Founder Mark Daoust said the market for e-commerce businesses is likely to stabilize this year. Quiet Lightsecurities firms and consulting firms.
“On the buyer side, it feels like things have stabilized a little bit. Maybe it’s not great, but it’s stable,” Daoust said in a video interview this month. “You’re not seeing as much choppiness as you used to.”
Last year, we saw a mismatch in the market with a shortage of sellers and buyers. Now, buyers are active but more cautious, and the average time to complete a transaction has increased from 110 days in 2021 to 150 days.
Mark Daoust
“Buyers are more sensitive to problems within companies than they used to be,” Daoust says. “The biggest problem right now is that we’re seeing more companies in decline. One of my brokers said, ‘We’re seeing a lot of listings of companies that need to be fixed.'”
Buyers’ Market
Dowst’s Prediction Steady Acquisitions Signs of recovery are beginning to emerge towards the fall, with a chance for real improvement in 2025. This assumes that companies stop losing money and sellers adjust their expectations to the current buyers’ market. That said, a growing percentage of deals are falling apart during due diligence.
“Buyers aren’t going to buy businesses that have catastrophic problems,” Daoust says. “When evaluating a business that’s on a downward trend, buyers ask themselves, ‘Is this going to be stable over the long term? Can we fix this? Can we return it to profitability?’ If so, it’s a great buy for the buyer, a good deal. This is a great opportunity for buyers to buy some of these businesses at low valuations.”
Falling interest rates, lowering the cost of capital, would help, but Daoust has seen many buyers obtain loans from the U.S. Small Business Administration to finance transactions, even with high interest rates of more than 13 percent.
Plus, for the right deal, buyers are willing to take on risk with private financing and interest rates in excess of 20%.
Either way, we should see more trading activity after the election, regardless of who wins.
“Republicans, Democrats. It doesn’t really matter. The market eases up pretty quickly after that,” he said. “I expect the same thing to happen here.”
Buyers are increasingly looking for multiple revenue channels Beyond the AmazonShopify, Walmart, Target, and TikTok are all powerful platforms for selling.
“You can build a good business outside of Amazon. More and more businesses are moving into brick-and-mortar stores,” Daoust said. Social media is also becoming very important. TikTok Shop It looks very promising.”
Artificial intelligence could be a game changer, and companies will need to reevaluate their search engine optimization and determine how to optimize for AI, Daoust said.
“From a business owner’s perspective, I’m thinking, ‘How can we leverage this?'” Daoust said. “A client came to us and said, ChatGPT Recommendation“… I thought, ‘Wow, this is something we need to see now.'”
