It’s amazing what can be achieved with a simple idea and a lot of hustle.
You might think of a $12 million exit as something reserved for tech startups or big-name brands but it’s totally possible for even a humble Shopify store selling everyday items to reach these heights.
I recently witnessed this firsthand when we helped a pair of entrepreneurs sell their Shopify store for a whopping $12 million!
Think you’re too small to get a 7-figure exit? 🤯 This Shopify store sold for $12 MILLION! 😳 Learn how they did it and maybe you can too! 😉
From Spiritual Jewelry to a Multi-Million Dollar Exit: A Case Study
Think you’re too small to get a 7-figure exit? 🤯 This Shopify store sold for $12 MILLION! 😳 Learn how they did it and maybe you can too! 😉
This story starts back in March 2018 with a simple idea – selling spiritual jewelry and related personal care products.
But what really set this business apart wasn’t just the products themselves but the innovative way they were packaged – in subscription boxes.
This strategic move was key to the business’s success creating a stable stream of recurring revenue that’s a dream for any eCommerce entrepreneur.
Think about it – most online stores are constantly playing a game of “hope” with their inventory.
They buy and stock products hoping they’ll sell.
With a subscription model customers pay in advance for their goodies giving you a steady cash flow and a clear picture of how much inventory you actually need.
It’s like having a built-in safety net that allows you to confidently plan your growth strategies without worrying about unexpected dips in sales.
Building a Solid Foundation: The Power of a Robust Supply Chain
This store’s success wasn’t just down to the subscription model though.
They also had a very strong supply chain that minimized risk and ensured a consistent flow of products.
They relied on a main supplier in China with several smaller suppliers strategically located across China India and the US.
This diverse network not only ensured a steady flow of products but also protected them from potential disruptions like the pandemic the Suez Canal blockage in 2021 and the recent unrest in the Red Sea.
The Numbers Don’t Lie: Growth Profits and a Solid Business Foundation
All this hard work paid off – the store experienced impressive growth achieving a 70% yearly revenue increase and averaging a whopping $277000 in monthly profits! It was a truly successful operation that attracted the attention of potential buyers.
When the owners decided to explore an exit we stepped in to help them navigate the process and find the right buyer.
The business ticked all the right boxes:
- Strong Revenue: The subscription model ensured a predictable and stable income making it an attractive investment for potential buyers.
- Profitability: Consistent high profits meant the business was well-run and generating solid returns.
- Growth Potential: The business was expanding at a rapid pace showing a commitment to innovation and a potential for even greater success in the future.
- Established Brand: The store had built a strong brand and reputation with a loyal customer base that was eager to engage with the brand’s mission and values.
- Strong Team: The store had a dedicated and experienced team which added to its overall value.
Finding the Right Buyer for a Big Business: Why It’s Not Always Easy
Selling a business is like selling a house – you need to find the right buyer who appreciates its unique qualities and is willing to pay a fair price.
But when you’re talking about a $13 million business it’s not as simple as posting a “For Sale” sign on the front lawn.
The reality is that very few people have that kind of money lying around.
It’s not just the purchase price – there’s also the ongoing costs of running the business and funding its growth.
This is where the expertise of a broker like us at Empire Flippers comes in.
Leveraging the Power of a Curated Marketplace
We have a well-established reputation in the M&A industry attracting high-net-worth buyers and firms.
We’ve built a strong reputation in the industry attracting a diverse pool of buyers including:
- Private Equity Firms: These companies have deep pockets and a track record of successful acquisitions. They are often looking for businesses with strong growth potential and they have the resources to help those businesses expand rapidly.
- Family Offices: These are private wealth management firms that represent affluent families. They are often looking for stable profitable investments that can generate consistent returns for their clients.
- Aggregators: These companies specialize in acquiring and consolidating a portfolio of businesses often focusing on specific niches or industries. They are looking for businesses that can be integrated into their existing operations and create synergies.
- Holding Companies: These companies invest in a variety of businesses often with a focus on long-term growth. They are seeking companies with a strong track record of success and the potential to become industry leaders.
The Right Buyer the Right Time: Finding a Perfect Match
We had a total of 33 interested buyers including several large aggregators who were eager to explore this incredible opportunity.
After a few months on the market a multi-national public company that operates in the fashion jewelry and lifestyle accessories niches stepped forward with a promising offer.
These large companies are often the ideal buyers for a business like this.
They have the financial resources to acquire the business the industry experience to help it grow even further and the potential to unlock new opportunities through brand aggregation and cross-selling.
Negotiating the Deal: A Strategic Dance Between Buyer and Seller
Negotiating the sale of a multi-million dollar business is a delicate dance.
The buyer wants to acquire the business at a fair price while the seller wants to ensure they get the best possible return on their investment.
The buyer initially offered a little over $11.9 million for the business with a 45x multiple.
But the sellers weren’t satisfied.
They knew the value of their business and they were ready to negotiate.
After a back-and-forth exchange the sellers presented a counteroffer of $12.9 million with the buyer agreeing to pay at least 75% of the price upfront.
This helped to solidify the sellers’ position and show their commitment to a fair deal.
The final agreement included:
- $12.9 million purchase price: A strong return for the sellers reflecting the value of the business and its growth potential.
- 75% upfront payment: This gave the sellers immediate liquidity allowing them to invest in their future or simply enjoy the fruits of their labor.
- Holdback payment: The remaining 15% of the price was paid in equal payments every six months over two years providing a safety net for the sellers and ensuring a smooth transition for the buyers.
- Performance earnout: The final 10% was contingent on a 10% growth in revenue/sales incentivizing the buyer to continue investing in the business and driving growth.
- Seller support: The sellers agreed to provide support to the buyer for three hours per week for three months ensuring a smooth handover and allowing the buyer to leverage the seller’s expertise during the transition.
Due Diligence: A Thorough Examination of the Business
Once the deal was agreed upon the buyer conducted a thorough due diligence review of the business to ensure everything was in order.
This process can take several weeks or even months depending on the size and complexity of the business.
In this case the due diligence process took six months as both parties’ lawyers carefully examined every aspect of the deal structure ultimately leading to a shift from an asset sale to an entity sale to reduce the buyer’s tax liability.
The Final Curtain: A Successful Exit for Both Buyer and Seller
After a thorough review and a few adjustments the deal was finally closed.
The buyer walked away with a thriving eCommerce business ready to expand its market reach and integrate the brand into its portfolio.
The sellers walked away with a life-changing $12 million ready to enjoy their hard-earned success.
This story shows that building a successful business takes dedication hard work and a bit of smart thinking.
It also demonstrates the power of a well-planned exit strategy allowing entrepreneurs to capitalize on their success and move on to new ventures.
Is It Time to Sell Your Business?
If you’re wondering if it’s time to sell your business ask yourself these questions:
- Is your business profitable?
- Is your business growing steadily?
- Do you have a solid plan for the future of your business?
- Are you ready to move on to new challenges?
If you answered “yes” to these questions it might be time to explore your options for selling your business.
Don’t hesitate to reach out to us at Empire Flippers.
We’re here to help you navigate the process find the right buyer and secure the best possible outcome for your business.
We’ve helped many entrepreneurs achieve their financial goals and we can help you too!
Think you’re too small to get a 7-figure exit? 🤯 This Shopify store sold for $12 MILLION! 😳 Learn how they did it and maybe you can too! 😉