Online Business M&A in 2023 - Kristin Jacobsen

Current State of the Online Business M&A Industry in 2023

As a Seller Advisor that’s assisted 59+ online business owners in successfully selling their businesses, I’ve witnessed how market conditions have changed, leading to an essential takeaway for business owners considering a sale: the market is normalizing.

The market has experienced significant shifts since 2020 and 2021, based on transparent insights from Empire Flippers’ State of the Industry Report 2023, which analyzes 1,493 business deals over the last five years.

The data clearly indicates that the post-pandemic M&A market of 2022 and beyond has entered a new landscape, which may not return to the boom of 2020-2021.

So, if you’re waiting for a repeat of the 2020-2021 peak, you might be waiting for a very long time… as the likelihood of such an event is highly improbable.

The current reality for online business owners looking to sell their business

Misalignment between sellers and buyers regarding valuations has become a challenge. Many sellers are still HODL’ing to 2021 valuation levels, leading to longer sale times and deal uncertainties.

As market conditions shift, it’s crucial for online business owners who are serious about selling their business now or in the near future to be flexible during negotiations, considering deal structuring options like earnouts to improve the chances of a successful exit.

The types of online businesses sold

Empire Flipper’s analysis shows that content sites, especially those focused on display advertising, outperformed other business categories in 2022. However, the current market for content sites is fragile right now due to the uncertainty of AI progression.

eCommerce businesses, particularly Amazon FBA, experienced a decline in purchase volume, while Amazon KDP and SaaS businesses saw significant growth.

Online Business Valuation Multiples

Sales multiples for most business models dropped in 2022 compared to the peak of 2021.

However, it’s important to note that valuations are still higher compared to pre-pandemic levels.

Predictions for Selling Online Businesses in 2023 & beyond

In the coming years, we expect eCommerce to become less competitive for non-institutional buyers, and once the AI uncertainty settles down, content sites will continue to thrive again.

Other inventory-less models like Amazon KDP and SaaS will likely rise in popularity, driven by advancements in AI and low-code tech.

When is the best time to sell your online business?

Deciding when to sell your online business should be driven by your personal and business goals, not market speculation.

If selling will positively change your life, now is an excellent time to consider an exit or acquisition.

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