Selling Your Brand For 8-Figures: Amazon Exit Deals w/ Broker Coran Woodmass

Holy crap, we're here with an Australian. Corin, what's going on, man? I cheers you, but I don't really have. Clement took all the wine. Look at. Look at this right here. Look. Clement got ambitious tonight. He just decided he's gonna use up all the wine. Well, Clement, you got some catching up to do.

Yeah.

Why don't you kick us off?

Oh, my goodness. It's the most pathetic thing watching you drink wine. And, Corin, you. You go by the FBA broker. We're gonna talk about selling some businesses tonight.

Yeah, that'd be great.

You were working on some deals today.

Yeah, I was always working those deals.

Always working those deals.

All right.

Hey, let's jump in. We got a lot to talk about. Because I believe in building businesses to sell. I've now sold a couple of businesses. Clement, the good doctor, and I have acquired a couple of businesses ourselves. So I'm on both sides of the aisle buying and selling businesses. And Corin sees more deal flow in the Amazon space specifically than anybody else I know. So, Corin, what are you seeing go on in the space right now?

Oh, man. A ton. A ton. There's a lot.

Forgive me. While I drink my one sip of wine that Dr. Clement left for me. I'll ask also. I'll act all sophisticated. I drink my one sip.

I'll drink my water.

Yeah.

Oh, come on.

All right, corn. Tell us. Tell us everything.

Well, if I had wine, I could tell you more, but no.

The space is crazy. What we're seeing a lot is the money on the buy side is ridiculous. So real money is coming into the space.

Well, how do you define real money?

So I would say in the 10, $50 million plus budget range is real money. So strategic acquirers, companies that have access to almost unlimited for the right deals. That's what we're seeing. We're also seeing international brands that are looking to acquire product based businesses that have proven their market on Amazon and they're looking to take them into their other channels.

What type of channels are those?

Businesses tend to be focused on one in particular has. I'll tell you a little bit about these guys. So I'm from Australia, you guys, we're in the States right now, just been in Europe. This product, these products that these guys have are in all of those locations. They have thousands of sales channels into retail, wholesale, worldwide distribution. So it's not online. What they do online is small compared to their actual business. So they're looking for products that could go into retail that have proven their model Right. So they've proven.

Model.

What does that mean?

What type of model?

They're solving a problem for a customer.

Okay.

So they've created a brand, they've created products that solve a problem for a real customer.

And that's the type of product they're looking for that can also go into retail. And they actually said to me, look, we're looking to buy.

I'm listening, Corin. Keep going. Keep spitting gold. While Clement spits out his wine.

They're looking to. To buy these brands while they're small, call up the sales department, say, hey, put these in a thousand stores. That's what they want.

So they've already got the distribution and they're looking for products that fit that model of their basically distribution place. So they're looking to acquire them and they've got the history and the deep pockets to be able to acquire them.

And deep. Actually, that's a great point. There's one more thing before we go on. Deep pockets is where it's at. So this one particular company I'm talking about, two brothers own this business. The head of M and A, over talking to, I said, well, what's your. What's your budget range for the first acquisition? He said, well, one of the brothers. One of the brothers and I do M and A. We could sign a check up to 30 million, the two of us. If it's above 30 million, we'd probably have to get the other brother and maybe the board involved above $30 million. These are my kind of people. Yes.

And the crazy thing, I think, is that most people who are in the Amazon space specifically aren't thinking about what it takes to position themselves in front of big money. And now you're seeing it inevitable that you see all the big money moving into the space. It was only a matter of time. It's finally happening. So how do you work with a lot of the one and two person shows that are selling to these strategic buyers? So how are you advising them to approach those types of situations?

Sure. So it's really about packaging up the business to position it in such a way that it appeals to these type of buyers. They need to be ready to go depending on the buyer type. They have a lot of different metrics they're looking at and it's tough to be perfect for everyone. So we try and position them for success going into the sale. So often we're preparing six to 24 months ahead of time.

Wow.

Before actually going to market.

And what's actually being done in that six to 12 months.

Yeah. So a lot of people, you know, they start an FBA business, let's call it just with the idea of what's selling on Amazon, what can I source, what can I make money on, what can I rank? And you know, that's how you get started. That's all good. And well, maybe you find a product line, a niche that's great. Let's say sports and fitness, you're in one type of fitness, right? That's your, your jam. You, you get something ranking in this. If you double down on this niche and you say, okay, I'm going to create more products around this niche, it's going to take some time. So that first year is often figuring out what works. The second year is really doubling down on building out products for that niche. The third and fourth year are often either expanding again or optimizing for a sale. So you can't aggressively be growing and be positioning for an optimal sale. You can or you can hard because one of the things you want is good net margin. So that's something. You can't be taking great net profit out of a business if you're, while.

