I'm getting close to wanting to sell my Shopify store (home goods niche, about $1.2M revenue last year, 18% net margin). But every broker I've talked to gives me a huge range, and a lot of it hinges on how they model ad spend going forward. With Meta and Google CPCs where they are, buyer models seem all over the place. Some still use a 3x SDE multiple, others are basically saying paid acquisition is dead and discounting the whole thing. Anybody here gone through this recently? How did the buyer actually value the store, and how much of it came down to ad costs specifically?
Ecommerce Exit
How do buyers value a Shopify store when ad costs are crazy high?
Watching this thread. We sold a smaller apparel store in 2022 and the multiple was tied almost entirely to how much of revenue was organic vs paid. Buyer basically said if more than half your traffic is paid, they treat it like a job, not an asset.
How are you defining SDE here? 18% net on 1.2M is decent but if that's after your own salary, the buyer will add that back. Also what's your repeat customer rate? That matters way more to some buyers than ad efficiency.
I help acquire stores in this range, though I'm not a broker and won't pretend to be. Two things buyers are doing right now: they're normalizing CAC to a 12-month rollinG average instead of the last 90 days, and rhey're stress-testing what happens if ad costs rise another 20%. If your store only works at current CPCs, the multiple compresses hard. If you have meaningful organic or email revenue, you get a much fairer look.
Repeat rate is around 31% over 12 months. Organic is mayBe 22% of traffic, paid social is the biggest chunk. I don't have an email list that's huge, about 24k. Does that change the picture much?
Honestly the ad cost thing is a red herring half the time. Buyers will say it's about ad costs but what they're really worried about is whether the margin is real. If your 18% ddpends on a brand-name supplier giving you terms, or one winning product, that's what gets discounted.
Have you looked at what comparable stores actually sold for? Not asking prices, sold prices. Its hard to find but it sets the floor way better than a broker's pitch. In home goods i've seen 3.0 to 3.5x SDE for stores with strong repeat and decent organic, closer to 2.5x if it's heavily paid.
quiet_kitchen is right about sold comps. A lot of the 'crazy ad costs' discount is already baked into the market multiple, so don't let a broker tell you it's a special haircut just for you.
Not a seller, just lurk Here. Curious how buyers even attribute ad spend to customer acquisition vs retention. If you're spending on retargeting existing customers that's a different story than cold acquisition. Do buyers care about that split?
offkeysam yes they do, or at least the good ones. Blended CAC hides a lot. A store with high new-customer CAC but cheap retention looks worse than the blended number suggests. OP, your 31% repeat is actually a strength here, might be worth making that the centerpiece of your memo rather than leading with revenue.
Appreciate that. So the tkeaway isn't 'wait for ad costs to fall' but 'show the durable part of the business.' That reframes how I'm writing this up. One more thing, has anyone seen buyers adjust the multiple based on how much of the ad spend is on brand terms vs generic?
Yes, brand-term spend is usually treated as defensible because it's harvesting demand you already created. Generic prospecting is the part that gets the hairy eyeball. If you can show a clean split, buyers in the 1M+ range will absolutely use it in their model.
Also be ready for them to ask what happens if you stop spending entirely for 60 days. It's a stress test, not a prediction. The answer tells them how much of the business is the brand vs the ad account.
One caveat on the comps I mentioned, home goods stores with 30%+ repeat are rare enough that they can push toward the top of that range. Don't anchor to the 2.5x number if your retention holds up under diligence.