Thinking of selling your Amazon business? 🤔
Whether you’re starting a new venture or feel like your business has a higher potential for growth with greater resources, Amazon brand aggregators may be able to help you move forward by acquiring, scaling, and expanding your business.
The good news is that Amazon sellers planning to exit their business have about 100 active Amazon aggregators to choose from.
⚠️ The not-so-good news? They have to sift through almost 100 companies to see who might be a good fit to sell their business to.
Some of these companies have seen massive growth and continue to thrive, while others are facing challenges from lawsuits to funding.
Choosing the right aggregator is critical not only to your business’s continuous operations but also to your income. After all, depending on your deal structure, your earnings may depend on how well the aggregator has scaled and run your business. 🚀
If you have an earnout over time based on performance, you want to make sure the aggregator you sell to can deliver, or even that they will still be around by the time your earnout date arrives.
So let’s check in on how some of these Amazon Aggregators have been fairing in recent times.
Choppy Waters
Perch
Perch is one of the leading Amazon aggregators that has shown a lot of promise since its early days. The company reached a unicorn status after achieving a 10-figure valuation just one and a half years after it was founded in November 2019. After acquiring more than 80 brands (including Web Deals Direct for upwards of $100 million last year) and expanding its business internationally, the company has made headlines again, but for the wrong reason.
Freya Pratty, a reporter for the European publication, Sifted, wrote in an article published last month that the company is facing a lawsuit.
Perch acquired the business of Gutter Games, Inc. but another company named That’s What She Said, Inc. claims it already had a contract with Gutter Games before Perch acquired it. As a result, Perch and Gutter Games are facing a lawsuit for breach of contract.
As Perch has achieved an enviable level of success in the competitive eCommerce aggregator industry, these types of lawsuits are bound to happen, but it’s something to be aware of when considering your options.
Simply put, Amazon sellers should make sure legal battles such as this that plague some aggregators could have an impact on the company as a whole, something which may impact a seller’s second exit, where they receive their final earnout money.
Perch remains silent on this issue.
Seller X
Like Perch, Seller X is another aggregator that has reached a significant level of success in a short span of time. After launching in September 2020, the company added more than 40 brands to its portfolio within one year and has raised over $750 million in funding.
But after allegedly committing a breach of contract, the company is now facing a lawsuit.
According to an article written by Melissa Daniels and published in Modern Retail last month, the aggregator bought Regal Games’ Chalk City and agreed to pay Regal Games $900,000 one year after its purchase, except when the sales of the product fell to over 15%.
The lawsuit filed by Regal Games claims that Seller X intentionally avoided performing its obligations – such as exploring new markets, investing in ads, and having enough stock of the products on hand – so when the sales of Chalk City dipped to over 15% (which they did), the aggregator would not be bound to pay Regal Games the $900k.
There has been no court ruling in this case to substantiate these claims so we will have to see how this case develops, but it should open sellers’ eyes to the fact that they should be structuring their deals and working with aggregators that will best secure their earnouts.
Seller X said it is ready to defend itself in court.
Telos Brands
Unlike Perch and Seller X, Telos Brands is not facing any legal battles. But they have recently been reporting less-than-stellar financial performance.
Among all the Amazon aggregators, Telos Brands has one of the lowest amounts of capital raised at only $2.1 million. The fact that they raised this capital last September 2021 could be cause for even more concern about this company’s financial status.
Funding for aggregators is dwindling this year. Hopefully, it hasn’t fully dried up for Telos Brands but time will tell.
Smoother Sailing
While multiple aggregators are losing steam, some are still holding strong.
Acquco
Founded in 2020 by two former Amazon employees and an investment expert, Acquco is one of the youngest and fastest-growing Amazon aggregator companies on this list.
The company buys leading Amazon brands and, using its proprietary technology, data, algorithms, and Amazon expertise, grows and scales them so they will become household brands.
Despite it being a young player in the field, Acquco has shown an impressive financial and operational performance so far: it generated a revenue of over $420 million for the year 2021, amassed more than $450 million in funding, grew its team of seven to more than 250 worldwide, and acquired 40 brands to date. The company also launched its own in-house tech and analytics divisions earlier this year, emphasizing its highly measured and strategic approach to identifying, valuing, acquiring, and managing brands.
