M&A Secrets for selling your DTC brand in 2026

22:55Olly:getting share of voice and awareness out there. I think it's really interesting, and we work with a business called Axe as well, which we talk a lot about. I just think they're just, I've been reading a lot of this concept about last mover advantage loads. I think they're such, maybe not last movers, but such great examples of how you can enter a category that feels like it's been done, hammered to the, just drummed into people and come with a better, newer, shinier proposition in those two areas that you mentioned where consumers are always looking for the new, the better, moving forward and create a hugely valuable asset and a hugely valuable brand very quickly.

23:39Olly:You don't have to invest in the education around. That's it. Yeah, someone's already paved the way and done the more expensive hard work of creating that category or that demand for you. And you're just kind of like, I think that's just, it's always tempting to feel like you have to innovate and create something completely new if you're at the start of that brand journey. But there's really good examples of building behemoths without having to do that.

24:03Paul Hanley:Yeah, so without going into pitch mode, one of the things that separates, I guess, the Fortier Group from maybe more traditional M &A firms is, we obsess over e-commerce. For the last five years, we've been exclusively focused on e-commerce. E-commerce valuations and deals is all we think about every day. So to do that, Emmett's ex-Morgan Stanley Credit Suisse. We have our investment banker in-house, second co-founder David Hyland, who is our in-house financial expert ex-SaaS and Ecom SaaS tech CFO. And then there's myself who have been involved with Ecom operations for the last 15 years. So that becomes important when you talk about positioning and articulating performance, both today, where the valuation is today, but also where it can be looking at forecasts in due time.

24:59Paul Hanley:To accelerate on that, one of the things that I've done is I've co-founded a brand incubator that's based out of Texas. And one of the assets that we have in our management exactly does that and talks about last mover. Like we're particularly targeting a niche where one behemoth has spent hundreds of millions on building awareness. And they've really struggled for profitability over the last five to six years. They're profitable now, but they're valued at almost a billion dollars. Not going to talk about the niche, but our strategy...

25:32Olly:Can I guess it whilst we're talking?

25:34Paul Hanley:Our strategy is to come in and leverage off that awareness and build a more profitable kind of model that, you know, if we can target 10 % market share, you know, we'll, we'll, we'll grow to an insane amount. And we don't have to have the, maybe the, the, the top tier influencers or things like that on our books that they would have had to drive awareness and build a niche. So I think that's really interesting for, you know, DTC founders. You know, where often, where do you start? i think you can start from multiple locations it can start from your own passion um which is a great place to start you'll always find ways to make money if you're truly passionate about something yeah and the other place to start is if you're a kind of a finance geek almost like myself you'll look for gaps in the market where you can fill but then if you get really smart with that you'll you'll identify spots where you know there's huge awareness driving in certain niches but that secondary brand that that just wants to sit behind and gain market share off the back of that you can build a really successful business off that that's that's profitable yeah

26:38Olly:i was pulling some notes together and i wanted to ask like where you think what do you think is hot now and what do you think is going to be hot if you were crystal ball next three to five years yeah um prior to that you you mentioned like that approach to finding opportunities i we obviously get to see like 200 plus 300 plus brands that come through our like lead funnel every month and like it's always but it never ceases to amaze me like when you'll come across a brand that's operating in some like really like boring niche category but doing crazy crazy numbers an example was a chicken feed brand that came through and they were doing multi-million a month supplements for chickens like just just a brilliant business like just so so left field but piggybacking off this like whole pet wellness hype but just in a different way to how everybody

27:34Paul Hanley:else is approaching that market yeah i i think i probably know the brand you're you're referencing um but uh because we we've we've come across them as well but they've they've effectively in maybe a B2B landscape, they've just developed a B2C kind of solution and almost found out that chickens, I think, is the number three pet globally. And the great things about chickens are, not to make the whole podcast about chickens, but it's not like dogs. You don't get one and then in two weeks time you've got four. Whereas chickens, it can be like that. So the demand almost creates itself. But yeah, there's there's lots of niches out there that either maybe b2b focus but you can build a really great b2c um brand around that and i think they're doing great stuff yeah 100 yeah i was going to say

