29 July 2022

eCommerce Valuations for 2022 – 2023 [Buyer Survey Results]

Matthew Walker
Matthew Walker
eCommerce Valuations for 2022 – 2023 [Buyer Survey Results]
Read time: 7 minutes

If you are an eCommerce entrepreneur looking to sell your business in the near future, no doubt you have searched for something like “How much is my Ecommerce Business worth?” 

Resulting articles (search engine results pages) for these searches and others around eCommerce valuation focus on how to calculate Seller Discretionary Earnings (SDE) or Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) – two principal models for assessing the profitability of a business.

However, what the results fail to include is the current state of valuation multiples in the buyers’ market. 

This is problematic because the buyers’ market negotiates what multiple to assign to the SDE or EBITDA of your business, and how to structure the deal between upfront and deferred payment. Both of which determine the cash you take home at the end of the day.

Although the process of calculating SDE and EBITDA requires some accounting skills, the formulas are stable. Whereas multiples are more negotiable, trend-based, and have clearly shifted since Q1 of this year. 

This renders all valuation articles from earlier this year immaterial to the value of your business today. 

In this post, we will publish the results from our recent Survey of Aggregator Valuations (June 2022), and discuss what they mean for entrepreneurs looking to exit now or in early 2023. However, with recent shifts in the market precipitating a more demanding exit process, we will start by looking at the benefits of retaining an M&A advisor to oversee your exit strategy.

If you want to know what your business is worth, you need an accurate valuation, and an advisor that understands the buyers’ market. Contact us today for an expert valuation. 

Do I Need An M&A Advisor To Sell My Ecommerce Business?

In our seller survey (Section 5, Exit Guide for Amazon FBAs) the top priority for entrepreneurs when exiting their business was getting the best valuation

If this is one of your top priorities, then retaining an experienced mergers and acquisitions (M&A) advisor early in the exit planning is crucial.  

A seminal study spanning thirty years of acquisitions (Does Hiring M&A Advisers Matter for Private Sellers, 2018) discovered having an experienced sell-side advisor increased the valuation by up to 25%. 

The study concluded an experienced M&A advisor:

  1. Levels the negotiation table: Businesses were typically sold at a lower valuation due to entrepreneurs with no M&A experience negotiating against well resourced buyers. 
  2. Bolsters the seller’s bargaining position: A direct sale tends to be less visible against the market, rendering the bidding process less competitive, leading to lower valuations. 

The Fortia Group

We launched The Fortia Group to provide investment banking, sell-side representation to sellers planning an exit. 

Our decades of M&A experience across hundreds of deals worth billions of dollars, teaches us that the smoothest and most lucrative exits involve the best prepared businesses. Hence our mantra: “Fail to prepare, prepare to fail.” 

Our exit team works with you (even 1 – 2 years from exit) to get every aspect of your eCommerce business ready for sale (eg. Legal, accounting records, business operations, product roadmap etc.,).

To ensure your business achieves the highest offer, we run a seven step exit process that includes a professional auction with our buyer network of hundreds of aggregators, PE firms and private offices. This gives your business the visibility it deserves and the competitive bidding process that drives up the offer. 

Next, we are going to dig into the survey results to discover the current state of eCommerce valuations for the rest of 2022, and into 2023. 

Survey Of Aggregator Valuations in 2022

Survey Rationale

2021 was a banner year – While increased headwinds (supply chain issues, increased PPC) impacted margins and revenue in H2, with >$13 billion raised in capital, eCommerce brand aggregation was still considered a sellers’ market. 

2022 Q1 – Q2 – In the last six month we have witnessed war in Europe, inflation across all markets, the worst US stock market trading in 50 years, and recession. In the eCommerce space we have seen acquisition pauses by some of the large FBA aggregators, and reports of aggregator consolidation (Mergers of Aggregators (MoA)).  

The rationale for this survey is simple: To provide an accurate snapshot of the buyers’ market, and what this means for eCommerce business owners looking to exit in 2022 or 2023.

