Finally, it’s here.

Months in the making — over a decade if you count his years as a banker, lawyer, and now president of HexClad …

🤑 Jason Panzer shares the five keys on how to sell an ecommerce business

🛍️ Cody Plofker reveals Jones Road and True Classic’s net-new growth unlock

🗞️ Top five headlines from this week in consumer news + three free resources

Oh, and a  bonus  that’s almost gone.

Cody Plofker CEO, Jones Road Beauty

$500M Brand Unlocks Net-New Growth

Customer acquisition is getting more expensive, less effective.

Why? Because Meta is crowded. Google is costly. And both keep circling the same customers.

That’s why we’re using Rokt Ads — a high-intent performance channel that puts our offers on the checkouts of other retailers, when shoppers are already in buying mode.

With deterministic identity, zero creative lift, and full suppression control, Rokt Ads reaches only net-new customers.

No overlap. No wasted spend.

In the first week of testing, it drove +1,900 conversions, with 88% coming from first-touch, net-new buyers. By week two, ROAS was profitable and built for scale.

Along with Jones Road + True Classic, brands like Honeylove, Mugsy, Quince, Portland Leather, and DRMTLGY are unlocking incremental growth Meta can’t deliver.

Ready to join us?

Jason Panzer HexClad, President

What You Need to Know About Selling Your Ecommerce Business

As an M&A banker and lawyer, now running HexClad, I’ve been on all sides of 100+ transactions.

I’ve seen founders walk away from deals they absolutely should have taken, watched solid businesses blow it in due diligence, and witnessed smart operators turn good timing into generational wealth.

Here are five key things to know about selling your ecommerce business. Starting with the most uncomfortable truth …

1. Don’t Build a Business to Sell
2. Know Your F****** Numbers
3. Private Equity vs. Venture Capital
4. Deals Take Time; Time Kills All Deals
5. When Should You Take the Money?

 Don’t Build a Business to Sell 

If you started your company with an exit in mind, you’re already playing the wrong game.

When you look at the number of businesses that get started versus those that get acquired, the outcomes are single-digit percentages. You’ve got better odds of getting struck by lightning than selling a consumer product brand.

Build a business you’d want to own forever.

The irony? That’s exactly the kind of business someone will eventually want to buy. Because that will be a business with a solid foundation.

Everyone loves to talk about “dry powder” sitting on the sidelines — a trillion dollars waiting to be deployed. I’ve been hearing this for over a decade. It’s only getting spent on quality business.

Doesn’t matter. What does?

Age, value, and the problem you solve.

If you want to create something and flip it in 2–3 years, you just took terrible odds and made them exponentially worse. This scenario is just incredibly rare — lightning in a bottle. Sorry, but it’s doubtful you have that.

You probably need to run the business for at least seven years before a buyer will see value in it.

Age shows you’re enduring, you’re durable, you’ve survived multiple cycles. Trying to get in and out in under five years? Like Sean has said, go get a job in big tech or run your own services business. The math works out better.

The current market is incredibly binary.

If you’re in CPG or consumables (beauty, beverages, snacks, anything with repeat purchase), congratulations, you’re hot right now. Dr. Squatch just did a massive deal. Beauty brands are getting snatched up left and right. Same with food and drink.

But if you’re in durables? Ice cold since early 2022. Investors have a herd mentality. They decide which sectors they like, and they swarm there like locusts.

You need to solve a problem for them.

Strategic buyers aren’t looking to solve your problems. They are looking for solutions to their own. They need growth and innovation.

Over the last 20 years, PE firms have become dominant players in the M&A world. Over 50% of transactions involved PE the last time I checked. PE firms have investment theses. They have sectors they like and models they understand.

Find buyers who understand your unit economics, customer acquisition costs, repeat purchase rates. Who can look at your business and immediately see how it fits their portfolio and their return requirements.

You’re not just selling a business.

You’re solving their growth problem, their product line problem, their innovation problem. If your business doesn’t solve a real problem for them, they’ll find one that does.

