The Online Store Sale Glossary

Valuation & financials

SDE (Seller's Discretionary Earnings)

SDE is the profit a single owner-operator actually takes from a business - net profit plus the owner's salary and any one-off or personal expenses added back. It's the standard earnings figure for valuing small stores, because it shows what a new owner-operator would really earn.

EBITDA

EBITDA is earnings before interest, taxes, depreciation, and amortization - a profit measure used for larger businesses run by a team rather than one owner. Above roughly $1M in annual earnings, buyers value on EBITDA instead of SDE.

Multiple

A multiple is the number you multiply annual earnings (SDE or EBITDA) by to get the sale price. Most online stores sell for 2-4x; the multiple rises with clean books, transferable operations, and non-paid traffic. Our valuation methodology breaks down what moves it.

Add-back

An add-back is an expense added back to net profit to show a buyer the business's true earning power - typically the owner's salary, one-time costs, or personal spending run through the business. Add-backs raise SDE, so they must be genuine and documented, or due diligence will strip them out.

TTM (Trailing Twelve Months)

TTM is the most recent 12 months of financial data, used instead of the calendar year so a valuation reflects current performance rather than a stale annual figure.

Net profit vs revenue

Revenue is total sales; net profit is what's left after every cost. Stores are valued on profit, not revenue - a $200K-revenue store netting $12K is priced off the $12K, not the $200K.

Gross margin

Gross margin is the percentage of revenue left after the cost of goods sold. Thin margins - under about 10%, common in dropshipping - push a valuation toward the bottom of its range.

MRR / ARR

MRR and ARR are monthly and annual recurring revenue - predictable subscription income. Recurring revenue earns higher multiples than one-off sales because it's more certain.

Churn

Churn is the rate at which recurring customers cancel. Lower churn means more durable revenue and a higher multiple.

Deal structure & legal

LOI (Letter of Intent)

An LOI is a short, mostly non-binding document that sets out the proposed price and key terms before the full contract. Signing one moves a deal from "interested" to "in progress."

APA (Asset Purchase Agreement)

An APA is the binding contract that transfers a business's assets - the store, domain, inventory, contracts, and IP - to the buyer. Most small online-store sales are asset sales rather than company sales.

Asset sale vs share (stock) sale

In an asset sale the buyer purchases the specific assets of the business; in a share sale they buy the legal company that owns them. Online stores are almost always sold as asset sales, which keeps the deal simpler and cleaner for both sides.

Earnout

An earnout is part of the price paid later, contingent on the business hitting agreed targets after the sale. It bridges the gap when buyer and seller disagree on future performance.

Escrow

Escrow is a neutral third party that holds the buyer's money until the assets are transferred, then releases it. It's what makes a store sale safe - never transfer the store before the money is in escrow. Escrow.com charges 0.89-3.25% depending on deal size.

Due diligence

Due diligence is the buyer's verification period, where they check your financials, traffic, supplier terms, and claims before closing. Deals most often die here, when numbers can't be verified - which is why preparation decides the price.

Reps and warranties

Representations and warranties are the seller's formal promises in the contract that the stated facts are true. Breaking them can unwind the deal or trigger a clawback of part of the price.

Non-compete

A non-compete is a clause preventing the seller from starting a competing store for a set time and area, so the buyer keeps the value they paid for.

NDA (Non-Disclosure Agreement)

An NDA is a confidentiality contract signed before sharing sensitive numbers, so a prospective buyer can't leak or misuse them.

Seller financing

Seller financing is when the seller lets the buyer pay part of the price over time instead of all at once. It's common on larger deals and signals the seller's confidence in the business.

Holdback

A holdback is a portion of the price kept back for a set period after closing, to cover any problems that surface during the handover.

Working capital

Working capital is the cash and inventory a business needs to keep running. Larger deals may specify how much transfers with the sale so the buyer can operate from day one.

Sale process & marketplace

Asking price

The asking price is the number a seller lists at. On average, businesses sell for less than asking - which is exactly why a price set by the market beats a guess.

Reserve price

A reserve price is the minimum a seller will accept in an auction; bids below it don't win. It protects the seller while still letting the market set the final number above it.

Live valuation

A live valuation is a price set by real, competing bids over a fixed window rather than an estimate or a fixed ask. On 14stores it's five days of public bids - the market's actual answer to "what's it worth?" instead of a calculator's guess.

Price discovery

Price discovery is the process of finding an asset's real market value by exposing it to competing buyers. It matters most when there's no P&L to anchor a number to, which is why pre-revenue stores benefit from it the most.

Migration

Migration is the technical handover of the store, domain, and accounts to the buyer after the sale. In one published Empire Flippers case study, migration took 11 days of a 21-day total.

Vetting

Vetting is a broker's screening of sellers before listing. Empire Flippers rejects about 91% of submissions, which is why most small stores can't use a broker at all.

Commission (success fee)

A commission or success fee is a percentage of the sale price charged by brokers and marketplaces when a deal closes - typically 10-15%. See how it compares across routes in where to sell your online store.

Flat fee

A flat fee is a fixed listing cost regardless of sale price, instead of a percentage. At small deal sizes a flat fee keeps far more of the exit - a $199 fee versus a 15% commission that would take $3,000 out of a $20,000 sale.

Aggregator

An aggregator is a company that buys stores directly for its own portfolio, making fast offers rather than listing to third-party buyers. The aggregator wave that once chased small brands has largely receded.

Broker vs marketplace

A broker runs the whole sale for a commission and screens who's allowed to list; a marketplace is a self-serve platform where you list yourself. Brokers suit large, complex deals; marketplaces and auctions suit everything below their threshold.

E-commerce metrics buyers check

Owner-dependence

Owner-dependence is how much a business relies on the seller personally. Lower owner-dependence - documented processes, no founder's face on the brand - earns a higher multiple, because the buyer can actually run it.

Transferability

Transferability is whether the things that produce revenue - supplier terms, ad accounts, traffic sources - actually move to the buyer. Untransferable revenue gets discounted toward zero, no matter how large it looks.

Supplier agreement

A supplier agreement is the terms - pricing, exclusivity - between a store and its product supplier. Confirming these transfer to a new owner is the single most common deal-hinge for dropshipping stores.

Conversion rate

Conversion rate is the percentage of visitors who buy. Proven conversion is part of what a buyer pays for, since their own store doesn't convert anything yet.

AOV (Average Order Value)

AOV is the average amount a customer spends per order. It's a lever on profitability that buyers model when they price a store.

LTV (Customer Lifetime Value)

LTV is the total profit a customer generates over their whole relationship with the store. A high LTV supports spending more to acquire customers, and supports a higher valuation.

CAC (Customer Acquisition Cost)

CAC is what it costs in marketing to acquire one customer. A healthy LTV-to-CAC ratio is one of the strongest things a seller can show.

Ad account / pixel

The ad account and its pixel hold a store's advertising history and accumulated audience and conversion data. That history has real value and should be handed over where the platform allows it.