If you’re a Shopify brand owner curious about how to sell your brand, you’re in the right place. Hello, and welcome to the first of a five-part series on just this; let's get you started! 📈
At Pattern Brands, we thrive on helping you take your business to new heights every step of the way. We previously shared 'The Definitive 10 Part Guide to DTC' ~ based on insights we learned from talking to hundreds of Shopify brand founders and operators across the country.
The feedback on these articles has been incredible.
You told us you wanted to know more about the process of selling your Shopify brand, as there has been a lack of transparency, confusing terminology, and not enough real talk in the space. We heard you loud and clear.
We took the most frequently asked questions from our conversations and condensed them into a series of five short and honest insights that we will be rolling out here. These five tips will equip you with all the information you need to prepare for the future and execute a successful sale.
While there are many paths to achieve security, stability, and liquidity for you and your company, selling your business can be the most direct route to achieve this. Pulling from our first-hand experience over the past two years, we’ll take a deep dive into this option.
eComm businesses like yours are valued on “multiples”. This is a common jargon in the M&A industry, but what does it mean? Simply put, valuation is the multiplication of an agreed upon number, such as revenue or EBITDA.
Now EBITDA is another fun industry term. It’s an acronym that stands for ‘Earnings Before Interest, Taxes, Depreciation, and Amortization.’ Still lost? Not to worry: it’s essentially an accepted standard for calculating your business’ profitability.
EBITDA multiples are used to determine the value of a Shopify business, as they offer the clearest overview of a business's health and outlook. The exact multiple and valuation can depend on many factors, and we’ll get into this later.
If you’re going to explore selling your business, focusing on profitability can vastly increase the value you see in a deal. It’s important to note, profitability is not the same as revenue; having more revenue does not automatically mean that your company is more valuable to potential buyers – especially today.
Sustainable profitability is currently the most valuable asset you can have when brokering a deal. We'll talk on how to best set your business up on the path to long-term success.
A common misconception amongst brand owners is that there’s only one type of brand acquirer, when in fact there are several. This section will teach you everything you need to know to see the best outcome possible for your business by partnering with the type of acquirer that is the strongest fit for your brand.
For this week’s guide, we’ll be going over each type, their motivations, and what sorts of businesses are the best fit for each.
Now that you’ve decided you want to sell your business, you understand your valuation, and you’ve found the right potential acquirer, be prepared for your deal-closing process, which takes about 60-120 days.
This process starts with a Letter of Intent, in which both parties agree to a not-legally-binding period of exploring a sale, through Due Diligence in which both parties go in depth on key data points and information, to Closing, in which the final legally-binding terms are agreed upon. Of note, it important to pace yourself, and make sure you are able to keep an eye on the details throughout the entire process.
For this week, we’ll go through deal closing best practices, so you can feel confident in your ability to close the best deal for your brand.
Thanks for reading this week’s overview. We’re excited to be a part of this journey with you! As a bonus, we’re going to get you started with our first out of five weeks, Planning for the Future of Your Brand.
Make sure to check back each week for the next guide. Leave us any comments, thoughts, or feedback on what you want to see and hear. We’re excited to listen and build a dialogue with you.
If you’re interested in learning more about how Pattern can uniquely serve the needs of your business’ growth, we’d love to hear from you!
Onward and upward!
Pattern Brands 🏡