 Know Your F****** Numbers 

So many founders run the financial side of their business by simply looking at their bank account.

That might be fine when you’re small and scrappy, but the minute you talk to sophisticated buyers, you’re speaking an entirely different language.

These people (or at least their financial dweebs) live and breathe financial statements.

First, get your inventory under control.

Don’t cut corners here. I still have nightmares about our first financial audit. We had to go back and figure out what our closing inventory was for 2019. It was a nightmare. Sean spent $3–$4M fixing the same problem at Ridge because they never did proper inventory counts.

It’s not complicated if you do it right from the beginning.

At the end of every year, count everything. If you’re using a 3PL, make them count it. If you’re doing fulfillment in-house, shut down for a day and count every SKU. This isn’t optional.

Second, put in real systems.

We implemented proper accounting and inventory software because when the financial dweebs ask about your gross margins by product line over the last three years, you need that answer in five minutes — not five days.

Definitely not five weeks.

One of my earliest hires was a CPA as our staff accountant. Not because I’m some finance nerd, but because I’d seen too many deals die in due diligence over sloppy books.

If you can’t explain why your sales trends, growth drivers, unit economics, working capital needs, etc. behave the way they do over time in the same language as the people writing checks, you’re not ready to sell.

 Private Equity vs. Venture Capital 

Venture capital’s game is about big bets.

1. Raise a billion dollars
2. Invest in 10–20 companies
3. Get one or two to return the fund

They want 20X returns, monopolistic outcomes. They’re not judged on individual investments; they’re judged on home runs. And critically, VC money goes into your company’s bank account. It’s primary capital meant to fuel growth.

Private equity? Different animal.

If they achieve a 2X return, they’re popping champagne. They want every investment to work. They can’t afford losers.

PE money typically goes into your pocket. It’s secondary capital where they’re buying shares from you and other shareholders. Sometimes they’ll put primary capital on the balance sheet too, calling it “growth capital,” but mostly they’re buying you out.

The structure reflects this difference.

Structure is downside protection with upside participation.

VCs might take preferred stock — equity that sits senior to your common shares. PE takes it to another level.

They lock in guaranteed returns before you see a dime. We’re talking about liquidation preferences that extend beyond bankruptcy. They apply to any sale.

• $100M for 20% = $500M valuation
• 1.5X preferred = $150M guaranteed
• Sell for $550M? They get $150M
• $250M? They still get $150M first
• They also get their 20% either way

Then there’s “payment in kind” (PIK).

Every year, their investment might earn another 8% or 12% in additional equity. It’s like interest; instead of cash, they get more ownership. In Canada, you have to record these preferred shares as debt, which is what they are — debt masquerading as equity.

Founders think that because they’re only selling 30% of their company, they’re keeping control. Wrong. Dead wrong.

These minority deals come loaded with veto rights:

• Block any new debt or equity raises
• Veto expenses over $100K-$250K
• Approve all key executive hires
• Control when and how you can sell

You might own 70% of the company, but you can’t sell those shares without their permission. They get right of first refusal, drag-along rights, tag-along rights.

You could hate these people, want desperately to sell to someone else, and they can just say, “No, we’re not ready to sell yet.” And there’s nothing you can do about it.

So, why not be your own PE firm?

Dividend recapitalization is the smart play nobody talks about.

As long as you’ve got stable cash flow and you’re profitable, banks will lend against your EBITDA (earnings before interest, taxes, depreciation, and amortization). Here’s how it works:

• Banks lend at 1.5-2.5X EBITDA
• Interest at 7-8% but tax deductible
• Refinance and repeat every few years

Basically, you take chips off the table without giving up a drop of equity. The bank gives your company the money, and you dividend it out to yourself.

If you’re profitable, your effective rate is half the interest rate. You can take that money and invest it elsewhere while your business pays down the debt.

It’s what PE would do to your business anyway; might as well do it yourself if you have scale and cash flow to get it done.

