What actually makes an ecommerce business worth buying?
In this episode of The Ecommerce Revolution Podcast, Ramin sits down with Joe Van Deman and Colin King of Circle City Capital Group to look at ecommerce from the buyer’s side of the table.
Joe and Colin have reviewed thousands of businesses and acquired more than a dozen companies, including ecommerce brands. Their portfolio includes businesses such as Vermont Flannel, Vermont Teddy Bear, All American Clothing, and more.
The conversation covers what makes a business attractive to an acquirer, how valuation really works, why clean financials matter, what buyers look for during due diligence, and how founders can start building a more sellable company long before they are ready to exit.
They also share how they find acquisition opportunities, why they are drawn to what they call “sleepy brands,” and how relatively simple improvements in ecommerce technology, marketing, and operations can unlock growth.
In This Episode
How Joe and Colin met through Craigslist
Why they reviewed more than 1,500 businesses before making their first acquisition
What makes an ecommerce business attractive to a buyer
How small business valuations and earnings multiples work
Why too many add-backs can create red flags
What founders should do now if they may want to sell later
Why clean books and separate business finances matter
How founder dependence can hurt a company’s value
What happens during due diligence
How long the selling process can take
Why buyers look closely at ad spend, fulfillment, product costs, and shipping
Why Joe and Colin prefer businesses with long operating histories
What they mean by “sleepy brands”
Why legacy platforms can represent an opportunity
How they have migrated multiple companies to Shopify
Why owning your audience increases the value of a business
Why email continues to be one of their strongest marketing channels
How direct mail is working for customer win-back
Why unit economics are critical for ecommerce founders
The importance of niche positioning and ongoing product development
Why ecommerce entrepreneurs may want to think about buying a business, not just selling one
The tools Joe and Colin use to stay organized while operating multiple companies
Key Takeaway
Even if you never plan to sell your ecommerce business, building it as if a buyer might one day evaluate it can make it stronger.
Clean financials, documented processes, better systems, a capable team, healthy unit economics, and an audience you own are not just things buyers want.
They are the fundamentals of a better-run ecommerce business.
Chapter Timestamps
00:00 Buyer and seller perspectives00:49 Introduction to Joe Van Deman and Colin King03:25 The Craigslist story06:16 How they find businesses to acquire09:08 How ecommerce business valuation works13:27 Should founders stay after a sale?16:38 Building a business with the end in mind18:24 Why founders need clean financials20:22 Add-backs and valuation red flags22:29 How they operate multiple companies25:24 Sharing knowledge across portfolio companies27:38 Technology, legacy platforms, and Shopify migrations30:40 Finding value in old customer databases33:08 What happens when a founder decides to sell37:03 How long a sale can take38:24 What buyers examine during due diligence41:28 What happens when performance changes during a deal43:30 Seller hesitation and why deals fall apart47:06 Advice for ecommerce entrepreneurs47:45 Own your audience48:42 Niche down and keep developing products49:56 Understanding unit economics51:15 What marketing channels are working52:43 Email, Google, Meta, connected TV, and direct mail56:10 AI and emerging marketing channels57:54 The opportunity in “sleepy brands”59:39 Why ecommerce founders should consider acquisitions1:02:00 Tools Joe and Colin can’t live without1:05:01 Where to find Circle City Capital Group
About the Guests
Joe Van Deman and Colin King are partners at Circle City Capital Group, a holding company that acquires established, profitable businesses with opportunities for growth.
Their portfolio includes companies across ecommerce, apparel, home decor, school supplies, and financial education.
Learn more at Circle City Capital Group and connect with Joe and Colin on LinkedIn.
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.ecomrevolution.co
