In the latest episode of the DTC Dive Podcast, we are thrilled to host Matthias Walter Eser from Eser Capital. Matthias is a distinguished figure in the DTC sector, known not only for his insightful LinkedIn posts but also for hosting his own popular podcast. At Eser Capital, Matthias and his team specialize in providing CFO services to D2C brands, guiding them through successful asset sales and comprehensive company deals. During theconversation, Matthias delves deep into the nuances of data-driven business strategies and the critical financial metrics essential for evaluating company values in the context of mergers and acquisitions. Join us as we uncover the complexities of D2C financial models and learn from Matthias's expert analysis on achieving fair company valuations and strategic asset management.
Navigating Complex Valuations in DTC: Mastering M&A Strategies
As the Direct-to-Consumer (DTC) sector evolves, businesses are increasingly facing intricate challenges in mergers and acquisitions (M&A), especially when it comes to accurate valuations of DTC brands. In this dynamic landscape, understanding the nuances of financial assessments and capitalizing on strategic growth opportunities is key. Matthias Walter Eser, a seasoned expert from Eser Capital, joins us to delve into the art and science of DTC valuations, exploring the essential metrics and approaches that drive successful transactions.
This episode provides a deep dive into the strategies for evaluating company worth, including the pivotal role of data quality, the impact of customer acquisition costs, and the calculation of customer lifetime value. We dissect how Eser Capital helps companies navigate the complexities of asset and share deals, focusing on CFO services tailored specifically for the DTC market.
Moreover, we explore common challenges businesses encounter, such as managing valuation expectations and strategizing for pre-sale positioning. Whether you're contemplating a sale or looking to enhance your company's valuation framework, this discussion offers actionable insights and expert guidance to optimize your strategic outcomes.
Join us for an enlightening conversation with Matthias Walter Eser on mastering the complexities of M&A in the DTC space, enhancing your understanding of how to drive value and ensure a smooth transaction process.
For more insights into DTC strategies and M&A best practices, check out the DTC Dive Podcast series on YouTube.
In-depth Interview with Matthias Walter Eser from Eser Capital
Markus Repetschnig: Welcome to the latest edition of the DTC Dive Podcast. Today I'm joined by Matthias Walter Eser from Eser Capital. Matthias, you're well-known in the scene, not just for your own podcast but also for your constant LinkedIn posts. Tell us a bit about what you do at Eser Capital.
Matthias Walter Eser: Thanks, Markus. It’s really nice to be on the other side of a podcast for a change. Normally, I host, but being a guest today is a great honor. At Eser Capital, we provide CFO services for D2C brands. We assist companies in the D2C sector in successfully selling their assets or the entire company, whether through asset deals or share deals. Our specialty is understanding the complexity of D2C companies and leading them to a fair company valuation.
Markus: That sounds fascinating! Today, we'd like to discuss the important metrics for evaluating companies, especially in the context of a sale. How important is data quality?
Matthias: Data quality is absolutely critical, especially for M&A deals. D2C is strictly a data-driven business. Those who understand their data and can correlate it properly can effectively increase their company's value or avoid losses. Key metrics include the Cash Conversion Cycle, Customer Lifetime Value, and Customer Acquisition Costs.
Markus: How do you approach valuing such a company?
Matthias: We often use the income approach, which focuses on the company's earnings. For D2C brands, which rarely have patents or similar assets, the earnings are often the only real value. We look at how the company trades, the profit it makes before taxes, and from there, we can calculate a break-even point.
Markus: And how do you evaluate a company's brand value?
Matthias: Brand value can be approximated through various methods, such as media equivalents or market studies. However, for smaller transactions, it is often more practical to use comparative values by looking at and analyzing similar transactions.
Markus: What happens when a company heavily invests in new customer acquisition and shows less profit as a result?
Matthias: That's an important point. Even if a company shows less profit due to high investments in customer acquisition, it can still have a high company value if other KPIs like contribution margins and retention rates are right. It's also strategic to ensure that the EBITDA rises before a transaction by possibly scaling back new customer activities.