You'Re also scaling, like you're also investing in advertising and so two different levers.

I mean, I know this from my experience and how we addressed it when I've sold a couple of businesses. But when you're working with these businesses, are you advising them to not go to market until they're at that place where they're stepping back and now managing profitability?

It depends on the business and depends on the goal of the seller. So in some cases we've had clients recently that say, yep, I get that I could grow this bigger and I could position this for a bigger exit. However, the market rate, the value of my business today is enough for me to say this is a hell yes number.

What types of. Are you seeing any specific markets or any specific specific industries? Sell for higher multiples or just like open ended question, what, what types of businesses are selling for the most as of right now?

Yeah. So actually the type of, you know your talk in Kiev was all about building a real brand.

Yeah.

Having product synergy, solving problems for that target market and that's actually what's always going to sell better than another. Another business.

Well, compared to what?

Yeah.

So you know, what's the, I think in brands like what's the opposite?

Yeah. So we see a lot. Anyone that sells via fulfillment by Amazon will come to us and think they can sell their business.

Got it.

So in some cases they could have a business on paper, but maybe they've got three, four different brands and six products. But three of those brands are a name and they have one product.

Got it.

And there's no synergy between those products at all. All they're doing is looking on all the online tools to figure out what's selling well and then they'll go do that and then they'll look for something else. They'll go sell this and.

And is there a market for that? Do those businesses sell?

Depend. Depends.

They're not slam dunks.

Hell, no.

But. But brands are slam dunks.

They can be. Yes.

Who has been saying this for years and years. And, yeah, I wish there was somebody who had warned us.

Yes.

And I don't know who mentioned this. It was definitely not you, but someone who said, you know, start a different brand for each product you create. It's ridiculous.

Who would give that advice?

I don't know, but I have. I have conversations with, I've got three brands and then we go to look at the business. This is not three brands. This is three products. There's not any brand synergy.

Whoever said that should be hit in the shoulder with a wet dog.

With a wet.

A wet dog. A wet dog.

A wet dog.

Have you ever been hit. Have you ever been hit in the shoulder, particularly the left shoulder, with a wet dog? You know what they say about that. It hurts like a bitch.

I'm a dad. I'm a dad.

I think we just lost everyone.

Yeah.

Shut it all down.

Looking forward to Brand Builder Summit.

Are you all signed up?

Yes, I am. I've got a group of four of us coming, so.

Good man.

Looking forward to that. So my question would be, how would one go about getting the most out of the experience, or how would you go about getting the most out of you out of the experience if you weren't in your position?

So I don't know what you're up to in life besides preparing for these other brands, but it sounds to me like you need to be in yes, Mode. And yes, Mode means you're looking for opportunities to open up. You're looking for new partnerships that excite you. You're looking for new ideas because you've got fresh eyes, you're flush with cash, you got some time, you have a little bit of experience, so you get to be the chooser in terms of what opportunities you pursue. To me, that's yes, Mode. So your goal at an event like Brand Builder Summit is to be looking at the people in the room that you might want to start new businesses with the people that look like ideal partners for you and the ideas that are going to be shared from stage that give you that fresh perspective on something that you haven't considered before. And you're like, oh, dude, that's the thing we're going to go all in on. Maybe somebody, maybe Catherine Lavery will be sharing about what's working really well in crowdfunding or on Shopify, or Ezra Firestone will be talking about building up audiences. Or you'll be learning from Chaz Smith about video marketing. Or you'll be learning from Corin Woodmass, who's going to be speaking at Brand Builder Summit about some of the businesses that are being positioned for sale. And one of those things will give you an idea and you're like, all right, team, there's four of us here. We got some cash, we got some flexibility. This is the direction that we're going to go. By the way, this is the partner that I just met for this. That's the type of perspective that I would encourage you to have going to an event like Brand Builder Summit.

Oh, all right. Yeah, no, that's. That's where I'm interested in meeting those, like, those people that really match with me. But the thing is, is it's always a busy space, and so it's a.

What space?

I have a hard time. No, it's just like, there's a lot of people at events and I guess where I.

You know, like, going up and just, like, cold talking to people is not my style, but it's just, like, approaching people who I'm qualified to speak to, but internally. Don't always think that I'm, like, qualified to go up there.

Yeah, I totally get. I.

You know.

