Hey everyone,
I’m looking at buying a D2C electronics brand and could use some advice. Here’s the scoop:
- Revenue: $900k in 2023, $700k in 2022
- Previously run by two partners (creative/marketing and operations)
- One partner left last year, business got less attention
- 20% repeat customers
- 30% TaCOS, 13% bottom margin
- Heavily dependent on Facebook/Instagram ads
The price is below yearly EBITDA, which seems good. But I’m worried about the reliance on Meta for growth. A mess-up there could really hurt sales.
What should I ask before deciding? Is this a good opportunity or too risky? Any red flags I’m missing?
Thanks for your input!
Having been through a similar acquisition process, I’d urge caution here. The heavy reliance on Meta ads is indeed concerning. I’ve seen businesses tank when algorithm changes hit. The recent growth is promising, but dig into why one partner left - that could reveal hidden issues.
Ask about their customer acquisition cost trends, especially given the Meta dependence. Also, probe into their product pipeline and market differentiation. With only 20% repeat customers, their offering might lack staying power.
The price seems attractive, but remember - cheap can be expensive. Unless you’re confident you can diversify their marketing and boost retention, this could be a risky bet. Consider bringing in a third-party auditor to verify the financials and growth projections before committing.
hey there, i’ve been in ecom for a while and this looks iffy. the meta dependence is a huge red flag - one algo change could tank sales. also, why’d the partner bail? thats sus. low repeat customers is worrying too. mightbe cheap, but could be a money pit. id pass unless u can fix those issues fast.
Hey ExploringAtom! Interesting opportunity you’ve got there. I’m curious about a few things:
Have you looked into their product reviews and customer feedback? That could give you some insight into why the repeat customer rate is low.
What’s their inventory situation like? With electronics, you don’t want to get stuck with outdated stock.
Any info on their email marketing efforts? Might be a way to reduce that Meta dependency.
Oh, and do you know if they’ve tried expanding to other platforms like TikTok or Amazon? Could be some untapped potential there.
Just throwing some ideas out there! Let us know what you decide - acquisitions can be exciting but nerve-wracking too. Good luck!