Aside from these figures, the company takes pride in its seller-friendly approach throughout the process. Their thorough and transparent due diligence, flexible deal structures, legal assistance, dedicated support team, and streamlined processes give Amazon sellers a convenient, efficient, and hassle-free way to exit their business confidently in as little as 23 days (on average).
Last but not the least, Acquco’s brands have purportedly, up to tripled their growth after acquisition. If you’re looking for an aggregator with a proven track record in growing businesses, this company may be the one for you.
Benitago
Benitago was founded by two Computer Science majors and Amazon sellers in 2016. The company has raised $380 million in funding to date.
This aggregator targets businesses with annual revenues of $3 million and innovative products that other aggregators may not be interested in.
They have an excellent record of growing Amazon FBA businesses, with more than 20 products in their portfolio having more than $250,000 in sales and achieving Best Seller Rank Improvement Trailing Twelve Months (TTM) 12 times. They also helped scale more than 300 products from over 15 categories such as beauty, electronics, health, maternity, orthopedic, and pet supplies.
Benitago’s acquisition process involves just three steps: business evaluation; intensive business data analysis; contract drafting and payout. This is perfect for sellers who want a short and fast exit from their Amazon FBA business.
The company also used to offer qualified Amazon sellers an Aggregator Offer Match Guarantee where they matched the amount offered by another aggregator for your business and give you an extra $250,000 if you sell it to Benitago.
In terms of post-acquisition performance, their brands show a 30% year-on-year growth rate, so there’s a high chance your business will also grow under their management.
Elevate Brands
Founded towards the end of 2016, Elevate Brands has emerged as another leader in the Amazon aggregator world.
The company buys FBA businesses based in North America, Europe, and the UK, preferably those that hold patents and those from the groceries, pets, and supplements categories. They have acquired over 25 brands and generated more than $500 million in funding to date.
What sets Elevate Brands apart is their focus on the relationships they build with Amazon sellers, founded on the fact that they started out as Amazon sellers themselves. Their relationship-first strategy seems to be working well, as their pet brands show a 57% growth in sales, and their grocery brands show a whopping 1556% growth in ad sales.
Their world-class mergers & acquisitions (M&A) team ensures sellers will also have an easy and seamless exit from their businesses in less than 30 days.
Merama
With headquarters in Mexico City, Merama positioned itself as the aggregator for Latin American brands looking to scale and grow to be $1B businesses. The company is valued at $1.2B and has raised $445 million in funding.
Their strategy is very different from the other aggregators, however: instead of buying many brands at a time, Merama will invest in only a few leaders in their respective categories and work at scaling and growing them exponentially. They currently have more than 20 brands in their portfolio.
Another thing that separates them from other aggregators is their Future Exit Option. Instead of buying your entire business from you, Merama will initially invest and become a strategic partner of your business, taking a significant stake but not owning 100% of it. Together, they will help you grow it to become a $1B business by providing you access to non-dilutive capital and human resources, then give you options to exit your business three to five years later.
Latin American sellers who want to stay hands-on in growing their businesses will find Merama’s strategic partnership approach ideal. Apart from their solid financial backing and proven track record in growing Latam brands, they also promote inclusivity as their brands come from a wide range of product categories.
Razor Group
Berlin-based Razor Group was founded in 2020.
A major player in the Amazon aggregator industry, Razor Group has raised more than $1B in funding from leading investors, manages over 200 brands, and has evaluated over a million FBA businesses from their five offices in Europe, Asia, and North America.
The company has a fair, fast, and forward-thinking approach in how they evaluate businesses. They’re interested in businesses with products that have high product quality and great reviews, low complexity, robust growth, promising potential, and sales ranging from $1 to $15 million. Their acquisition process has only three phases and takes only a few weeks from evaluation to closing, which is ideal for sellers in a rush to sell their business.
In summary, the stressor is to know who you are getting into bed with when you sell your company. It is important to look at not just the numbers but also the track record and future prospects for the aggregator you may essentially be going into business with. That is essentially what you are doing when you are selling your business with an earnout on the back end.
Knowing more about the aggregators you are in talks with towards your exit will help you to narrow down your decision to make the right choice for your business. 💯