Markus: Matthias, thank you for these deep insights! It was great having you here to discuss all these important topics.
Matthias: Thank you, Markus. It was fun, and I appreciate how we get straight to the point in this format. Those who want to learn more are welcome to do further research.
Markus: Absolutely, I'll also post your podcast link in the show notes. Thanks again for being here.
Matthias: Thank you, Markus. Until next time!
Why Multiples Matter More Than You Think
So, you’re running a DTC brand or an ecommerce store—and you’ve grown it to the point where a payout is on the horizon. Whether you're planning to sell next quarter or just exploring your options, there's one concept you must grasp: ecommerce investment multiples.
These magic numbers—typically 2x, 3x, 5x or more—can dictate whether your exit is a life-changing event or a missed opportunity. But here’s the kicker: they’re not just plucked from thin air. They’re calculated, negotiated, and driven by data and market dynamics. For ecommerce owners like you, understanding these multiples is not a luxury—it’s leverage.
Ecommerce Investment Multiples
Before we unpack the variables that influence valuation, let’s clarify what we mean by ecommerce investment multiples.
In simple terms, a multiple is a number that gets multiplied by a financial metric (usually profit or revenue) to arrive at your company’s value. For example:
- SDE multiple: 3x SDE = 3 × your Seller Discretionary Earnings
- EBITDA multiple: 5x EBITDA = 5 × your Earnings Before Interest, Taxes, Depreciation, and Amortization
- Revenue multiple: 1.5x revenue = 1.5 × your trailing 12-month revenue
Buyers use these multiples to simplify valuation. It helps them compare businesses across industries, models, and size. But every business is unique—and so is its multiple.
Types of Multiples in Ecommerce
Let’s break down the most commonly used ecommerce investment multiples:
Seller Discretionary Earnings (SDE):
Mostly used for owner-operated businesses under $5M in revenue. SDE is your profit plus your salary, personal perks, and one-time expenses.
EBITDA & Adjusted EBITDA:
Commonly used for larger ecommerce businesses ($5M+), especially those that have teams, systems, and some corporate structure. Adjustments are made to reflect true profitability.
Revenue Multiples:
Used when a business is growing rapidly but not yet profitable—or when a SaaS-like recurring model is present. Most common in subscription DTC brands.
Each multiple tells a story. SDE shows what a buyer could pocket annually if they stepped into your shoes. EBITDA attracts financial buyers who care about scalability. Revenue multiples shout growth and potential.
What Affects Ecommerce Investment Multiples?
You guessed it—multiples vary. A 2x multiple for one store might be 5x for another. Why?
Because buyers are evaluating risk vs. return. Here’s what moves the needle:
- Profit margins – Higher margins equal higher multiples.
- Revenue consistency – Predictable income commands a premium.
- Brand strength – Own your traffic and customers? That’s gold.
- Operational efficiency – Lean teams, automated systems, and SOPs boost confidence.
- Owner involvement – The less you're needed, the better the valuation.
In other words, your systems sell your store. Not just your sales.
💡 Pro tip: DTC brands with strong first-party data, owned audiences, and repeat customers almost always pull higher multiples.
The Role of Growth and Scalability
Buyers aren’t just buying your past. They’re buying your future cash flow. That’s why growth rate matters—especially for revenue-based valuations.
A DTC skincare brand growing at 50% YoY may command a 2.5x revenue multiple, while a flatlining store gets stuck at 3x SDE. Think of it this way: predictability + potential = premium.
Want to raise your multiple? Make it easy for the next owner to scale.
Red Flags That Kill Multiples
Not all that glitters is gold. Even a $1M revenue store might struggle to get a decent offer if it’s:
- Dependent on the founder (you are the brand)
- Lacking financial documentation or clean P&Ls
- Living off one winning product
- Over-leveraged with paid ads and no organic traffic
- Using hacked-together fulfillment processes
Buyers see these as liabilities. And they will reduce their offer—or walk away entirely.
Optimizing Your Store for a Higher Multiple
If your goal is a strong exit (and who doesn’t want one?), you need to prepare your business like it’s going to sell next month.