One of the stories that I like to tell is at one of my first events, I. I noticed that I got super depressed by, like, the end of day two. And the reason was because the perception from stage is all these people are killing it. What am I doing wrong? And the. The truth was, I fit in with the rest of the group, just like everybody, right? But the perception is everybody's sharing their best stuff, everybody's playing a who's got a bigger dick contest. And as a result, it's really easy to feel kind of bad about yourself, which is why our events are really, really different. And there's no ego at our events. Like, at Brand Builder Summit, you're literally going to be around a campfire cooking s' mores with a multimillionaire who's doing a roll up and you won't even know what he does for a living because you're sitting there talking about some unrelated topic while you're cooking a s'.

More.

And then later you go have a glass of wine and a beer and you start talking business. That's the type of environment that we build at our events, specifically Brand Builder Summit. We're outside of town, we're in the wilderness in this fancy resort that's in the middle of nowhere. We're going to have campfires, I'll probably bust out my guitar, we'll drink too much wine. There'll be a bunch of keynotes, we'll have a bunch of fun and maybe business will get done.

That's what I like to hear.

All right, great.

Well, good. When you're coming to the right event. All right, it's time for our last drunk dial of the night. See money. Who we got?

We got Patrick in Brooklyn.

Thanks so much for giving me a call.

Well, thanks for calling in. What can we do you for?

What kind of techniques, habits have you had? The three? Have either any of you developed to keep holding yourself accountable and that would keep you from executing, keep you from doing the things that you really want to do?

That. That's a fantastic question. I. I'll take it first. I'll say having skin in the game, put yourself at accountability to yourself. And skin in the game can come in the terms of investment. It can come in the form of time, it can come in the form of public commitments. That's how you get skin in the game. But I don't think there's any, I think there's any replacement for mentorship and community accountability. Mentorship is ultimately, we're only accountable to other human beings. We tend not to be accountable to ourselves. We're accountable to communities or accountable to individuals, which come in the form of coaches or mentors. And that is who will hold you accountable to clearing out your own mental bs, if you will. I also am a voracious journaler. I journal just about every day. I'm writing down my thoughts, but I actually read my journal more than I write in it because I'm going through the reflections that I've had at up times, down times, and I journal when I'm feeling really good. I journal at times when I'm on a high so that I can remind myself of what I'm focused on when I feel good. Because a good piece of advice that was given to me was you make your decisions when you're on a High. When you're on the up and up, you wait until you're in the clear before you make major life decisions. Clement, what about you?

I think I've seen, like, good. I think Tim Ferriss had a good one, and I don't remember which book.

But stick using, like, S, T, I, C, K. Yeah.

Yeah.

You can put a bet on kind of developing a habit. And I think, like.

And that's.

That's part of it in terms of.

Creating goals. I think a lot of us try too hard to try to think like there's an end game, try to enjoy the process, try to figure out ways to systemize and to do. Like to be consistent about what you do and enjoy the road otherwise. Like, I think a business is more of a marathon than a sprint. And if you don't, if you think of it as a sprint, it's really.

Easy to get disappointed.

Burnt out.

And I think, like, also as an entrepreneur, I think, like, it's. It's a lonely road. I think Y Combinator, which is a kind of vc, kind of incubation type fund, kind of recommends having a business partner. But the con side of that is, like, I've heard business partnerships are like marriages without the makeup socks.

So.

Well, I mean, we can all customize our own relationships.

Yes.

So, yeah.

You want to be also such a.

Source of challenge and learning in life. The hardships kind of make the highs worth, at least in my experience. But I hear you about that.

Yeah.

I think most entrepreneurs I know are kind of manic depressives.

Yep. Yep. Pretty much. And, Corin, you get the last word.

Yeah. So, Patrick, I think this is an excuse. And what I mean by that is what you said at the beginning, if I remember correctly, was.

You have all this mental baggage stopping you from moving forward. So what I would do to clear that up is to say, what do you actually want to do? Why do you want to do it? And write down what the first step is to doing it, and do it today. Don't wait. Don't go to the therapist first. Figure out what you actually want to do, why the fuck you want to do it, and take the first step today and keep doing that every day. What's the next step? Do it today. Pick up the phone, make the call. That's what I would do, and that's actually what I did to get sitting right here today.

Wow. Thank you.

Corn.

Great question, Patrick. Thanks for asking.

Loved it.

Thank you very much for fielding and giving me a call to include me.

Say hi to Brooklyn. It's one of my favorite places.

Yeah, drop me a line next time you're here.

All right, see ya.

Bye.

Well, Corin, thanks for coming to Austin.

I do have. Oh, one more question.

Let us have it, Dr. Juan.

So when people think of getting brokers, I think like their concern is, well, how do I know that I'm not going to get screwed? How do I like thinking through kind of the pricing is do you find that the commissions are flexible and how do I evaluate the right broker? Obviously there might be some bias there, but what do you say to people as to like what, what should they look for and how do they get the best deal?

