range you are seeing for DTC led brands?

  • Average valuation range: The average lower bound of the valuation range is approximately 3.78x, and the average upper bound is approximately 6.06x.
  • Lowest valuation range: The lowest valuation range given was 2x.
  • Highest valuation range: The highest valuation range provided was 12x.
  • Please note all valuation ranges are EBITDA multiples.


  • Paul Hanley, Co-Founder at The Fortia Group brought the audience through the firms new Buy-side diligence offering. The Fortia Group have been servicing investors and credit funds but are now formalizing their Buy-side diligence offering, a rapid initial target screen, to learn more please contact The Fortia Group directly.



04.Value Creation


Will Holtz, Head of Operations at SourceMedium

Daniel Mc Carthy, Co-Founder at Theta

Robert Sperling, CEO at EastWest Basics

Rupesh Sanghavi, Founder & CEO at Ergode

Jim Stine, VP of sales at ShipPlug

Naseem Saloojee, Co-Founder at Carbon6

Kevin Fischer, President At KAPOQ

Bill Tauscher, CEO at Farallon Brands

Balaji Kolli Co-Founder at Saras Analytics

CFO Josh Holley at Bare Performance Nutrition

Jacob Cook, CEO at Tadpull

Heath Barnett, Head of SMB & Growth, North America at Airwallex

Jim Mann, VP of Europe at Getida

Ben Fletcher, CEO at The Mothership

Joseph Falcao, CFO at Orva

Shawn Dougherty, COO at Society Brands

Alex Urdea, Founder at Deep Ocean Partners


Key Takeaways:

  • Title sponsor Airwallex spoke about the important of localised payment options and how this was going to be crucial as part of a hyper-localised targeting strategy for eCommerce today and into the future.
  • Local payment methods accounted for 77% of transactions worldwide.
  • 44% of consumers are likely to trust online shop that offers their preferred payment methods.
  • The supply chain panel agreed that the rise of manufacturers going direct to the customer via marketplaces will continue to cause difficulties for eCommerce acquirors. It will be difficult to compete on price, however, as always obsessing over CX, branding and marketing strategy always have their place in combatting this type of competition.
  • A common theme throughout value creation talks were the importance of visiting and developing relationship with suppliers globally. Often this can open up different credit terms or cost efficiencies over time.
  • Predications for 2024 on supply chain were mixed as we move further from a covid container spike yet current situations in Suez Canal may continue to cause delays and additional cost.
  • KAPOQ and Carbon 6 explained that obsessing over performance metrics and investment benchmarking were crucial for brands and operators to double down on, with new Amazon marketplace fees forecasted to hit 2024, operators should be focusing on where they can make savings and efficiencies within the P&L.
  • CFO Josh Holley brought this to life with insight into how his brand, Bare Performance Nutrition are optimizing with data support and help from Saras Analytics.
  • Scrutinizing costs and ensuring you are setup for future success was a common theme, Bill Tauscher at Farallon Brands explained the importance of agility in retail, the role of eCommerce and marketplaces, and a view on timing when discussing growth plans with big retail.
  • Conference Partners Jake Cook, CEO at Tadpull and Daniel Mc Carthy, Co-Founder at Theta discussed the importance of understanding and using data sets to help with prediction analysis or growth forecasting.


Poll no.3: What is your top financial and operational priorities for 2024?

  • Become cashflow positive: 45%
  • Increase corporate EBITDA margins: 23%
  • Revenue growth: 13%
  • Reduce leverage: 12%
  • Improve inventory turns: 7%

Poll no.4: What is your target for corporate EBITDA by end of 2024?

  • Unprofitable: 0%
  • 1-5% margins : 20%
  • 6-10% margins: 10%
  • 11-15% margins: 60%
  • 16-20% margins: 10%

Poll no.5: What will drive the biggest valuation (profit multiple on exit / listing) of aggregators?

  • Financial profile e.g. corporate EBITDA margin: 15%
  • Brands: revenue quantum, growth, net margins: 54%
  • Being truly omnichannel: 8%
  • Tech & Data competence: 0%
  • Scale efficiencies: 8%
  • Other: 1%


Need some comments from the finance and operations panel.

Need a comment from an investor in the space [ don’t name Alex Udea].

Need success stories comment, don’t need too much detail on that.


We thank all our sponsors, without them conferences like this would not be possible. We look forward to working closely with you all throughout 2024.

  • Airwallex | ConferenceTitle Sponsor
  • BigCommerce
  • Carbon6
  • Eastwest Basics
  • Factored Quality
  • Getida
  • Grips
  • Saras Analytics
  • ShipPlug
  • Withum

As we mentioned at the event, this will become an annual event, and together, we look forward to making the next one bigger and better.


Blog Summary

In this blog post, we examine the current state of the eCommerce aggregator industry and its financing challenges. Following the financial crisis and the COVID-19 pandemic, the landscape has drastically changed, with inflation, interest rate hikes, and supply chain issues impacting valuations and funding prospects. We explore the implications for aggregators and discuss potential financing options, including debt refinancing, equity dilution, asset divestment, and merger opportunities. While the market remains tough, there are encouraging signs of resilience and strategic shifts among some aggregators, indicating a path forward amid the uncertainty. Join us as we delve into the intricacies of aggregator financing and the potential for a rebound in the near future.

