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Business Trends

Data Shot: Deal Multiples & Profitability

May 21, 2021 by Paul W

Data Shot is a new series that gathers and reviews data from The Hatchit Marketplace.  You will be able to use it as a guide in your business transaction process, and as a way of identifying useful insights.

profitability by category

Profitability by Category

This Data Shot reviews profitability by category, based on 400+ posts.

 

Avg. Adj. Net Margin Avg. Revenue Avg. Adj. Profit
Software & Platforms 63% $645,717 $410,013
Other Digital & Tech 32% $1,575,025 $506,721
Web Businesses & Sites 25% $1,573,345 $400,392
Brick & Mortar 20% $3,296,521 $661,975

 

Businesses in Software & Platforms have the lowest gross revenue but the highest margins. Likewise, Brick & Mortar businesses have the highest gross revenues with the lowest net margins. Web businesses & Sites and Other Digital & Tech have much more comparable gross revenue and net margins.

In looking at how companies in these categories are priced for sale, Software & Platforms leads the way again. The remaining three categories are much closer in their profit multiples. Distorting outliers were removed.

 

Avg. Adj. Profit Multiple
Software & Platforms 5.37
Other Digital & Tech 3.96
Brick & Mortar 3.73
Web Businesses & Sites 3.34

 

Questions to consider with a qualified business broker or other specialist

-What do higher profit multiples mean for buying or selling a business?

-How do businesses within these categories compare in terms of being replicable or occupying a larger moat? Does it influence the profit multiple in a sale?

- Brick & Mortar businesses still command a respectable profit multiple despite a lower net margin. Why?

-Are businesses with higher profit multiples indicative of better profitability potential or is it just what buyers want?

Read our Data Shot article on deal multiples for Amazon FBA and Shopify stores or price multiples for e-commerce businesses. 

Image from Pixabay

Filed Under: Business Trends

Ecommerce Sales for Full Year 2020

March 24, 2021 by Paul W

Summary: The coronavirus continues to significantly affect the rate of digital acceleration in the U.S. economy, according to the latest statistics from the U.S. Department of Commerce.

Fourth Quarter 2020

  • U.S. retail ecommerce sales for the fourth quarter of 2020, adjusted for seasonal variation, but not for price changes, was $206.5 billion, a decrease of 1.2 percent (±0.7%) from the third quarter of 2020.
  • The fourth quarter 2020 ecommerce estimate increased 32.1 percent (±2.1%) from the fourth quarter of 2019 while total retail sales increased 6.9 percent (±0.5%) in the same period.
  • Ecommerce sales in the fourth quarter of 2020 accounted for 14 percent of total retail sales.

Full Year 2020

  • Total ecommerce sales for 2020 were estimated at $791.1 billion, an increase of 32.4% (±1.8%) from 2019.
  • Total retail sales in 2020 increased 3.4% (±0.4%) from 2019. 
  • Ecommerce sales in 2020 accounted for 14% of total retail sales vs. 11% in 2019.  

ecommerce trends 2020

As you can see from this graph, the percent of ecommerce sales vs. total retail sales has taken a big jump up over the last year.

For more articles, see our Top 7 Digital Business Acquisition Categories for 2021.

Source: U.S. Census Bureau News, Press Release, Feb 19 2021

To view brokered and non-brokered businesses on Hatchit, feel free to browse our latest posts.

Filed Under: Business Trends

Ecommerce Sales First Half 2020

January 6, 2021 by Paul W

Summary: The coronavirus has profoundly affected the rate of digital acceleration in the economy, according to the latest statistics from the U.S. Department of Commerce.

  • U.S. retail ecommerce sales for the second quarter of 2020, adjusted for seasonal variation, but not for price changes, was $211.5 billion, an increase of 31.8 percent (±1.2%) from the first quarter of 2020.
  • The second quarter 2020 ecommerce estimate increased 44.5 percent (±1.9%) from the second quarter of 2019 while total retail sales decreased 3.6 percent (±0.5%) in the same period
  • Ecommerce sales in the second quarter of 2020 accounted for 16.1 percent of total sales.

eCommerce trendsAs you can see from this graph, the percent of ecommerce sales vs. total retail sales has more than doubled in the last five years and has accelerated since the beginning of the year.

For more articles, see our Top 7 Digital Business Acquisition Categories for 2021.

Source: U.S. Census Bureau News, Press Release, Aug 18 2020

To view brokered and non-brokered businesses on Hatchit, feel free to browse our latest posts.  

Filed Under: Business Trends

7 Digital Business Trends for 2021

January 6, 2021 by Paul W

With the new year around the corner, it's a good time to look at new business trends and which business ideas are attracting the most interest from business buyers. We reviewed our website data of 15,000 page views over ten weeks in the fourth quarter of 2020 to answer the question: what digital business trends for 2021 can we expect in the year ahead? 

digital business trends 2021

Some key findings before we count down to number one:

  • Five of the seven "most sought after" businesses are b2b solutions.
  • COVID impact: "interactive video" landed high up in our rankings, as companies deal with remote management throughout the pandemic.
  • Recurring revenue (vs. transactional): buyers are seeking a model that continues to deliver dollars, versus one that is focused on individual sales.

Read on from #7 to #1 for insights into what business buyers are seeking now.

#7 SEO Tools

Optimizing not just traffic, but relevant traffic to your website is the heart of SEO. A good Google or Bing ranking can drive a lot of organic traffic to a website. But the pieces that make up a good ranking rely on data analysis and an understanding of competitors. Software solutions for SEO challenges are frequently SaaS models.

email services

#6 Email Services

Email marketing services for businesses consist of ways to make email campaigns easier and more effective. They typically have a CRM integration but also consist of apps, plug-ins and platform solutions and employ a SaaS model. Email outreach is popular with companies, because it typically has a higher ROI.

#5 Affiliate Content

These are content-based sites that could be blogs, product reviews, or magazine articles. These content sites usually focus on a particular interest or hobby and make money through the posting of ads on their site with an affiliate network partner. Site owners get paid based on the amount of traffic or views/clicks of the ad by customers.

#4 Niche eCommerce

This includes Shopify retail sites and other eCommerce. These retailers either fulfill goods themselves or through a third party such as Amazon FBA or dropship warehouses. Niche products would be accessories or tightly focused product selections such as personal gear, pantyhose, or women's tunics. Most of these sites cater to consumers but niche products for businesses are also a strong category.

cloud service providers

#3 Cloud Service Providers

These are network services provided to organizations, which can be application or data based. Essentially, these third parties are providing an infrastructure solution through their remote servers. Typically, companies pay for the data they use but applications are likely to involve a more set recurring charge.

#2 Interactive Video

Video applications for highlighting content. This is a twist on the Zoom type of video where you view, talk and chat with people. This format allows viewers to connect with individual products or information and take an action to learn more. Most of the revenue streams are SaaS based models with retailers or other consumer facing businesses.

#1 Enterprise Software

This is software geared to helping businesses manage their day-to-day business activities such as procurement, accounting, project management, supply chains, risk management and compliance. Many of these businesses follow recurring revenue models and service other medium to large company organizations.

That's everything. Hope you found these industry findings to be revealing. If the company acquisition route intrigues you, browse our technology and other Internet businesses for sale. 

Read about digital transformation trends for 2022. 

Filed Under: Business Trends

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