M&A Advisor on Ecommerce Valuations

The podcast explores strategies for e-commerce business owners looking to sell their brands, with Frank Kosarek, co-founder of Bizport, providing insights based on his experience in M&A. A key focus is understanding seller's discretionary earnings (SDE) as the basis for valuation, which is calculated by adding net income, owner's salary, benefits, and one-time expenses. Kosarek suggests that businesses doing up to $15-20 million in revenue are typically valued using a multiple of SDE, while larger companies might be evaluated on revenue multiples. He also highlights the importance of cultural fit between buyer and seller, especially when structuring deals with seller notes or earn-outs to bridge valuation gaps.