Over the last year, I’ve chatted with friends who are seasoned e-commerce entrepreneurs. They saw their businesses explode. People were at home more than usual and ordered online instead of going to physical stores, so that makes sense. I’ve heard stories and read articles about e-commerce businesses having their best year ever.
I predict that this year we’ll see a record number of e-commerce businesses sold—specifically, those doing less than $10 million in annual revenue. I believe this for a lot of reasons, a big one being timing. Founders who’ve spent years building these businesses and recently have thought about exiting have a great opportunity. Businesses of this size are usually valued based on trailing-twelve-months financials. This means the valuation is largely based on how the business performed during the last twelve months—which have been record setting for a lot of these businesses. Many sellers may see this as the perfect time to cash in on their hard work.
I look forward to paying closer attention to the private market for these businesses and hope the founders who were tenacious and built great businesses are rewarded handsomely this year.