Good questions. So how do you pick a broker? Actually, when I first talk to people on a call, I say there's three things we aim to get out of our first intro call. One is we'll figure out what the value of your business is today. Number two is, is now the best time to sell or is it best to plan for an exit and sell later? And three is, are we the best broker to help you? Because I'm not the best broker for everyone and not all clients are the best fit for me. As far as picking a broker, you want someone that whatever niche you're in. So even if you're not doing physical products, whatever you're doing, if you're in SaaS, if you have a service based business, you want to work with a broker that has a track record in an experience knowledge database of specific buyer types. So for instance, we can tell you we have over 800 million in capital available from our registered buyers alone. The people that have taken the time to say, put their hand up, this is what our budget is and given us all their information. 800 million. So I can say for physical product brands, that's how much our buyers have to deploy. So if a broker can't answer that question for your vertical, that's not a good sign. They should be able to tell you that. They should be able to tell you for your business how long this process could take, what the deal terms are typically like, how to best position your business. And if you're not in a position to sell right now, they should have the balls to say that. And realistic valuation is another thing. You know, we, we don't push for a huge multiple and then reduce the price just to say, oh, we couldn't sell it for that. Let's reduce the price. We see this a lot because we map the whole market. And this happens in real estate. This isn't exclusive to business Brokerage. So it's not always the broker that tells you the highest price, because the chance of them actually getting closed at that is one thing. For instance, I was talking to someone recently. Their friend sold a business for 4x net profit for a fairly small business. And I said, oh, that's great. What was the deal terms? And he said, well, it was 15, 50% up front, that included inventory. And we paid our broker their full fee at the beginning. So if you actually break all of that down, you got like eight bucks, they got a really shitty deal to say they sold at Forex. So the deal term as well. How, how can you help me through the deal process is what I'd want to know. And will you, as the broker, walk away from a deal that isn't good for me and tell me, look, this isn't a good deal for you, let's go find another buyer, Even if it means the broker may not sell the business. That's the type of commitment I'd want in a broker.

And on like price or cost for a broker, what should people typically anticipate and how hard or soft are those numbers?

Yeah, so price is an interesting one. When, when I was selling businesses myself, I was looking at more who could get a deal done. And for a market rate, not necessarily how do I get the cheapest broker or the cheapest fee? So in some ways you get what you pay for. Sometimes it's not always the case, but there are some market averages for commissions that should be adhered to.

And also go with.

What the broker's been doing for you. So talking is, is easy. So someone just saying, I can get you this and I'll charge you less. That's just talk. What have they actually been doing for you up until that point? Have they been following up with you? Have they been professional? Have they been helping you prepare for a sale? Regardless of.

Give it to you straight, Corin. What's, what's Dharma.

Sure. So there's lots of different things. So we use the M and A standard, which is the Double Lehman formula. So that's what we use. And that's, that's pretty standard across the industry. Some brokers will tell people who don't know what. Yeah, so. So the Double Lehman formula was from the Lehman Brothers, which maybe we shouldn't be following this stellar.

Of progress from the past. But basically when they were raising capital, it started as a single Lehman, then became the Double Lehman. So essentially it's 10% on the first million, 8% on the second million, and it scales down at 2 less until it gets to 2%, then that's it for the rest. So it's a money in scenario.

So the more you sell for the.

Less, the lower the commission goes.

Makes sense.

Yeah. Yeah. So that's what we use. And sometimes there's a performance component. So we'll say here's a flat rate, and then if we get above this price point, then we'll take a high percentage. Some people just. Brokers will just say we'll go rock bottom just to try and win the deal. And I think if. If someone's, you know, definitely speak to a number of brokers. Don't just. Excuse me, don't just go with one. Get a feel for what's out in the marketplace. Get a sense. Ask all the same questions to each one and see which one you want to deal with. I have a friend recently that spoke to seven or eight other brokers and, you know, he's fortunately coming back to us, which is great, but he gave us some insight into the market and there were some things that we were taking notes on, you know, so definitely go talk to the. Talk to the market. And if there's an outlier, if someone's saying half what everyone else is saying that. Why. Why are they saying half? They just. Are they needing a deal or are they actually providing some? Do they have something else to back.

That up and it's negotiable?

No.

Corin, I'm stoked to work with you. If our conversations go in that direction, I'm excited about what you're doing in the world. And if you have an FBA business and you're thinking about selling it because you follow my work and you know these businesses are hot right now. He might be a guy that you want to give a call. Fbabroker.com Right. Oh, and public, public apologies to Tim Ferriss. We wanted to get to Tim tonight, and we just ran out of time. So hopefully, hopefully he'll be able to join us on a future episode. Thanks for watching, everybody. Good night.