Here’s a 90-day multiple-boosting checklist:
- Standardize operations with SOPs
- Diversify acquisition channels (add email, SEO, affiliates)
- Switch to accrual accounting (if not already)
- Replace yourself with a team or VA
- Clean your financials with a bookkeeper or CFO
Because when the numbers are tight, and systems are tight, buyers get excited—and generous.
How to Work With E-commerce Business Brokers
A broker can 100% change the outcome of your sale. While they typically charge 8-12% of the transaction, they:
- Help you package your business
- Connect you with qualified buyers
- Run the due diligence process
- Negotiate the best multiple
Go DIY if you’re selling for under $250k. But if you’re aiming for a mid-6 or 7-figure exit, a reputable broker like FE International, Quiet Light, or Empire Flippers is worth every penny.
Understanding Buyer Types and Their Valuation Approach
Different buyers = different priorities = different multiples.
Individual Buyers:
- Focus on SDE
- Prefer turnkey, passive businesses
- Often buy for lifestyle or first-time investment
- Multiples: 2x–3.5x SDE
Private Equity (PE) Firms:
- Target $2M+ EBITDA businesses
- Look for scalability, roll-up potential
- Love clean books, teams, systems
- Multiples: 5x–8x EBITDA
Strategic Acquirers:
- Competitors or synergistic brands
- Willing to pay a premium for audience, tech, or channels
- Less price-sensitive if it’s a strategic play
- Multiples: up to 10x or more
💡 If your business aligns with a buyer’s strategic goal, you could leapfrog standard multiple ranges altogether.
The Role of Deal Structure in Multiples
Here’s a dirty little secret: the headline multiple doesn’t tell the whole story. The structure of the deal matters just as much.
Common deal components include:
- Earnouts: You earn part of the price based on future performance. Buyers love them, sellers… not so much.
- Seller financing: You finance part of the deal (think of it as a mini-loan).
- Holdbacks: Portion of payment withheld until conditions are met (e.g., no chargebacks).
- Equity rollovers: You keep a % of the business under the new ownership.
A 5x multiple deal with 50% paid upfront and 50% as an earnout is not the same as a 4x all-cash deal. Always read the fine print.
Market Trends in Ecommerce Multiples (2024 & Beyond)
The ecommerce M&A landscape has evolved dramatically post-pandemic. Here’s what’s shaping ecommerce investment multiples now:
- Aggregator decline: Many Amazon roll-ups have slowed down or collapsed, leading to stricter deal reviews.
- DTC consolidation: PE firms are building mini-brand portfolios—looking for 3–5x EBITDA exits later.
- Recurring revenue is king: Subscription models and SaaS-like ecommerce get higher multiples, even with thinner margins.
- AI + automation: Brands that leverage AI for customer service, ads, or inventory management are more attractive.
- Community-driven brands: Those with a loyal, organic audience (via email, TikTok, YouTube) command premium valuations.
Despite economic uncertainty, ecommerce is still a buyer’s playground—if your business is optimized.
FAQs on Ecommerce Investment Multiples
How do I know what multiple my business deserves?
You can estimate it by benchmarking similar businesses, talking to brokers, or getting a valuation from M&A advisors. It depends on your model, profits, and risk factors.
Are higher revenue businesses always worth more?
Not always. Profitability, operational structure, and customer base quality matter just as much—if not more—than topline revenue.
Can I sell my business if it’s not profitable?
Yes—especially if you have strong growth, a recurring revenue model, or strategic IP. Revenue multiples may apply.
What’s the average timeline to sell an ecommerce business?
Typically 60–120 days from listing to closing, but complex deals can take longer. Preparation reduces the timeline.
What hurts ecommerce valuations the most?
Founder dependence, messy books, weak brand, high churn, and reliance on one channel (like paid ads or Amazon).
What’s better: a high multiple with earnouts or a lower all-cash offer?
Depends on your risk tolerance. Some sellers prefer all-cash deals even at lower multiples. Others are confident in their projections and take the risk.
