Valuation tips - "boring" business, but with e-commerce distribution

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January 18, 2023

by a searcher in Lehighton, PA 18235, USA

When evaluating a business such as a manufacturing business that might normally sell for 2x-3x EBITDA, what adjustments would you make for an ecommerce component? For instance, if 50%, 75%, or even 100% of product is sold through an ecommerce system - no sales force required and a fair percentage or repeat customers.

I know that some ecommerce companies are valued at a higher multiple even if they are not actually fulfilling their own orders; I'm curious how valuation is impacted when the company controls both the actual manufacture and also the distribution through ecommerce.

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Reply by a searcher
from Georgetown University in Charlotte, NC, USA
I have been looking into this myself. My concern is owning the customer relationship. If Amazon sources 95% of my sales and I don't have any customer data to build repeat business, it's too big of a risk for me.
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