Important Survey Details

35 Buying firms: Completed the survey.

82.5% FBA-first aggregators participated: While most of these firms have begun to acquire or have intentions of buying DTC brands, their provenance is FBA aggregation which is only a niche within the wider eCommerce space. 

17.5% DTC aggregators participated: Multiples for profitable DTC brands trade much higher (6 –10X) on average than FBAs according to our previous buyer survey (Q4 2021). One reason for this is they are considered a less risky acquisition (FBAs do not own the customer, nor have influence over the marketplace). Projected multiples would be higher on average if sole DTC aggregators were surveyed. 

No PE Firms or corporate ventures participated: This is important because private strategics are actively acquiring in the eCommerce space, bidding on considerably larger assets and paying higher multiples. 

Note: It is in the best interest of aggregators if valuations are lower. While we ensure all firms (FBA, DTC, PE Firms and corporate ventures) in our buyer network operate ethically, their goal is to acquire the asset for the lowest price. Buyers have cited unrealistic seller expectations as a barrier to acquisitions in Q2. Reports projecting conservative valuations is a way of influencing seller sentiment across the market. 

To better understand the broad spectrum of buying firms and their approach to acquiring businesses in the eCommerce sector, join our next digital event: Valuations Deep-Dive (August 25th) – a panel discussion with leaders from FBA, DTC, PE firms and corporate ventures. 

Survey Questions
  1. By what percentage has valuations declined in your deals on average?  
  2. By what percentage has your volume of deals declined from Q1 compared to Q2, 2022?   
  3. Including completed deals, how many deals do you expect to do in 2022?
  4. What multiples (including any type of deferred compensation) are you seeing across your deal flow?
  5. Regarding compensation, has upfront payment decreased and deferred payment increased since Q1, 2022?
  6. In 2022, do you expect valuations to: Stabilize, further decrease or rebound?

#1 By what percentage has valuations declined in your deals on average?

Ecommerce Valuations

(Figure 1)

  • 0% answered 5% decline 
  • 2.94% answered 10% decline 
  • 20.59% answered 20% decline
  • 50% answered 30% decline 
  • 20.59% answered 40% decline 
  • 5.88% answered >50% decline

Results show that 100% of firms have seen a decline in valuations, with 3 out of 4 firms seeing valuation decline of >30%.

There are a lot of common credit and equity investors across the aggregator space. Seeing Factory14 distressed, and Thrasio’s mass lay-offs following suits, proved a cautionary tale, resulting in some aggregators pausing acquisitions and most focussing on operations. Focussing on efficiencies while holding capital in a recession is a proven strategy.

It also suggests that smaller businesses were trading at a premium in 2021 due to competition. However, as aggregators continue to raise their revenue minimum for assets (many have reported >$5m threshold, with exceptions), competitive bidding will only occur for larger businesses. 

From our last buyers and sellers survey: Only 12% of deals by aggregators were above $5m. In 2022, aggregators forecasted this to rise to 50%.

#2 By what percentage has your volume of deals declined from Q1 compared to Q2, 2022?

Ecommerce Valuations 2022

(Figure 2) 

  • 28.13% answered 10% decline 
  • 18.75% answered 20% decline 
  • 6.25% answered 30% decline 
  • 3.13% answered 40% decline 
  • 15.63% answered 50% decline 
  • 28.13% answered >50% decline.

The spike in both the “10%” and “>50%” range could account for some of the bigger firms pausing acquisitions over the last two quarters, while small to medium firms actively acquire.

#3 Including completed deals, how many deals do you expect to do in 2022?

E-commerce Valuations 2022

(Figure 3) 

  • 43% answered 1 – 5 
  • 26% answered 6 – 10 
  • 26% answered 11 – 20 
  • 5% answered 21 – 30 

No firm answered “0 deals” or “31 – 40 deals” – both options in the answer column.  

>94% of firms will complete 20 or less deals in 2022.

From our last buyers survey and market-leader roundtables (Q4, 2021 in Berlin and London), it was estimated that the FBA aggregator space completed approximately 300-400 deals in 2021. This was forecast to rise to 1,000 completed deals in 2022. Furthermore, 40% of aggregators said they expect to do at least 40 deals in 2022.