Read Time: 8 minutes

Years of cheap debt followed the financial crisis (2007–2008) and M&A flourished. In 2020, the COVID pandemic restricted movement and pushed consumers online, boosting eCommerce but at the same time precipitated unprecedented sourcing and supply chain issues. Multiple geopolitical conflicts further impacted consumer demand resulting in the highest inflation in decades.


Currently, governments worldwide seek to offset inflation by increasing interest rates, with another hike recently announced by the US Federal Reserve (and another forecast for December 2022), and a similar hike by the Bank of England.


A recent report revealed that eCommerce growth is resetting to a pre-pandemic trajectory. This signals trouble for many of the aggregators that raised debt primarily based on an inflated, Covid-induced run rate.


A fundamental shift since Q1 of this year is lenders have far less appetite for risk because they do not know when the markets will bottom out and begin to recover. That said, PE firms and corporates have trillions of dollars of dry powder for acquisitions.


Valuations in public and private companies have corrected significantly, with a subsequent flight to quality. However, considering recent, high-profile setbacks, the eCommerce aggregator model is not front-of-mind for investors.


What does this all mean for financing eCommerce aggregators in the near term?

In this post, we will discuss current market conditions, and the factors that have precipitated the tough state of play for many in the eCommerce aggregator space, including the impact on valuations. Then, we’ll end by laying out the financing options for aggregators, going forward.


Inflation and Interest Rates | Quick Overview

Public market valuations have declined since Q1. Inflation is the driving force, sparked by the pandemic; fanned into flame by supply chain issues and increased demand, and conflicts like the war in Ukraine continue to add fuel to the fire.



Source: S&P 500.


In addition to supply and demand issues, the eCommerce space was hit with iOS changes (May 2021) limiting access to the customer, increased PPC costs (H2, 2021), increased marketplace fees (e.g., Amazon fuel hike Q2, 2022) – each of which negatively impacted margins, resulting in depressed valuations.


The Fed targets inflation rates at 2%. Last December’s projections for 2022 were 2.6%. However, inflation rose quickly, far exceeding initial projections and peaked this summer. The rate of inflation is forecast to end the year at mid-7%.


Subsequently, the Fed chasing the market has recently completed its fourth 75 bps interest rate hike, with the Federal Open Market Committee (FOMC) projecting it to close the year at 4.5–4.75%.


Currently, we are in the most aggressive hiking cycle in four decades.  Economists recently forecast (Reuters) that this front-loading tactic should end in Q4 2022 and thereafter we’ll see a steadier rate of hikes.


Source: Federal Reserve.


Considering it can take many months for increased interest rates to positively impact inflation, it’s hard to say when rates will peak, and if this strategy has set the US on a direct collision course with a recession. The same Reuters poll put a 65% probability of a recession within one year (up from 45% in the last poll).


While spending is decreasing, consumer sentiment remains high as unemployment is low, and wages across most sectors are at the higher end of the range. Consumer behavior focused on hard goods during the pandemic has since switched to experiences. While this continues to sustain inflation rates, the labor market is shifting.


Mass layoffs across the US tech sector have dominated news cycles in October and November (2022). Considering how aggressively the tech sector hired in previous quarters, this is not the cause for alarm some might think. However, the perception and timing are bound to impact consumer sentiment. This will apply further pressure on underperforming portfolios, which will make it even more difficult for aggregators to secure financing.


The Impact for eCommerce Aggregators

While each aggregator journey is unique, in our experience, aggregator funding took the form of one part equity and typically three parts debt. So, in a $100 million raise, $75 million was delivered in tranches from lenders, and the balance in equity. The equity was generally used to build out the company, and the debt used to acquire businesses.

The covenants generally limited up-front cash multiples aggregators could pay for assets, but also ensured a standard of portfolio performance to continue acquiring.


Many aggregators priced during the COVID growth period. Fast forward to Q4 2022 with declining consumer spending, many of the same aggregators find themselves in technical default and at risk of breaching their credit facilities (if they haven’t already), as their true corporate EBITDA has not grown in ratio to the amount of outstanding debt. And depending on the amount of cash on hand and the cost of outstanding debt, it is likely that several aggregators will not be able to continue servicing their debt in 2023.


Due to the burden of debt, many aggregators have been shut out of the market, forcing them to focus on operations in 2022, and looking to use paper, or stock (in the case of Aterian), as a means of acquiring other aggregators.


Is the Market Closed for Aggregator Financing?

Credit is the driving force in the aggregator market. It is becoming increasingly scarce as interest rates continue to climb.


Our source from a US investment bank said: “We don’t have a firm view on what ‘peak’ interest rates will be, or when we will see them (if we haven’t already). We do believe that lenders’ willingness to underwrite a credit based on LTV is waning. Increasingly, lenders (including more venture-style debt providers) are focusing on corporate EBITDA-level profitability as the most important factor in determining credit quality.  As such, traditional EBITDA-based leverage metrics are in focus for lenders.”


