Buying And Selling Remote Amazon FBA Businesses
Jason Kwan is the Chairman and President of Pearl West Group, a successful Amazon mergers and acquisitions (M&A) firm that has recently made some significant acquisitions and grew exponentially. I recently had the pleasure to sit down and talk with Kwan about his history as an entrepreneur, how he came to be successful, and what he finds to be the upcoming trends of M&A for smaller online businesses currently running remotely.
Jason Kwan is the Chairman and President of Pearl West Group.
Like many successful people before him, Kwan took a massive risk: "My entry into entrepreneurship was very fortunate. I started reading books about financial freedom, and then it slowly led to books about starting a business. I decided to skip university to pursue this route. My mom was very upset about it because she wanted the best for me, and she thought that going to university would have a higher chance of me becoming successful. She also wasn't rigid about it because she had some faith in me. And I could always go back to school if I fail."
With nothing but a dream and a little money in savings, Kwan quickly dove headfirst into the field of entrepreneurship. "I started my first business at 17 years old. I was devouring a ton of courses on online marketing and how to use Google Adwords. I formed a digital advertising agency." Kwan quickly realized the benefits of running an online business like this that can generate income and was more or less passive. The lightbulb moment occurred when he went to a family member's wedding and realized he was earning money with his business running in the background.
However, the biggest test in Kwan's growth came when he learned of the power of M&As. Still working within his original digital marketing business, he had experienced a 160% compounded annual growth rate for eight years. "I never had the thought of selling the business because I didn't think anyone would buy it. The agency was centered around me, and I didn't know how it would function with me, but if I knew what I know now, I would have built the proper systems and hired the right talent so that it could have been sellable." Eventually, Kwan shifted his focus over to running an Amazon FBA (fulfilled by Amazon) mergers and acquisitions firm.
It didn't take long for Kwan to realize the power of running a business like this. After opening its doors, Pearl West Group has focused on finding the right deals and brands where it’s a win-win for both sides. "Each deal is different, but we typically offer anywhere from 70% to 95% of the cash upfront with the rest over a 1–2-year period. We usually go for a 100% acquisition."
As Kwan states, "We're focused on buying up brands that have the majority of their sales coming from Amazon. But we're agnostic to the category of products we're looking for. We look at almost any category on Amazon, from health supplements, beddings, pet supplies to kitchen household items."
Kwan is also very transparent in the processes and steps that he goes through when deciding which businesses to purchase: "we evaluate them based on the sustainability of the earnings.
We want to know if the business earnings will be just as good in 12 months. When we make an offer, there's always an earn-out component in the offer because we want the seller to benefit from the upside as well." Therefore, as an investor trying to do something similar, you might want to take Kwan's advice and consider whether your investment will continue to produce the same income after acquisition and how you can align the incentives for growth.
In Pearl West Group's experience, now is a great time to purchase a remote business and focus on improving the quality of and profit of the company. "The pandemic has shifted more consumer behavior towards online shopping, and we've been able to see positive effects from that." Indeed, the growth rate of Pearl West Group has exploded since the pandemic started.
When asked about the benefits of running a remote team, Kwan was clear that this has not phased his operations much. "Working remotely wasn't a massive issue for us because more than half of our team is located overseas, so we're experienced with virtual meetings. We miss the energy that happens in person among our local team, though - we're looking forward to spending time at the office again once everyone is more comfortable." It seems that in today's day and age, the benefits of operating a business with a remote team are starting to have way more benefits than drawbacks.
It seems that the future for companies such as Pearl West Group will include more remote workers, virtual meetings, and so on. Especially for businesses that want to attract some of the best candidates from all corners of the globe. Pearl West Group has been embracing this change and not letting it halt its vision for the future.
"Our short goal is to establish ourselves as a top seller on Amazon, through investments in creating internal brands, and acquiring other quality brands to add to our portfolio. Our long-term vision for the company is to build a global digitally native consumer brands corporation. We want to be 1 of the top 10 sellers on Amazon, with hundreds of brands within our portfolio, great brand exposure through other DTC channels, and, more importantly, have a lot of fun doing it."
With all of these visions of success coming in the future for Pearl West Group, it seems that keeping passion and having an interest in what you are doing is one of the top recipes towards their success. That and keeping a pragmatic stance along the way: "We want to scale and grow aggressively, but only if it makes sense. We're patient."