28:25Loukas:like another i guess another way to view that as well and i would like to get your thoughts on whether this is something you're seeing more and more is almost the idea of tying proprietary through tech or sass into d2c brands i think you're seeing it through you know i think we had pure pet on on the podcast they've they've even from a logistics point of view and how they have built their own almost data infrastructure internally within the business that is very bespoke to them how that in itself will you know how that will potentially impact their valuation as a as a business as in terms of intellectual property similarly with i think tales.com sold for crazy um crazy multiples almost treated as a sas product you know you've got the likes of ring doorbell cure who have built like internal logistic systems you know apps now where it almost the barrier to entry to tie tech into your business is is is so low because of ai and no code so is that something you're seeing more and how how are you seeing that like used as a strategic lever to

29:29Paul Hanley:drive valuations yeah i i don't i don't see it as being a huge driver of of of valuation because for many sub 100 million DTC brands the reward of buy versus build for like AI and these kind of things is work with agencies who are adopting these. I think it's a real challenge for acquirers but I think the thing it does is it's like a hygiene check across the P &L if there are ways in the P &L that you can reduce your OPEX costs, you can reduce your overheads you can be more efficient with MPD launch, you can be more and harvest more data as a data company, which e-com companies are, then great, do it.

30:16Paul Hanley:But am I really seeing DTC brands say, we're the next AI thing that we're making decisions based on AI, and it's great, and everyone's now kind of viewing it as, is it an e-com business, is it a tech business? you know i i think e-com founders have a lot more problems that they need to solve like ring fencing their consumers and getting them away from competition and you know one of the great things you talked about was ip you know um building up a really robust ip strategy to build a moat we always talk about you want to build a brand with a capital b um i would say that starts with gross margin.

31:00Paul Hanley:And if you can make efficiencies with gross margin, then great. I've said once that on a podcast or a webinar, I think with lots of people on it, that gross margin for e-com businesses now needed to be definitely north of 70. And I could see in the chat, people were outraged by this. Gross margin for me is revenue less landed cog. But I love that as a metric because it encapsulates so much. It encapsulates pricing. I'm talking about as a brand, your gross margin as a brand. So pricing, pricing per product range, per SKU, AOV is increasing, what are you doing on promotions, how are you getting creative there, how good are you with supply, what does the complexity of supply chain look like and how's that impacting landed cog you know i think showing hygiene improvements through adopting ai and tech in that or who you work with in that is really interesting and something that acquirers love to see but i think it has more of a net impact on your base ebita than looking at an econ business saying okay well back of an envelope valuation for a dtc business is somewhere from like 5x to 12x.

32:30Paul Hanley:EBIT. EBIT, yeah. Now I'm going to say, because you've got this piece of tech, that you're a tech company, I'm going to value you at 25x, or 2x revenue or something like that. We're not seeing that, but it's a hygiene check throughout the P &L, which is great. Because e-com businesses, that's why I say gross margin needs to be above 70. I mean, for beauty businesses, heck, it needs to be above, of, you know, needs to be close to 80, 85%. That's what we're seeing in P &Ls across my desk every single day because CAC has increased, because logistical costs are fluctuating so much. I used to say, you know, back in 2020 and 2021, 20 % EBITDA margin was the yardstick of good.

33:15Paul Hanley:You know, back in 2023, it was 15 is the new 20 because logistical costs had gone crazy and CAC is going crazy. And like, you know, unless AI is going to do a great thing and it may do, I don't see CAC reducing anytime soon. You know, you can make efficiencies in it and great, but there's going to be more and more competition, which is going to just, you know, the only people winning out of the whole econ bubble right now is like the meta is, that's a Google. But, you know, being able to show and demonstrate that you run a really clean book of business is always something you should be doing. You should be doing that whether you're going to exit in the next 12 to 18 months or not.

33:54Paul Hanley:So if you're not doing that today and you're worried about that, there's margin improvements to be making, then great, make them. Because that's going to fuel your MPD. It's going to fuel launching a new channel that accelerates growth.