With no firm projecting >30 completed deals for the year, and some of the large aggregators pausing acquisitions – even with some of the recent funding raises, it’s hard to see the FBA space exceeding 500 deals in 2022. 

#4 What multiples (including any type of deferred compensation) are you seeing across your deal flow?

E-commerce Valuations

(Figure 4)

  • 5.88% answered 1.5 – 2X SDE 
  • 35.29% answered 2 – 3X SDE 
  • 47.06% answered 3 – 4X SDE 
  • 8.82% answered 4 – 5X SDE 
  • 2.94% answered >5X SDE 

Results show that >82% are seeing valuation multiples between 2 – 4X SDE (Q3, 2022)

Reminder: 82.5% of this sample came from FBA aggregators. In our qualified buyers network, multiples among DTC, PE firms and corporate ventures are considerably higher.

In our experience, only FBA businesses with strong brands, healthy net margins and revenue are fetching >5X SDE.

From our last seller survey (Q4, 2021): 

  • 8.7% answered 2 – 3X SDE,
  • 30.43% answered 3 – 4X SDE,
  • 43.48% answered 4 – 5X SDE,
  • 17.39% answered >5X SDE. 

>91% were seeing valuation multiples >3X SDE (Q4, 2021)

There has been a substantial drop in multiples since Q4, 2021. Buyers are more selective. Sellers are more cautious of which aggregator they sell to (especially if the deal is structured more towards deferred, see next question). 

#5 Regarding compensation, has upfront payment decreased and deferred payment increased since Q1, 2022?

E-commerce Valuations 2023

(Figure 5) 

  • 64.71% answered YES – upfront payment has decreased and deferred payment has increased. 
  • 35.29% answered NO. 

More than 6 out of 10 firms have seen a restructuring of deals in favor of deferred payment since the beginning of the year.

Deferred payment is a de-risking mechanism that can help acquisitions get through investment committees with more stringent covenants to uphold. 

However, with deal structures shifting toward deferred, sellers should seek a higher return on riskier earnouts (eg. equity stakes in the aggregator), and arrange to participate in operations during the earnout period.

In a recent webinar “Acquisition Criteria of Buyers in a Bear Market,” Chief M&A Officer for D1 Brands stated that the future of brand aggregation will be more about partnerships between sellers and buyers, than outright acquisitions. This way, sellers can share in the upside, while buyers benefit from the seller’s experience and expertise. 

#6 In 2022, do you expect valuations to: Stabilize, further decrease or rebound?

E-commerce Valuations 2023

(Figure 6) 

  • 21% answered STABILIZE 
  • 79% answered FURTHER DECREASE.

Of the 35 firms that participated, 0% forecast that valuations would rebound in 2022. 

Again, it is in the best interest of buyers that valuation expectations decrease. In a market with depressed valuations, there is a promising opportunity for buyers with access to capital. 

That said, with deals shifting toward more deferred payment structures, clearly favoring the buyer, valuations could stabilize quicker.  

Ecommerce Valuations in 2023

At the beginning of 2022 there was a consensus among prospective buyers: It’s a great time to sell your eCommerce business. 

All commentary pointed to the quantum of capital raised in the industry, with business brokers promising 30-day FBA asset deals from LOI to close (Note: the sales process for DTC brands is considerably longer).  

As we enter Q3, 2022, buyer sentiment is a little muted: It’s a good time to sell, if your eCommerce business is of a certain quality. 

In a recent digital event with 10 aggregator CEOs on the panel, one said “Average is not good enough, anymore.” Currently, buyers are only willing to pay a premium for businesses with a strong brand, healthy net margins and upward trending revenue. 

  • Strong brands have strong moats and are hard to replicate.
  • Healthy net margins (>20%) signal profitability.
  • Upward trending revenues show opportunity. 

While a new caution has entered the market, it’s important to state that the vast majority of aggregators are actively seeking high quality assets. 

If you decide to sell your online store, you should start planning today. Partner with The Fortia Group. We will prepare your business for due diligence, and then run a competitive auction with our vast buyers network (which includes PE firms and corporate ventures), to get you the offer you deserve.  



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