Sumana Sanjiva·October 4, 2022

Selling a Business for 5x a Year After Buying It

Sumana Sanjiva is an immigrant from India who arrived in the US with $70 and built a career from bank teller to branch manager before becoming an entrepreneur. She ran three Learning Center tutoring franchise locations in North Carolina before spotting an Amazon FBA board-games business on BizBuySell in late 2019. With no e-commerce background, she acquired the business in February 2020 for $1.1m using an SBA loan, a 10% down payment from her family's savings (using her home as collateral), and seller financing for inventory — just as Covid began shutting down Chinese factories. Rather than panic, she placed a massive 8-container inventory order with her supplier the moment they reopened, locking up 8 months of supply and effectively freezing out competitors. The timing was perfect: board game sales surged as families sheltered at home. Within about a year of ownership she sold the business for approximately $5.5m (roughly 5x her purchase price) in a deal combining cash, equity rollover, and an earnout, brokered through Quiet Light. She has since acquired three more Amazon FBA businesses (automotive, home goods, supplements) at varying sizes, operating all of them as a solo operator and applying the operational and supply-chain lessons from her first acquisition.

Deal facts

purchase price: $1.1m
sde ebitda: SDE ~$350k (at acquisition listing)
financing structure: SBA loan + 10% down payment + seller financing for inventory (5-year seller note at same rate as SBA)
notes: Acquired Amazon FBA board games business in February 2020 for $1.1m. Sold approximately 13-14 months later for mid-seven figures (~$5.5m), representing roughly 5x the purchase price. Sale included cash, equity rollover, and an earnout. Subsequently acquired three additional FBA businesses: one seven-figure, one mid-six-figure, and one five-figure acquisition.

Why this business

Sumana was trying to sell her three Learning Center franchise locations on BizBuySell when she saw a listing for an Amazon FBA business advertising work-from-home income of $350k SDE. Having no e-commerce background, she was skeptical but intrigued — the appeal was being able to work from home while her kids were at school, earning more than she was making running three physical locations, and having the flexibility to be present for her family. She followed her gut instinct despite knowing nothing about e-commerce or Amazon seller platforms.

What's working

Bold inventory bet at the onset of Covid: placed an order for 8 containers (roughly 8x normal volume) from Chinese suppliers just before they shut down, locking up supply and keeping competitors out of the market for 8 months
Business was already the number-one seller in its Amazon category, with strong reviews, established by the original product founder
Asset-light, one-person operation with no employees — Sumana ran the entire business solo, using agencies for PPC management
Reinvested all cash flow back into inventory to sustain growth rather than taking early distributions, allowing the business to scale rapidly
Proactive supplier relationship management: held video calls with all suppliers upon acquisition to understand the Covid situation firsthand
Sold through Quiet Light Brokerage (Chuck Mullins), generating 14-15 interested buyers within two weeks of listing, and exiting at ~5x purchase price
Applied learnings to three subsequent FBA acquisitions across automotive, home goods, and supplements categories
On one new acquisition, identified a Hazmat classification caused by a small glue tube; removing it from the product added $20,000 per container in profit

What's hard

No due diligence performed on acquisition — never accessed Seller Central, never spoke to the seller before the day after closing; relied almost entirely on SBA's 89-page market analysis report
Acquired in February 2020 just as Covid hit, with immediate uncertainty about Chinese supply chains shutting down
E-commerce cash flow cycle requires constant reinvestment into inventory — difficult to take personal income until substantial volume and inventory buffer are built up
Managing rapid growth without experience: learning PPC terminology (ACos, TACoS) in real time during agency calls while Googling terms she didn't understand
Was simultaneously running three Learning Center franchises and the new e-commerce business for three months — ultimately sold the Learning Centers at well below market value to free up focus for the e-commerce business
Smaller new acquisitions have struggled with momentum — previous owners had weak operational foundations, requiring more work to get traction
Earn-out structure on the exit sale introduced some uncertainty about the full payout

Notable quotes

I still till today you know I still think about like what made me think that I was gonna be able to do this. I think we all have an inner voice and we all have that gut feeling and if we — I think sometimes if we just follow that — everything's gonna be okay.

I actually acquired the business for 1.1 million — at that time 1.1 million dollars was not even a number that I couldn't even think about. We didn't have all that money and just the down payment itself we had to take everything that was in our savings account to put the down payment and then imagine that conversation with my husband: I just found a business for a million dollars that we are going to acquire and we're gonna take everything we have in our savings account put a down payment and we're gonna use our house as collateral.

I didn't do any due diligence — I didn't even have access — I didn't look at the back, I didn't know Seller Central which is the actual setup, you know the backend selling for Amazon. I hadn't looked at the Seller Central. I didn't have access to any of that and I actually didn't even talk to the seller until the day after closing.

If I'm gonna be running out of stock by July then by the time they send it out to me and it reaches here — it's kind of like that math — think of all the things that can happen and also need to visualize and then kind of think futuristically. If I have the product on hand I'm going to be making twelve dollars in profit per unit but if I don't have that product then I'm actually losing that twelve in profit because I'm concerned about that seven cents of storage cost.