Amazon & FBA businesses EBITDA ratios

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April 10, 2025

by a searcher in London, UK

Looking at FBA & Amazon businesses' EBITDA ratios I couldn't help but notice that higher margin shops have lower ask prices relative to their EBITDA:


Why is that? Intuitively, higher-margin businesses should be more valuable and have higher ask price per EBITDA dollar.


The likely explanation is tied to business stability: it becomes clear that many higher-margin businesses are newly established, which naturally introduces uncertainty about whether those margins can be maintained in the future.




We used the data from https://www.getdealmatch.com/ to power this analysis.



Curious to hear other bits of financial wisdom you came across in your search!

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commentor profile
Reply by a searcher
from New York University in Greenwich, CT, USA
I've noticed the same trend. I've been shopping FBA brands for a few months now and I think there are a few reasons, the first is as you state- many of the very high margin brands are newer, which implies there will be a margin decline coming as either (a) the existing market is tapped out (i.e. everyone who needs one of those widgets already bought one), or (b) competitors move into the space. Another thing I've noticed when margins are abnormally high is that there is key person risk- a special social media presence, maybe a weekly podcast, just something that you think won't necessarily transfer well to the new owner. Another point is size- often the high margin businesses are quite small overall- I had one come across my inbox today with impressive margins, >80%, but total EBITDA is only $50k. So it's unlikely that it will scale and retain that margin.

So far from my search I've found myself most interested in the older brands, 10+ years old, but they all seem to eventually get to a ~20% EBITDA margin unless there is something special like a patent + a big enough market. 20% isn't bad, of course, as long as the business is priced correctly.
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Reply by a searcher
from University of Pennsylvania in San Francisco, CA, USA
Helpful - from experience the multiple is usually a function of growth and margin - businesses usually have the flexibility to adjust variable costs at the expense of growth. There is a Rule of X threshold - likely a more representative of this universe
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