The year of operations has quickly shifted to survival as growing revenues and maintaining margins across an entire portfolio of businesses is challenging, to say the least.


Declining consumer spending and increased operating costs, coupled with the fact that many aggregators acquired assets beyond their capacity to integrate and grow, has rendered many in the space significantly over-leveraged.


The aggregators in this position have limited options, including:


  • Refinancing debt – albeit the markets are effectively closed.
  • Accepting equity at lower valuations (i.e., a down round) – similarly, the equity markets are closed, and existing equity investors are not willing to provide further support even for down rounds.
  • Selling off assets like non-core brands as certain aggregators shift away from a category agnostic model.
  • Seeking an acquirer for the firm itself – likely in a paper/stock transaction; however, such a transaction can be hard to execute where both aggregators are significantly over-levered.

Those seeking to refinance still must answer: Can they afford a higher rate of interest? This will affect what financing structure can be achieved, which narrows the available lenders considerably. “This fully depends on the size, performance, and regional exposure of the aggregator,” as one aggregator Head of M&A said. He continued “of course, if the Fed goes >5%, it will be a different ball game.”


Mergers of aggregators  has been a recurring theme in our industry webinars over the last six months. Consolidation in the industry seems to be inevitable considering the large number of participants, and particularly as smaller aggregators try to find scale. Yet, this is not uncommon in a venture backed environment. Most negotiations regarding mergers of aggregators stall because firms are short on the financing needed to reduce leverage to facilitate a transaction.


We are currently buyside advisors to an aggregator who is doing >$200m in revenue with a healthy balance sheet (i.e., no term debt) and who has a path towards profitability during 2023. Contact our CEO here.


Encouraging Signs Q4, 2022 | Aggregator Financing

While the funding market is effectively closed and there is a recession on the horizon, the increase in hiring and investing in technology by some aggregators give a positive perception.


For example, industry-darling turned villain (or scapegoat), Thrasio, made headlines in 2021 with huge funding rounds, unprecedented year-on-year acquisitions, and aggressive hiring; and subsequently made headlines in 2022 by firing their entire M&A department and seeing a significant exodus at the executive level, too. However, having paused acquisitions for the best part of two quarters, we are now seeing an increase in hiring (currently Thrasio has 30 available roles, mostly in operations), and a new acquisition strategy.


Furthermore, many of the aggregators are investing in technology, building out more efficient operational infrastructures to increase capacity to integrate brands.


The impact for eCommerce M&A | Valuation Multiples

While some of the larger aggregators have paused acquisitions, there are many that are still actively acquiring. However, current market conditions have resulted in greater scrutiny around revenues, revenue growth, net margins, and brand – aggregators are being far more selective, and doing less deals. Concurrently, stricter covenants have capped valuations that can be offered to these targets.


Our recent Survey of Aggregator Valuations (July 2022) revealed that >82% of acquirers were seeing valuations in the 2X – 4X SDE/EBITDA range (including deferred consideration). This is a significant decrease in valuations from our Q4, 2021 Survey of Acquirors where >60% were offering more than 4X SDE/EBITDA on average.


Source: Olsam Group


This has further impacted deal structure (e.g., upfront vs. deferred component). Last year’s survey found 75% of the final consideration was paid upfront. As buyers seek to offset risk in the current market, equity incentives are increasingly becoming a viable option.


Join our upcoming webinar: Survey of Acquirors 2022 Insights and Outlook for eCommerce M&A


Conclusion | Aggregator Financing

The great poet, Percy B. Shelley wrote: “If Winter comes, can Spring be far behind?” History shows the markets will bounce back. Spring will come and all the dry powder on the sidelines will start to be deployed, and there will be a sharp uptick in M&A just as there was after the 2008 crash.


However, it is difficult to forecast the peak of rates – yet many in the space are watching the end of Q2 2023, with Goldman Sachs recently raising their peak fund rate forecast from 4.75 – 5% up to 5 – 5.25%.


Still, those without the capital in the short-term need options, now.


Forging the right partnerships is always crucial. For many in the eCommerce aggregator space financial partners were determined multiple funding rounds ago; it is the partnerships or mergers in the near term that could ultimately determine which aggregators navigate the coming year.


Can We Help with Your Corporate Finance Needs?

The Fortia Group is a global M&A firm for eCommerce with decades of corporate finance and eCommerce experience across $80bn worth of deals.


Schedule a call with our team to discuss:


  • Selling non-core brands.
  • Mergers of Aggregators (acquiring or exiting).

Schedule here.



New CEO of Thrasio Interview (2022)

Amazon Marketplace deals dry up

Trillions of dollars in dry powder for acquisitions

Global Interest Rates, Statista

Global Rate Hiking, Bloomberg

M&A Activity 2022, EY

Global M&A Market, McKinsey

Inflation Impacts Private Markets, LionPoint

Inflation so High, Forbes

Interest Hikes, Reuters

Inflation Rates, CNBC

Recession Risks, CNBC

Amazon Covid Bump, Marketplace Pulse

Post Covid eCommerce, Bloomberg

Fed Officials Crushed Investor, CNN

New CEO of Thrasio Interview, Forbes

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