How To Sell Your Business For Maximum Value (With Fan Bi)

Dec 27, 2023

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Fan Bi sees 10 different ecommerce businesses every week and has seen ~1,000 in the last year. That's because Fan's job is to buy DTC brands for The Hedgehog Company, the aggregator where he's the CEO. He's got 4 now and looking to add. The upshot of all that? He has one of the deepest senses of the market for ecommerce brands of anyone I know, and he can tell you very quickly if your business is set up well for an exit. So on this week's episode, Fan and I talked through what makes a good DTC brand and what kind of multiples ecommerce businesses are getting today, all so that you can focus on the right metrics for maximizing the value of yours. EPISODE HIGHLIGHTS • [00:02:28] The meaning of life. • [00:05:11] Valuation of e-commerce businesses. • [00:08:09] Impact of investor preference. • [00:10:37] Early-stage valuation and investment. • [00:14:48] Valuing ROI and Exit Strategies. • [00:15:41] Valuing businesses based on EBITDA. • [00:19:32] Changing deal structures in acquisitions. • [00:22:06] Negative CAGR and business volatility. • [00:28:32] E-commerce business challenges. • [00:29:00] Lean operations in e-commerce. • [00:32:07] Revenue quality and valuation. • [00:35:33] Cash conversion and working capital. • [00:39:14] DTC advantages and scalability. • [00:42:31] Unfair advantages in e-commerce. • [00:45:56] Tough time to be selling. • [00:48:24] Building a business for scale and profit. EPISODE SPONSOR Add supply chain experts to your team at a drastically lower cost than you're expecting by hiring More Fractional Supply Chain, a service of my friends at More Staffing. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://morenow.co and use the code AJF20 to get 20% off your first 3 months. PREVIOUS AFP EPISODES REFERENCED • "Patrick Coddou Sold Supply" (Spotify, Apple) • "Dan McCormick Is Taking 'Build In Public' To A Whole New Level" (Spotify, Apple, YouTube) FOLLOW UP WITH FAN • ⁠Follow Fan on X: @LifeOfBi • Learn More About The Hedgehog Company: https://www.thehedgehogcompany.com/ FOLLOW UP WITH ANDREW

Follow Andrew on X: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@andrewjfaris⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠
Email Andrew: podcast@ajfgrowth.com
Work with Andrew: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.ajfgrowth.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

EPISODE MUSIC

Music Intro: "⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Tell Me Mama⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠" by The Devious Means
Music Outro: "⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Rusty Little Scissors⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠" by The Devious Means