This $969K Business Made $11K Last Month. Here's Why He Should Walk Away

This brand is listed on Empire Flippers right now for over $969,000, and these financials have been verified. They have brand registry. It's a 12-year-old business. So on paper, it looks like such a clean deal because over the trailing 12 months, the average is above $24,000 per month in profit, has a 28% profit margin, and TACOS is right around This is such a perfect deal that an investor wanted to purchase this business and reached out to me to see if I would go ahead and partner with them. And I ultimately tell them no. And the first reason why I told them no was because the actual profit in this business over the last couple of months is not $24,000. In fact, the very first month of this year in 2026, it's actually $11,000. Which if you look back to January of 2025, right over here, it was actually $26,000. And look, if you guys follow this YouTube channel, you guys know that I purchase Amazon FBA businesses and I've purchased my fair share of Empire Flippers businesses and listings because I trust them. I know what a real deal actually looks like. So on this term, I told the investor to walk. And here are every reason why I did so. And I just want to preface this by saying that this business on the first 30 seconds, you can go ahead and see the profit was the main issue. But the second one is invisible until you actually take a look at how many SKUs this business actually has and what it actually means. And then the third one is the reason why the seller is actually selling. So by the end of this video, you'll know why this person is actually selling this business. And you'll actually know how to find all of this before you even talk to a broker and not waste your time at all. So again, trailing 12 months on this actual business was $24,000. And I'll go ahead and hover over this, um, to go ahead and kind of emphasize it. Right. But the net income in January alone was $11,000. Basically less than half of what the trailing 12 months actually looks like, right? So again, if you guys have been following along my video series as far as analyzing these businesses, I showed you the money I have lost, right, with both Relax Support and Nudery Labs, which is over $260,000 of real money lost. If you guys haven't watched that video, go ahead and check them out. But this one is going to be about someone else that reached out to me to try and purchase this business. And based on my experience, I told them to walk away because this is a sinking ship, right? So this is all going to be a part of like this 47-point list checklist that I have before I even go ahead and purchase any type of business. If you guys are interested, go ahead and check out the actual link below to learn more details about your deal that you're going ahead and purchasing. But ultimately there's 3 problems, right? The stated margin is not a real margin on this actual business. 70 SKUs is a full-time job, not a passive investment. And when you take a look more into this P&L statement that we'll go ahead and look like, an operator salary is not there. The person running this business expects you to run the business just like they did full-time, which in this case, we're not doing that. And then Tockle signals eroding organic ranking. The buyer inherits this at full price. And we'll go over exactly what this actually means when it comes to advertising, because any e-commerce business Relies on paid advertising. Amazon FBA businesses are no different. But let's take a look at the deal on paper and kind of go over a little bit more as far as what it was. You guys saw it at the beginning of this video, but let's kind of go over it, right? So the list price of this actual business was $969,000. That is a 39 times multiple, which again, it's already a little overpriced than what it is, but it doesn't tell the full story, right? Trillion total revenue. $1.2 trillion in profit. The stated margin here is 28% profit margin, which is actually a golden rule. Like, this is actually really, really good as far as a profit margin if you're doing Amazon FBA. My current businesses, I operate around 20% profit margin. So I have 8% more, which again, it's huge, right? So SKU count, they have a total of 70 SKUs, 40 parent ASINs. Look, I would have no issue having 70 SKUs as long as the parent ASINs are only 3 or 4. We're talking about if I went ahead and bought a socks brand, I know that they're going to be different sizes for the actual socks and there might be different colors of the actual socks. So one parent ASIN might have 20 different types of child SKUs, but in this case There is 40 parent ASINs and 70 SKUs. So a lot to go ahead and handle here, which again, this could be like a big reason why. And the business age is 12 years. This is fantastic, right? We want to have a business that has legs on it. I don't want to buy a supplements brand that is here today and gone tomorrow based on search volume. It being a business for 12 years means that it is actually a very good vetted type of business. The suppliers, again, 4 suppliers. That's actually really good as well for the amount of SKUs that they currently have. And the TACoS I put in red here is 15 to 16%. If you can go ahead and see that, right? And a lot of people love to have low TACoS type of businesses because they don't rely solely on ads. But in the world of business, especially in Amazon FBA, if you are not growing, You are going ahead and slowly dying. And advertising is the biggest key when it comes to growing on Amazon FBA. But the problem number one, which is the net margin or the real margin here, right? Because in November of 2024 and December of 2024, the net income was $38,000 and $39,000. That's fantastic. January, as I mentioned here, $26,000, right? And in February to October, there was nothing but a decline in this actual business where trailing 12 months is continuously coming down. It's like a falling knife. And then January 2026 basically gives us the full story because now we have year over year numbers to really dictate how well this business is actually doing. Because you have to understand every single business, every single category on Amazon has some seasonality to it. But if you look year over year, you will really see exactly how healthy this business is. And in this case, you can see from $26,000 in net profit to $11,000 in net profit means that there is more than a 50% collapse that is going on with this actual business. So in turn, right, if we take the sales price of $969,000 and actually put the real trailing 12 months over the 6 months of this business, this business is actually at a 66 times monthly multiple on the current run rate, which is screaming overpriced. Again, if you can get this business at half of this selling, of this actual list price, then maybe we are talking about a business that might be worth looking at. But at the current run rate right now, It is completely overpriced. Again, 57% year-on-year decline in this