Joe Valley·June 20, 2022

Good News for Ecommerce Buyers

This episode features Joe Valley, co-owner of Quiet Light brokerage and author of 'Exit Preneur's Playbook,' discussing the e-commerce aggregator phenomenon and what it means for individual acquisition entrepreneurs looking to buy online businesses. Joe provides expert market context on how aggregators like Thrasio raised hundreds of millions to roll up FBA businesses, drove multiples from ~2.74x to 4-5x SDE during the 2021 mania, and are now imploding or niching down — creating a potential buyer's window. He argues multiples will come down due to aggregator retreat, stock market uncertainty, rising supply chain costs, and burned-out e-commerce operators eager to exit. Key advice for buyers: be personable (sellers often prefer likable buyers over highest price), don't change anything for 90 days post-acquisition, always have a line of credit established before you need it, and consider seller notes on inventory as a cash-preservation tool. This is an expert/advisor episode — Joe Valley is not himself a current business buyer, but a broker with deep transaction experience across hundreds of e-commerce deals.

Deal facts

multiple: 2.74x SDE (pre-mania high end); 4-5x SDE (2021 mania peak); 3x SDE (projected coming down)
notes: Quiet Light average transaction size ~$1.8M in 2021; seller notes typically 10-25% of purchase price, up to 50% in rare cases; inventory seller notes common (6-month term). No specific personal deal being discussed — guest is a broker/advisor.

Why this business

Joe Valley is not a buyer being profiled; he is the owner and co-founder of Quiet Light brokerage, one of the leading online business brokerages. He joined Quiet Light after selling his own e-commerce business in 2010-2011 and buying a content site that was wiped out by Google's Panda/Penguin updates. He found his natural strength was being in the middle of transactions and helping people, not operating products himself.

What's working

Quiet Light sends listings to the public simultaneously rather than giving aggregators first access, leveling the playing field for individual acquisition entrepreneurs
Individual buyers who are personable and trustworthy often win deals over aggregators because sellers care about who buys their business, not just price
Aggregator mania of 2021 drove multiples up but is now correcting, creating a potential buyer's window in the next 12-24 months
Aggregators niching down and becoming more disciplined will reduce competition for individual buyers
Quiet Light maintains a blacklist and tracks aggregator deal behavior to protect sellers
Seller notes on inventory (6-8 month term) are an effective deal structure tool for buyers to preserve cash

What's hard

Aggregator marketing (all-cash, close in 30 days) is misleading — they use stability payment holdbacks (10% in escrow for 12 months) and working capital escrows, not true all cash
Avoiding a broker and selling directly to aggregators costs sellers significantly — they lose negotiating leverage and broker expertise
E-commerce entrepreneurs face supply chain cost increases, rising inventory costs, and cash flow strain making it hard to hold on
New buyers often change things too quickly post-acquisition — they should sit on the business for 90 days before making changes
Setting up credit lines before you need them is critical — banks won't extend credit to someone with no current income even with equity
FBA businesses are platform-dependent and subject to aggregator buying pressure that has inflated and now is deflating multiples

Notable quotes

Why in the world would you take your greatest asset that's worth the most you know net worth that you have and risk it and selling it directly to an aggregator?

Don't fix something that's not broken. Buy the business and just sit on it for the first 90 days and learn everything you can about that business.

You're not smarter than the guy that bootstrapped it and built it and is able to sell it. Learn from them and then grow it. Wait 90 days and then add your touches to it.

An entrepreneur should always have a line of credit set up wherever you can — either through your investment partners, a HELOC, or with your bank. If your business is established, get a line of credit set up because you will need it someday.