Call us here at Revision Legal if you are thinking of selling your online business to an e-commerce rollup company or if you are in the process of rolling up e-commerce businesses. We thrive on representing e-commerce companies and want to be your one-stop shop for answers to your legal questions. We are and have been General Counsel to e-commerce rollup funds, aggregators, and holdcos, and are General Counsel to one of the largest brokers of digital assets. We have advised and supported the closing of sales for hundreds of online businesses.
The rollup and ecommerce aggregator trends really took off back in 2020-21 and the momentum has never slackened. In 2023-24, rollup and aggregator transactions are expanding. Why? Consolidation within new market segments is, historically, a business strategy that is very good and profitable. Rollup funds and aggregators are marketed as something spicy and new, but, in truth, these are just forms of marketplace consolidation. Such consolidations have a long history of success. Consider why a company like Nabisco owns and markets so many products under brands that are not named “Nabisco.”
Generally, an e-commerce rollup or aggregator acquires multiple e-commerce companies that have established, recognizable, registered, and legally defensible brands. The goal is to combine the companies, continue operating the brands, increase profitability, and accelerate growth.
Profitability is increased by eliminating redundancies and exploiting efficiencies (such as economies of scale). For example, when three ecommerce companies are merged, various business “structures” within them become redundant. Of these, two can be eliminated or combined to create a single, more efficient business operation. One such “structure” is company “governance.” There were once three boards of directors/managers, three CEOs, etc. After the merger, three can be reduced to one with the attendant cost savings and productivity increases. Similar redundancies can be found in human resources, accounting, marketing, etc.
Growth acceleration is achieved through various strategies. First, the cost savings from consolidating business structures can be used for expanded marketing and investments to increase productivity. Further, assuming that the e-commerce companies had at least somewhat differentiated consumer bases and products, the consumer bases can be cross-marketed with new products from the acquired e-commerce companies. Sometimes, simply achieving a higher market share can accelerate growth. In addition, new products/services can be offered, now to a much-expanded consumer base. Also, at some point, the cross-branding and marketing strategies can open new sales channels like other online sales platforms and even physical locations.
To accomplish all this, the first step is legal services. Business mergers and acquisitions are legally complex, involving many business and personal factors (since we are, after all, dealing with small, closely-held businesses). You will need experienced help with negotiating and drafting the Purchase Agreement, with the necessary due diligence tasks, and with the consummation. You may even need post-closing legal assistance if, for example, there is a need for transition services from the seller.
Contact the E-Commerce Rollup Attorneys at Revision Legal
For more information, contact the experienced e-commerce rollup Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.