34:08Olly:I saw an interesting tweet a while back about that meta piece. It was like, how many founders would be better off if they just dumped the balance sheet into meta stock rather than continue to scale the business over time just based on how many DC runs are basically just a meta-advertising business. You mentioned gross margin there. I agree. I think all the... Try to do this analysis of what separates our top 10 % of clients from the rest. It mostly is when you look at fundamentals like gross margin efficiency through vertical integration, controlling more of the supply chain. and that creates an environment where you can just pay more for customers especially at scale when you're hitting CPM increases and more competition

34:54Paul Hanley:I think when you're bringing your P &L to an acquirer that's the aspect that they scrutinize over because that's the aspect that's harder to fix there's more risk in changing suppliers than making efficiencies in marketing there's more quality control risk, just pain in the ass of moving from China to Indonesia or wherever it needs to be for tariffs. So if you already thought about that and done the hard yards there, and what's going to be hot in the next three to five years, I still think back to the macro where the world is struggling for who's number one and China and US, where does supply chain live for e-com businesses?

35:38Paul Hanley:you know there's you know i i don't really follow donald trump with america first and everything needs to be made in america because that's not efficient most econ businesses are probably in the last six months priced up hey what would it take if i made my product in u.s and quickly gone okay that's not an option um but you know i see the u.s market then becoming increasingly important I know it's heavily fragmented versus a sole US market that gets really interesting because you can single serve it with DTC or with Amazon. With EU, it's more fragmented because you've got compliance, you've got VAT, you've got language, all the really exciting stuff that e-com founders love doing on a daily basis.

36:27Paul Hanley:But yeah, I think what's going to be hot is showing that you've got a risk-diverse supply chain, that you've got not just a reliance on one sole market. it and often you know when we when we work with clients and they want to speak to acquirers early which is by the way one of the most important things we do with our clients is we position them in front of acquirers and we get their feedback early is um what do i tackle myself as a founder versus what do i leave on the table for an acquirer to do so often for dtc businesses it's like well i could go on my channel in the morning but you know guess what boots is super aggressive on cost price or you know i i i don't really know the u.s um retail landscape well enough or i've got to take a trip over and learn and educate myself versus you know an acquirer would say but i already have existing relationships in these things and i've got more purchasing power so when they speak to acquirers and they try and marry up the synergies it's about what do they really want a brand to bring versus you know what do they want to to tackle themselves because if If you go and tackle brick and mortar, it should bring more revenue.

37:40Paul Hanley:But sometimes what founders need to be careful of is doing these growth tactics, might grow revenue, might grow EBITDA. It has no impact on enterprise value. So you've just spent the last six months painstakingly negotiating and launching, and your net impact to EV is zero.

38:00Olly:It's also doing them wrong, right? If you do it and you fail, you can't tell the story.

38:04Paul Hanley:and acquire us to go in first thing they do post acquisition is go into boots and negotiate and you know try to solve that problem that's not fun

38:12Olly:just a faff yeah yeah makes sense same with new markets I think so I've spoken to a couple of people I know who who operate inside like these these hold up holding companies or roll up companies that's a really attractive part of UK econ businesses is the idea of just taking them global if they've been very one market reliant

38:31Paul Hanley:yeah

38:31Olly:it can be tempting to do that as a founder but it's harder than it sounds. And if you've gone and done the US, failed, and then having that acquisition conversation in there, you can't tell the big magical story about going to conquer the US market. That's exactly it.

38:47Paul Hanley:It's like in the back of any sim, you'll find growth opportunities. And is the growth opportunity, well, if you had done it right, it would have been X because I messed it up. so you know you don't want to do something that almost disproves it you want to you know if the u.s market is on your horizon um it's great to have a conversation with acquirers and see would you like me to tackle it does that make sense or is it best to leave it alone um because you don't want to just disprove that that's a valid market by doing it wrong if that's the metric that you have to bring that's that's where the the elevator pitch gets longer and longer and

39:28Olly:longer i want to come back to categories but i just wanted to ask a question because we're talking about like valuation here like what what do you see as like top valuation drivers like you've mentioned gross margin is and um bringing something that they don't have so like a premium customer to a more value-based business um or strategic acquirer would you say there's anything else and then on the flip side what do you see is like maybe three or four like key drags that are really pulling people away from the value they want to realize so not to get too operational

40:01Paul Hanley:about it because i do want to bring a different lens um then i always say this to founders the the number one growth driver of enterprise value outside of growing revenue and ebitda is matching with the right acquirer and that's warren buffett's whole thing isn't it and like That's not me to make a statement or a headline, but realizing then that that takes so much time. Look at any of these strategic acquisitions that are making headlines right now. Hayley Bieber didn't turn around one day and go, hey, I want to take a backseat on this. I'm going to sell my business. And Elf was just sitting there going, gimme, gimme, gimme.