actual business. And you can see at $11,000 a month, you're paying a 66 times current trajectory, not 39 times. So that's the biggest problem there, right? And showing this to an actual seller might have some repercussions because obviously they were told by Empire Flippers that their price is currently— their business is currently worth one amount. Um, well, we actually look at the numbers, they're worth a different story. So that's number one. Problem number 2, and I think the biggest problem here that probably takes that trailing 12 months even further, it's these 70 different SKUs, right? Because now we have to hire someone full-time. And look, I'm an operator and I've been doing Amazon FBA for the last 8 years. I know every single thing that you have to do to have a successful brand on Amazon. I cannot handle this type of business because you can see all the different things that involve in going ahead and having this line of business. PPC management, keyword research, store auditing, COGS optimization, supplier coordination, right? Supplier listing refresh, all these different types of things that go into a business, especially when they have 70 SKUs, right? And in the reviews, and every owner will say this when it comes to selling their actual business, is that it's minimal time. Where in reality, in this case, 70 SKUs, that is a full-time operator role, which again, a full-time operator at this scale is probably going to cost you around $6,000 per month to get someone decent to be a brand manager for this. Right. So, and then 2 products ready to launch, more complexity, no more value unless operators already in the actual place. Right. So if you want to go ahead and launch other products, for this actual niche, we already have to have an operator looking at the search query performances, looking at the data, looking at the conversion rate. You guys get the picture, right? So again, the fall-off is an operator problem. It's not a marketing problem, right? So that's one thing to consider. That's problem number 2. And then problem number 3, that probably is the reason why a lot of people would have bought this business to begin with, is that they're operating at a 16% TACoS, right? And People always call me crazy. They're like, hey, you're operating at 20% or 25% TACoS. You're overspending on ads. Look, if you are a growing business, you want to take up more and more market share. That means that you're advertising top of the funnel, middle of the funnel, bottom of the funnel, and then retargeting all of those different people that eventually they'll become your actual customer. Because why? We're growing our business. And again, if you are now growing your business, you are slowly dying. So even at a 12-year-old brand benchmark that it currently has right now, right, you still want to be at around 20%, uh, TACoS in this situation. Why? Because people have bought your board games or whatever it might be before already, and those people are going to be coming back. But you continuously want to get more and more customers to join your ecosystem, especially on Amazon. Right. So any brand that's 3 years and over and they're below an 18% TACOS, I consider that a yellow flag or a red flag because I want people to continuously grow their actual business. And in this case, right, it being 12 years old, it might be okay with that. We might have some different levers that we can go ahead and pull and put that up to 20%, have some advantage on that. The problem is the margin. To go ahead and do that, right? We can definitely go ahead and kind of scale up things, but then our profit margin takes a hit. So this is why I'm saying that this is a red flag. You guys can go ahead and read that there. But then this is the real deal summary, right? So when I went ahead and talked to this investor, as far as not purchasing this actual business, is the presentation itself, right? The broker reached out and said, this is a perfect deal for you, right? Because Based on the numbers, you're getting a tremendous deal. The profit margin is there. You're not going to be spending a lot of time in this actual business. The PPC dependency is awesome there. You don't have to rely because organic sales are coming in. The SKU complexity, don't worry about it. It's an asset. Nobody else can go ahead and come out with this many SKUs. This is the broker going ahead and doing its job, right? But the real picture of this actual business is right over here. And the main one is that you're overpaying by almost double, right? This is actually what you're paying for annually on a declining business that requires you to work full-time there. And even though they've been around for 12 years, they are not going ahead and growing anymore because year over year, they should be growing. They shouldn't be declining the way they are declining right now. And again, this figure, as far as like their annual profit, does not include an operator role, right? So what was the recommendation here? Pass. Not because the brand is bad, because the price does not reflect the operational reality. We would need to get this business for around $300,000 just for it to make sense that there is some like actual meat left on this bone, right? And I put $400,000 to $500,000 as a full-time operator role in this place, uh, with a full-time operator with trailing 12-month run rate And the conversation actually changes. So again, I would say $350,000, but just to go ahead and give this current seller the benefit of the doubt, I put $400,000 to $500,000 right there. And again, this is based on experience. This is not based on theory, right? Because these are my 3 rules here. Never underwrite the trailing 12-month averages. You always want to look at the last 3 to 6 months. You want to count How many SKUs they have before you read the margin room, because we want to know, do we have to go ahead and put somebody in this actual role? And then we mentioned the advertising part of this, right? So checklist items for this deal, right? Financial analysis category, the monthly, you guys can go ahead and read over this. But if you guys want my proprietary thing, as far as a free checklist that you want to go ahead and examine, go to emanruiz.autopsy or emanruiz.com/autopsy. And it's a free tool that you can go ahead and use to put your deal flow in there. And I'll go ahead and go into it right now and show you just a little quick summary of how that actually looks like. Because if we were to go ahead and put this actual deal on the website, which shows all the numbers straight from Empire Flippers, you will see that it has a 62% score and literally tell you and flag why, right? Requires one time of first and full a full-time role, the, the actual 40 ASINs, um, the actual, you know, operational risk here. There's definitely different things that on a surface level numbers look great, but when we start analyzing this actual business, we start noticing that this business is not a true business to go ahead and purchase.