💡 Amazon Exit PSA 📢
99% of Amazon influencers and agencies on LinkedIn talk about growing sales and not a whole lot else. Why is that? Honestly, it comes down to limited experience.
What's ironic is that selling your Amazon business is when you will make the vast majority of your money. Running a brand is a ridiculously inventory-heavy business model so most of the time, you're not paying yourself.
Heck, most sellers pay themselves NOTHING in their first two years of selling on Amazon.
Exiting is the end goal for 99%. Paying yourself $10-20k per month pales in comparison to exiting for $5 million. It's truly 🍎 to 🍊.
When Amazon sellers do exit, most do it wrong. It comes down to a lack of education and bad lawyers.
A typical Amazon exit involves three buckets of money:
Bucket #1: Cash at exit. Your goal is to get the buyer of your brand to agree to make this number as BIG as possible. This is secured money that is deposited into your checking account the moment you hand over the business to the buyer. This is zero-risk money. The buyer is going to want to make this bucket as small as possible. Don't give in.
Bucket #2: Seller Note. A seller note is money that is personally guaranteed by the buyer. A typical payment structure is monthly payments to you from the buyer over five years and then a large balloon payment at the end. It all sounds nice on paper but the buyer can get himself into trouble and not be able to pay this to you. I've seen it happen so it's definitely not risk-free!
On this one, make sure your contract has some verbiage related to the assets of the business or personal assets. You want the language to be incredibly scary for the buyer. If the buyer defaults, it's a legal nightmare and will take a LONG time to see this money. Ensure you have an option to regain control of your brand if a default happens.
Bucket #3: Earnout. Your goal is to negotiate HARD to make this bucket as small as possible. Why? Because, if the buyer destroys your big beautiful business, you might never see this money.
Earnout money is typically tied to the performance of the buyer and serves as a type of "insurance plan" for the buyer. It is only paid out when the new owner hits agreed-upon monthly or quarterly profit goals. As the seller of the brand, you should do everything in your power to help the buyer during the transition and beyond. If they succeed, you get this money. Many have had to say goodbye to this bucket over the years due to piss poor performance. Now you know.
👉 Please don't hesitate to drop a question below and I'll do my best to answer it!
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P.S.
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