The last time we checked:

There were over 150 Amazon aggregators actively pursuing FBA businesses to acquire.

This is great news for Amazon sellers, like you.

In fact:

If an aggregator takes an interest in your business, you could be in receipt of a Letter of Intent (LOI) within 48 from providing your financials.

Pretty quick, huh?

Yes, but don’t be too hasty to sign the document, no matter how keen you are to get a deal concluded.

You see:

Despite the relative unimportance that most Amazon sellers place on the LOI, it’s actually a key document in the process of selling your FBA business.

In fact.

We would go as far as to say that a poorly worded or heavily weighted (in the buyer’s favor) LOI could make or break your deal, before you even get going with due diligence.

But what exactly is an LOI and what will it contain?

Let’s take a closer look:

In layman’s terms, a Letter of Intent is a simple one-page document presented to a seller on behalf of a buyer.

It outlines the following:

1. 1. 1. 1. The offer, in absolute dollar (or equivalent) terms for the going concern of the business
         2. Confirmation that the stock held in the business on closing will be paid separately
         3. How the payments for the going concern and stock are split, and when they will be paid
         4. The period of exclusivity (usually 30-60 days) between signing the LOI and closing the deal
         5. How and where (in which country) the terms of the purchase agreement will be regulated
         6. If the aggregator is buying the legal entity (share deal) or just the core assets (asset deal)
         7. Any other pertinent details or considerations not already covered in items 1-6 above

Now:

In our experience, it’s unlikely that an Amazon aggregator will make you just one offer.

Simply put.

If your brand and, more importantly, your financials are strong, you will often have several proposals to consider as part of the LOI.

For example:

Most aggregators open negotiations by offering a straightforward cash payment of 70%-75% of the overall deal value upon closing (with 25%-30% paid over a period of time, often one to two years).

This, of course, is negotiable.

You may, alternatively, be offered a longer term profit-share style agreement, which could prove more lucrative if you are prepared to wait for your money.

This can be attractive to certain sellers, but only if you trust the aggregator not to screw up the business once you have handed over operations.

And finally:

We have also seen deals consisting of a hybrid of both of the above proposals, all of which were summarised in the LOI.

The bottom line?

Regardless of the offers on the table, we strongly encourage you to read our Asset vs Share Deal article before signing an LOI.

Why?

Because this one, 5-minute page could save you thousands in taxes, no matter what sales contract you eventually agree to.

Interested in finding out more?

Click here to compare over 150 aggregators in 3 simple steps. We will then reveal the select few companies that are most likely to offer you the highest valuation.