Amazon Marketplace Sellers

Six Steps To Prepare Your Amazon Business to be Sold

General News & Firm Announcements   |   Monday, August 20, 2018

It’s one of the fastest growing areas for acquisitions in the technology industry - the Amazon Seller Marketplace.

What was once the exclusive province of global brands, when major retailers could command prices, maintain economies of scale and dominate share of mind, today has become fair competition for entrepreneurs. New private label sellers compete side by side with billion dollar brands. In many cases, they’re even outselling the established brands on Amazon.

Today, anyone can create an Amazon private brand, add a logo and outsource to a Chinese manufacturer. Suddenly, a small start-up is competing with brands that have been around for decades.

The Amazon private label business model creates incredible value much faster than more conventional models, making many of these businesses prime acquisition targets.

Our goal is to provide you a method to get started preparing important information for a buyer to perform due diligence on your business, leading up to an offer and potentially a sale. The goal is to identify any risks that either could kill the deal or result in a price adjustment. And, it will confirm for the buyer that you actually have the assets you claim to own.

If you have questions, please contact us. Our in-depth experience in conducting due diligence inquiries into Amazon business acquisitions will guide you through the sales process.

The Six Steps To A Sale
  • Corporate Formation and Maintenance Documents. You need to confirm that you have copies of all your key corporate documents. This includes articles of incorporation/formation, filed annual reports, all meeting minutes and corporate actions, including initial corporate actions laying out the capital structure of the company (i.e. who owns what, voting rights, appointment of directors). If you don't have or cannot locate certain documents, it is possible to remedy the situation with new corporate actions fixing any problems.
  • Key Contractor Contracts. Confirm that you have contracts containing IP assignments (or perpetual licenses) for all people who created logos, product packaging, copyrighting, photographs, patentable content or inventions. If you do not have these contracts, it is possible to get assignments after the fact.
  • Financial Records. Confirm all state and federal taxes have been paid and gather the returns. Confirm all appropriate state sales taxes have been paid, and gather records to confirm. Create annual financial statements for each year the business has been in operation. If appropriate, create comparison documents to reflect growth of revenues and profits.
  • Create Process Documents. If you have documents that methodically document the processes for running the business, you will be able to dramatically reduce your transition time. Recommended process documentation includes the following processes: daily Amazon account maintenance, managing inventory, the inventory ordering process, processes for non-Amazon warehouses, processes to create labels for the factory (or warehouse personnel) to ship product to Amazon (FBA only), processes to update product packaging, managing social media accounts, and managing paid search accounts.
  • Technical Transition Matters. If you put web assets, domain names, email accounts, and other technical accounts in stand-alone accounts that can be handed over to a new owner, you can save an enormous amount of transition time. For example, if you can merely hand over the credentials for the hosting account, and have the buyer change the credit card information, then you don't have to transition the actual web files to a new server.
  • Hire Legal Counsel Familiar with Amazon. Getting the right attorney can save weeks or months in the sales process. Further, a well-written sale agreement can significantly reduce your financial risk in a sale. Attorneys experienced with the sale of Amazon business see the same issues in deal after deal. Don't pay counsel to learn these unique issues for the first time. Also, it is important to get counsel involved before any negotiating occurs, as you will want to have a plan for all key negotiation points as developed with counsel before negotiating, because it is hard to change your position later in the negotiating process. Just a few of the many issues with which an experienced attorney can assist are provisions to ensure you get paid, and provisions protecting you from future liability after you sell the business. However, there are many issues to discuss with an attorney, and getting counsel involved early can save a great amount of time and money.

These are the many issues where an experienced attorney can assist to ensure you get what your business is really worth, and to protect you from liability after the sale. Don’t hesitate to contact us if you need any assistance in preparing your Amazon seller business to be sold.

Call Us.

Karl Kronenberger,
Partner - 415-955-1155, Ext. 114
[email protected]

This entry was posted on Monday, August 20, 2018 and is filed under Amazon Marketplace Sellers, Internet Law News.






MOST RECENT


RELATED PRACTICE AREAS




Kronenberger Rosenfeld recognized as a Top Boutique of 2015 by The Daily Journal

Let’s get started

online case submissions

Send us information about your matter, and we will respond to you promptly

Submit Online