What should you know before buying an online business?

What are you paying for?

The 3.43x average applies to e-commerce businesses: online stores selling physical products. Content sites, software and service businesses sold online are priced differently, and we have no sourced multiple for them. Do not apply the e-commerce figure to them.

An online business is a bundle of assets that each have to transfer:

• Domains, the store and website, and their content.
• Marketplace seller accounts, such as on Amazon.
• Email and customer lists, with the consent records behind them.
• Advertising accounts and their history.
• Supplier and manufacturer relationships, and any purchase orders in progress.
• Trademarks, product designs, photos and copy.
• Inventory, often priced separately at cost.

Check each one. Some marketplace and platform accounts have terms that limit transfer to a new owner. Read the current terms of each platform and ask how the seller plans to hand the account over. If an account cannot transfer, part of what you are paying for may not come with the deal.

What is platform risk, and how do you measure it?

Platform risk is the chance that a company you do not control changes something and your profit falls. Measure how much of the business depends on each:

• Marketplace share. What share of sales comes through one marketplace? A suspended account can stop that revenue overnight. Ask for the account health history and any past suspensions.
• Traffic sources. What share of visitors comes from organic search, paid ads, email and direct? A search ranking change can cut organic traffic without warning.
• Ad dependence. What is ad spend as a share of revenue, and how has the cost to acquire a customer moved over 24 months?
• Supplier concentration. Does one manufacturer make most of the products? What happens to margin if its prices or lead times change?
• Product concentration. Does one product drive most sales? Bestsellers attract copycats.

None of these kills a deal by itself. Together, they set how much you should pay and how much debt the business can carry.

How do you verify an online seller's numbers?

Online businesses leave more data than most small businesses. Use it. Do not rely on exported spreadsheets or screenshots.

1. Get read-only access, or a live screen share, to the store platform, marketplace accounts, payment processors and ad accounts.
2. Tie platform sales to payouts from the processors and marketplaces, and payouts to bank deposits.
3. Tie bank deposits to the tax returns.
4. Pull refunds, returns and chargebacks by month. High return rates can hide in gross sales figures.
5. Check cost of goods by product against supplier invoices, including freight and duties.
6. Look at repeat purchase rates by customer cohort. Revenue from returning customers is worth more than revenue bought with ads each month.

Our article on how to verify a seller's numbers covers the bank-to-return-to-system sequence in detail.

What legal and tax issues come with an online business?

There is usually no lease or trade license, but there are other issues to check with your lawyer and CPA:

• Sales tax. Many states require online sellers above certain sales thresholds to collect sales tax. Rules vary by state. Ask whether the business has been collecting where required. In a stock purchase, past uncollected tax can stay with the company you buy.
• Intellectual property. Confirm the seller owns the trademarks, designs and content, and that nothing infringes on someone else's.
• Product compliance and liability. Check whether products need testing or certification, and whether insurance covers product claims.
• Customer data. Confirm the email list was collected with consent and that the privacy policy allows transfer to a buyer.
• Warehouse and fulfillment contracts. These replace the lease. Check term, assignment and stored inventory.

Worked example: what an ad cost increase does

Illustrative numbers for an e-commerce business financed with an SBA loan:

1. SDE: $300,000. Price at 3.43x: $1,029,000.
2. Add $100,000 of inventory and $40,000 of fees and closing costs. Total project cost: $1,169,000.
3. Minimum equity injection at 10%: $116,900. SBA loan: $1,052,100.
4. Annual debt service over 10 years at an assumed 10% rate: about $166,800.
5. Subtract an $80,000 salary for you. Coverage: $220,000 divided by $166,800 is about 1.32x. That clears the 1.25x test.
6. The business spends $400,000 a year on ads. Ad costs rise 20% with no extra sales. SDE falls by $80,000, to $220,000.
7. Cash available after your salary: $140,000. Coverage: about 0.84x. The business no longer pays its loan.
8. At the same 3.43x multiple, the business is now worth $754,600, or $274,400 less than you paid.

Where these numbers come from: The 3.43x e-commerce multiple and the 2.57x all-sector average are BizBuySell data for 2021 to Q1 2026 as summarized by Beancount. The 10% injection, 10-year amortization and 1.25x coverage test are SBA rules under SOP 50 10 8.1, summarized by Beancount. The 10% rate is the SBA maximum variable rate for loans over $350,000 with prime at 7% in September 2026, per NerdWallet. Check current prime. SOP 50 10 8.1 applies to loans numbered on or after October 1, 2026; lender practice under it is still settling and these are secondary summaries, so confirm current terms with your SBA lender.

Related questions

Can I use an SBA loan to buy an online business?

Some SBA lenders finance online businesses and some avoid them. The same rules apply as for any acquisition: 10% minimum injection, 1.25x coverage on historical cash flow and an independent valuation. Ask lenders early whether they lend on e-commerce.

Is an online business passive?

Rarely. Inventory, ads, customer service and platform changes need weekly attention. Budget for your time or for someone else's.

Should I buy through a marketplace or a broker?

Both list online businesses. Either way, the seller's representative works for the seller. Do your own verification inside the platforms.

What comes next

Verification is where online deals are won or lost. Read how to verify that a seller's numbers are real before you sign a letter of intent. The buyers who end up with the most valuable companies decide what the business goes into before they buy it.

Related articles

• Which "boring" businesses are worth buying?
• Should you buy a restaurant?
• How do you verify that a seller's numbers are real?
• How much customer concentration is too much?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.