Which Amazon Aggregators Are Still Acquiring in 2023 And Which Ones Have Paused Acquisitions?
Hahnbeck has published the current acquisition status of the 85 Amazon “aggregator” companies. The list of Amazon aggregators provides insight into whether or not each firm is currently acquiring new brands and attempts to shed light on the nuances around how active each firm currently is in the space, in the second half of 2023.
Image: Go North
Acquirers were classified into one of four categories:
Type 1: “Not acquiring at all”, which means not currently open to acquiring independent Amazon FBA brands
Type 2: “Not acquiring, with rare exceptions”, which means not currently acquiring, with the exception of extraordinary opportunities (v low multiple or other exceptional circumstances)
Type 3: “Still in the market but M&A not a primary focus”, which means still making acquisitions, with capital ready to deploy, but other initiatives are higher priority at the moment
Type 4: “Actively acquiring, growth via acquisition is a primary focus”, which means inorganic growth is currently a high priority; actively seeking to make new acquisitions
At the time of publishing, 33 firms (39% of the total) are classified as currently being in the market for acquisitions, with capital available to deploy (categories 3 or 4), although only one third of these are the most active type, where acquiring new brands remains a priority for the company.
On the other hand 52 of the acquirers (61% of the total) are listed as either “not acquiring at all”, or “not acquiring, with rare exceptions”. This is illustrative of the challenging environment experienced by the sector over the last two years, with investors tightening purse strings, in some cases refusing to release committed capital and generally making it more difficult for the aggregators to make new acquisitions.
Variation Between Aggregators
Categorising 85 different acquirers into only four categories is difficult, given that each firm has a different strategy and different priorities. Hahnbeck notes that there is substantial variation between firms of the same type: for instance, some of the firms in categories 3 and 4 have stricter limits than others with regard to the EBITDA multiples they can pay, which restricts them to deals where the prices are relatively low. Others can bid more competitively when they find the right opportunity. Acquisition criteria have narrowed across the board, but some firms have extremely narrow criteria, focusing on only one or two narrow verticals, whereas others are pursuing a wider range of categories and opportunities.
Consolidation Set To Continue
It should be noted that many of the aggregators, including those who are currently not pursuing the acquisition of independent brands, are in active merger or acquisition talks with other aggregators. Consolidation in this sector will certainly continue in 2024.
End Of The Road For Some
One notable detail is the fact that the list of active Amazon aggregators, which once stood at almost 100, is now down to only 85. Some of the acquirers have been removed from the list through mergers, others have simply closed down and others have pivoted to different business models. Hahnbeck captures the list of former Amazon aggregators at the bottom of the same page.
Optimism Remains
Despite the challenges the sector has faced over the last couple of years, the “hold co” business model in the consumer products space remains sound. Not every acquisition has been a success but that is the benefit of diversification. While some players have struggled, others have performed well and many of the aggregator firms report that they have reached or are approaching profitability at a corporate level. New equity investment into the sector is needed in order for debt providers to have more confidence, but some firms have successfully raised more equity in 2H 2023 and a number of other firms are currently raising. Consolidation will reduce debt to equity levels and enable more of these firms to reach corporate level EBITDA profitability in 2024. This is not to say that the outlook is rosy: the acquisition status data alone shows that the majority of aggregators - whose raison d'être was to make acquisitions - are currently not doing so. Many of these will return to market, but there will almost certainly be more failures. However, this was always going to be the case in such a fragmented market.
For Amazon sellers (and the owners of multi-channel brands, which are now favoured by some aggregators), these acquirers will continue to provide a route to exit. There will be fewer of them, and in the most competitive deals they will lose out to strategic buyers and consumer private equity, but they will continue to make acquisitions and will remain a significant presence in the M&A landscape in 2024 and beyond.
Hahnbeck is an M&A advisory firm specialising in consumer retail and SaaS, with extensive connections to buyers in this field. If you are considering the sale of your business and would like our advice, we would be happy to help. Email us to arrange a confidential discussion.