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The Surge in Amazon Business Mergers and Acquisitions in 2020

Over the past 12 months, companies involved in purchasing Amazon businesses raised over $3.5 billion. $2.5 billion of this funding was secured in just the last four months, during the first quarter of 2021.

Additionally, it's important to note that most of the companies on the fundraising list didn't exist a year and a half ago, indicating that this is the hottest sector in the investment world, rapidly gaining momentum each month.

Take a look at the complete list of fundraisers, courtesy of Marketplace Pulse:

  • April 2021. Berlin Brands Group raises $240 million

  • April 2021. Elevate Brands raises $12.5 million

  • April 2021. Thrasio raises $100 million

  • March 2021. Benitago Group raises $55 million

  • March 2021. SellerX raises $31 million

  • March 2021. The Stryze Group raises $100 million

  • March 2021. Boosted Commerce raises $50 million

  • February 2021. Elevate Brands raises $55 million

  • February 2021. Technology Commerce Management (TCM) raises $28 million

  • February 2021. Unybrands raises $25 million

  • February 2021. Valoreo raises $50 million

  • February 2021. Branded raises $150 million

  • February 2021. Thrasio raises $750 million

  • January 2021. Berlin Brands Group commits $300 million

  • January 2021. Razor Group raises $12 million

  • January 2021. Cap Hill Brands raises $150 million

  • January 2021. Thrasio raises $500 million

  • November 2020. SellerX raises $118 million

  • November 2020. Heyday raises $175 million

  • November 2020. Razor Group raises $30 million

  • November 2020. Heroes raises $65 million

  • October 2020. Perch raises $123.5 million

  • September 2020. Boosted Commerce raises $87 million

  • August 2020. Razor Group raises $5 million

  • July 2020. Thrasio raises $260 million

  • April 2020. Thrasio raises $100 million

  • April 2020. Perch raises $8 million

In this prestigious graph, you can find more than 50 different companies from around the world. However, if you examine the list closely, you'll notice that some companies are raising funds at a significantly higher rate than others, including Thrasio, Heyday, Perch, and SellerX.

So, why are these companies so eager to acquire Amazon businesses?

The main reason these aggregators entered the market in the first place is that managing an Amazon-based business requires significantly less manpower compared to traditional e-commerce or brick-and-mortar businesses. In fact, an account that grows by 100% in a year may not require additional staff even though it has effectively doubled its operations, leading to a significant increase in net profit.

Moreover, after consolidating multiple accounts, the same individual can manage several accounts simultaneously, further reducing costs.

However, this was just the reason for their initial entry into the market. Today, these companies, realizing the inherent potential in this market, are aiming even higher. They have understood that since Amazon now serves as the largest and most significant distribution channel in the United States, these companies effectively act as conglomerates, selling a wide range of brands in various categories, just like the largest conglomerates globally, such as Unilever, Procter & Gamble, and others.

How does this growth affect Amazon entrepreneurs managing private label brands?

What has happened over the past year is that as competition has increased, every company wants to acquire as many Amazon businesses as possible in a relatively short time, which has driven up prices. Therefore, while a year ago, the typical multiples used to value Amazon businesses were 2-4 (meaning the annual profit multiplied by 2-4), today, the typical multiples are already at 3-5, and I believe that as time goes on, these multiples will continue to rise.

In summary, if you haven't grasped it yet, if you currently own a private label brand that is selling on Amazon, you are essentially nurturing one of the most interesting and hot assets in the investment world. Therefore, it's advisable to start treating it accordingly. This involves professional business management, fundraising for growth, and systematically increasing sales and profitability.

Good luck!


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