40:44Paul Hanley:The conversations were happening in the background. it takes a long time to understand on both sides where synergies lie and how you parcel up your data and how you demonstrate and show that and disclose data to an acquirer is a really tailored approach you know and and what what a strategic versus what a private equity firm will be really interested in differs slightly strategic how they model up valuation is slightly different so you need to really understand that and understand who your top targets are so you know operationally have clean data have a really robust ip strategy if you can like you know if your ip if you're if your moat as a brand is your network that can be really powerful you know if it's a utility patent that can be great if it's unique formulas and you've got you know ip around that brilliant um having really clean data that tells a good story having a really data-driven robust forecast all these things take time and draggers to um draggers to valuation are not connecting with the market sooner and not understanding what the desires and needs are doing things wrong and you know not leaving enough on the table for an acquirer to go and tackle as exciting growth opportunities.

42:08Paul Hanley:Launching loads of MPD and hoping something will stick. That can be a concern. One big thing that people need to watch out for, I think ad backs, you know, ad backs is a bone of contention over the last couple of years. In 2022, the world was crazy. Everything was added back in. I think we live in a more sane world now where we see ad backs as a minimal. Really, if they're one-off costs that don't either influence the top line of a business or they're not really with continuity of business, they can be discounted out. But that's minimal, unless you're running a lifestyle kind of P &L. That's minimal.

42:48Paul Hanley:Where we do see founders get shocked is where they say, I'm doing a really great job. I'm only spending 5 % tacos and I'm growing by 100 % year over year. And it's like, well, you're running a sub 20 million business. So, you know, high growth trajectory is expected, but what does that tacos peg need to look like for me as an acquirer? Because I can't live with a 5 % peg. That's not really interesting to me. I don't want to scrimp and save on my marketing efforts. Total cost of sales for those people who... Total cost of sales, yeah. For those non-acronyms. so because there will be a few acronyms we all need more acronyms try that to market in the two but they so they will come to the table thinking I've done a really great job and they almost see that discounted it's like unrealistic because it's I don't want to live with that I can't live with that I need a peg as well OPEX another bone of contention I haven't paid myself a salary I've been running the business out of my garage it's been growing at a phenomenal rate I haven't hired anyone I don't have any systems.

43:57This stuff's just growing like a weed.

44:00Paul Hanley:My EBITDA margin is 20%. And because you've been fixated on that 20%, your gross margin's like 70, 68. You say, but I've got 20 % EBITDA margin, so I'm doing a great job. And again, the choir comes on and says, I need a whole team to run my vision. So I'm going to discount the EBITDA by like 5, 7%. And suddenly that has a huge knock on impact on valuation. So just, I don't want to tell DTC founders how to run their business efficiently because we all know how to do it or can speak to acquirers in doing it. But matching up those synergies and building relationships with acquirers and building a competitive auction process ahead of the auction process builds competitive tension.

44:48Paul Hanley:It's like a lot of your audience will have done crowdfunding. you know you don't just list your crowdfund and list it and they will come you got to put the hard yards in ahead anyone who's raised millions and millions via crowdfund has done painstaking work over the last 18 months to make that happen it's the same with an exit yeah one one final um

45:09Olly:just because i watched a i think it was a maybe maybe your last event maybe it was in new york or somewhere in the us and you did a talk i don't know if it was yourself or someone else on your team i can't remember but around the concepts of like customer concentration as well and like how that's often not something brands look at enough like how much of their cost like how much of their revenue is and more so profit is driven by a very small percentage of total customer base and how that can be become a big problem when looking at the valuation of a company yeah so you know if