 Deals Take Time; Time Kills Deals 

Whatever timeline you have in your head for selling your business, it’s wrong.

• Double the estimated length + 6 months
• Get audited financials if >$20M revenue
• Build a data room with every document

Even after you sign a term sheet (that non-binding letter of intent outlining the deal), you’re only halfway there. The process is a meat grinder that will test every aspect of your business and your patience.

Time kills all deals.

That’s one of my Panzerisms. It’s the main reason bankers are worth every penny.

People balk at banker fees (typically 2–5% of the transaction).

Get over it. A good banker is the difference between getting a deal done and wasting a year of your life. They’re elite salespeople, the absolute top of the profession.

Bankers prep your company, create marketing materials, reach out to every potential buyer, and manage the chaos.

They know how to create competitive tension, how to play bidders against each other. They’re shameless in the best possible way.

The due diligence phase alone will crush you without professional help.

Imagine five to ten sophisticated buyers, each with teams of lawyers and accountants, all asking different questions, all demanding information yesterday. Your banker quarterbacks this insanity while you run your business.

Not all money is the same.

There are thousands of private equity groups out there. Some have great reputations for working through good times and bad. Others are known for grinding founders into dust.

The people at these firms are smart and can impress you with their fluency in numbers, but they aren’t operators.

Find firms that understand your space. If you’re selling a consumer brand, don’t sell to a firm that does oil and gas deals. They’ll come in telling you to “turn off the bad ads and only run the good ones.” Like you never thought of that genius strategy. You want partners who’ve seen your movie before.

Pay attention to where they are in their fund lifecycle.

Funds typically have a 10-year run (maybe seven years to deploy capital and seven years to harvest returns, with some overlap). If they’re investing in year eight of their fund, they need quick returns. Their behavior will be different than if they’re in year two with plenty of time.

Family offices are the wildcards.

They’re permanent capital without the usual fund constraints — investment vehicles for the ultra-wealthy. The Belgian billionaire who owns a bunch of consumer brands might be perfect for you. Or they might be a nightmare who wants to micromanage your Facebook ads.

Every family office is completely different. There’s no playbook.

 When Should You Take the Money? 

The M&A landscape is littered with people who turned down good deals because they thought they could get better ones. They ended up with nothing.

If someone offers you life-changing money at a reasonable valuation with terms you can live with …

Take the f****** money.

Also, know what you’re signing up for.

These PE guys all went to the same schools, worked at the same firms, run the same playbooks.

When things go well, they’re fine to work with. When things go sideways (and something always goes sideways), they get tough fast. They’ve got armies of number crunchers and sharp elbows.

They’re not your friends.

I remember being a first-year lawyer watching PEs build their models, going through every number, analyzing every aspect of a business. I was in awe.

Now I know better. They’re smart, but they’re not as smart as they think they are. They just have a very specific way of looking at the world, and if your business fits their model, great.

If not, prepare for pain.

Building a Business to Sell Is Backwards

Build a business that prints money. Make it something you’d happily own forever.

Get to real scale (at least $20 million in revenue, preferably much more). Have audited financials, clean data, and sophisticated analytics. Invest in data systems so you understand your unit economics across every channel.

If you do explore a sale, approach it with radical clarity.

Understand that headline valuations mean nothing without a favorable structure. Be aware that minority deals still relinquish significant control. Accept that the process will be longer, harder, and more likely to fail than you imagine.

Most importantly, remember why these firms exist.

They’re not in business to make your dreams come true. They’re in business to generate returns for their investors. Every term, every structure, every negotiation point is designed to tilt the playing field in their favor.

That’s not evil; it’s business. Your job is to understand the game and play it better.

The exit will take care of itself.

When it does come, make sure you’re ready.

Sean Frank CEO, Ridge

THIS PART IS UNSPONSORED (I JUST LIKE THE EVENT)

​Beanstalk is the best event in all of commerce.

I will be there. My CMO will be there. Mehtab is coming.

