What Amazon Aggregators Are Really Looking For

Fortunet has conducted a survey among 42 companies (“Aggregators”) that engage in rolling up Amazon Businesses by way of merger and acquisition (“Amazon M&A”). Such aggregators were asked about their investment criteria and other considerations related to their acquisition process, as well as about their plans moving forward.

Some of the key findings

The most popular categories among the Aggregators include 1. “Home and Garden” (over 88%), 2. Pet Supplies (over 78%), 3. Baby Products (67%), 4. Outdoors (64%), 5. Health and Personal Care (64%).

The respondents excluded the following categories: 1. Apparel (52%), 2. Electronics (44%), 3. Supplements (42)%, 4. Food (42%) or 5. any Fashion product (39%). This is mostly due to the demand for evergreen products that won’t lose popularity over time, won’t require constant innovation or design, and that do not have complex compliance/regulation.

None of the Buyers polled are looking to acquire solely wholesale businesses. 63% of the respondents indicated that they purchase only private label brands, 30% are buying primarily private labels.

46% of the Buyers assert that they require a minimum operating history of one year only for acquisitions targets, 35% require over 2 years, 17% do not require any minimum operating history.

Although a profit margin of over 20% is typically deemed desirable, over 50% of Buyers said that they require at least 15% SDE profit margin for Amazon FBA businesses.

Preferred structure: Most aggregators offer 70-80% cash up front, with a deferred or stabilization payment, followed by an earn-out.

While many sellers assume that sales via multiple platforms increase their valuation, most aggregators replied that they do not necessarily value additional sales channels unless they drive significant sales.

    Omer Yacoby Levine

    Director M&A

    Seasoned professional specializing in cross-border investment banking & business development between Israel and Asia & Europe regions.