Because of my post Harley from Shopify confirmed and Aaron made my emails with Ray big so you can read them.

It is in NYC next month. They are opening it up to more non CEO level people. But you have to apply.

If they do not let you in write back-
Aaron will make sure they see it.

THE FEED

​Acquisition Offers That Drive Retention: What’s Working & Why Testing Matters​

​Winning Big In Consumer With Grüns’ Founder Chad Janis​

 BONUS 🎁 

In case you missed it, we have just a few Grüns three-packs still available! Here’s how to claim yours.

1. Follow the Operators on LinkedIn​
2. Comment on Chad’s episode post
3. Reply with screenshots of both

We’ll confirm the next few 100 🥳

US shipping addresses only.

Resources

1. Taylor Holiday Sold CTC. Here’s Everything He Learned.

Few figures in DTC loom as large as Taylor Holiday. So when he sat down with Andrew Faris for an all-access, high-production interview, the ecommerce ecosystem erupted with joy.

2. Complete Influencer Whitelisting Guide (Aligned Growth)

Whitelisting has made its way into just about every conversation on ads, influencers, and growth. How do you execute it well? Josh Durham’s must-read new guide shows you.

3. Experimentation to Unlock Wins: +15 DTC Leaders

Our executive editor 🤓 hosted a who’s-who of ecommerce heavy-weights last week — including speakers from Simple Modern and HexClad. You can access the ~2-hour replay here.

The Trends

Curated by the editor of CPG Wire, this week’s five biggest consumer-news headlines.

1. Ty Haney Returns to Outdoor Voices: Retail Dive​

After being pushed out five years ago, Ty Haney is returning to the activewear brand to lead product, brand, and creative. Haney launched Outdoor Voices in 2013. By 2020, the brand was approaching $100 million in annual sales.

The wheels began to fall off soon after Haney departed, and OV has gone through multiple leaders — barely escaping bankruptcy since then. Consortium Brand Partners acquired OV in 2024 and has been working with Haney for the past nine months to return the brand to its former glory.

2. The Pathfinder Raises $3.6M: Instagram​

Non-alcoholic spirits brand The Pathfinder secured $3.6 million in fresh funding. The round was led by Stoli Group, the spirits firm best known for its eponymous vodka brand.

The Pathfinder was founded in 2020 by Guy Escolme, Steven Grasse, and Chris Abbott, three veterans of the spirits and cannabis industries. Stoli Group is doubling down on The Pathfinder, following its initial investment in 2023.

3. Rare Beauty Goes Big on Fragrance: Cosmetics Business​

Rare Beauty, the unicorn co-founded by Selena Gomez, is launching a fragrance line exclusively at Sephora on Aug 7th. Its fragrance line will include a perfume along with four layering balms. Given the success of Glossier’s similarly priced line, fragrance could be a 9-figure business for Rare Beauty in relatively short order. Rare Beauty launched in 2020 and is reportedly valued at $2.7 billion.

4. Quince Valuation Surges to $4.5B: Crunchbase News​

Quince — a DTC purveyor of high-quality but affordable apparel, accessories, and home goods — raised $200M in funding and the company’s valuation surged to $4.5B. For context, that’s more than double what it was earlier this year. ICONIQ Capital, the San Francisco-based investment firm with $80 billion under management, reportedly led the round.

5. Energy Drink Sales Continue to Grow: Twitter​

According to NielsenIQ, energy drink volumes jumped 14.1% for the four-week period ending on July 12th.

The biggest winners in the category were C4 Energy, whose volume jumped 83.5%, and Celsius (including Alani Nu), whose volume increased by over 37%. Red Bull’s volume also increased by 14% thanks to its seasonal flavors.

If you made it this far …

Bless you. And I’ve got a question.

With thanks and anticipation,
Aaron Orendorff 🤓 Executive Editor

Disclaimer: Special thanks to Aftersell by Rokt for sponsoring today’s newsletter.

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