45:45Paul Hanley:you're a large company and you've you've got heavily reliant on either you know let's take products for an example you've got 50 skews but you know 80 percent of the revenue is going through five skews and acquires well within his rights to say i don't want the remaining skews because they're not doing anything and you know so your revenue is discounted but then you've got stock holdings of those skews and they're discounted as well and suddenly it's becoming messy you know m &a is all risk it's all risk so it's about how do you diversify that risk for an acquirer how do you make it less risky because they can write bigger checks if it's less risky so you reduce your reliance on channels on how you acquire customers on your customers products things like that geos you know how can you prove that it's not just reliant on one thing um and you know that that's a great way to to build investor or buyer confidence

46:45Loukas:so we've got um you know quite a few seasoned uh founders should we say that listen to the podcast we also have some that are much earlier in their journey i'd love to like let's say maybe pre-revenue as a as an example that maybe are looking for that product they're looking for that product market fit the category that they want to go into and you know i love this this um kind of concept of ikigai and not just necessarily going into where you think the money is going to come it needs to be something that you are genuinely interested and passionate about as well however i'd love to know from your your experience where should these individuals be looking right now like what what is looking what is appealing from an acquirer's perspective we've mentioned obviously

47:30Olly:premium beauty and health care but beyond that is there yeah is there any other yeah i would say

47:35Paul Hanley:you know start a male grooming business uh because look at the look at our three cabinets over the last 10 years they've you know evolved from lynx hair gel all the way up to 50 60 products so that as a category is booming it's not going away anytime soon men are slowly catching up with you know women in terms of what we're using which is great because we're getting better looking and you know that's that's the collagen injections exactly yes well received so uh yeah that's great um but seriously outside of that you know there's there's there's a lot of different ways to do it I always say, you know, okay, let's go the influencer route.

48:14Paul Hanley:Find something that you're passionate about. There's always money to be made and something you're passionate about. Find an influencer that you can get connected with that also shares that. You know, influencers just, you know, they have such a network that can scale something so quickly at a lower, you know, customer acquisition cost. if you don't have to spend 40 % on marketing to scale something aggressively and have someone's network do it that's great watch out though is obviously when it does come to acquisition time the brand needs to be able to stand on its own which I think IMA as an example is doing a great job because you don't go on there and it's David Beck's brand it's not it's all about the scientific board that backs it and stuff like that um so that's one i think baby and and pet are you know recession proof so no matter how bad things get people will buy a baby people buying pet and uh you know i think look at look at again another school is look at where people are making headlines is there a way to piggyback off the awareness is there low competition um you know for the for anyone starting out i would say fail fast fail multiple times don't fail expensive you know um don't be afraid as well to to reach out to m &a firms and speak and find out what's happening on trends and because you know i i see all kinds of p &ls across my desk from you know we're the next big thing and they've done 400k revenue and And, you know, you get a sense of what they're doing and how they're doing it all the way to, you know, we're doing 50, 60 million revenue.

50:02Loukas:I also think with AI now, it's like becoming extremely easy to be able to stress test product market fit before you actually invest into starting a brand or going all in. You know, I mean, in its simplest form, wait lists, right? Like that's one way that you can, you know, get a gauge for demand. And other than that, you can, I think there was an example you shared recently where you can actually, you could model a product very easily through AI that doesn't necessarily exist and drive traffic to a site that, you know, isn't necessarily buying the product through.

50:36Olly:Just refund it.

50:37Loukas:Yeah, either buying the product and refunding it or going through to a wait list as an opportunity to potentially A, B test different products that tap into different problems. and bullish on smoke.

50:50Olly:That's like a smokescreen test. I think the reason I really like that is because it's a very different part getting someone to part with money versus getting them to part with an email address. So the closer to get a signal on like product market fit for a couple of grand through a meta and make some ads, render up a product, put it on a landing page and then test and figure that out. But I agree, it's very, that is the value of, that is e-com, right? It's meant to be leading quick.

51:17Paul Hanley:Yeah, I think, you know, if you can, for anybody looking to start out, unfortunately, like build a P &L, you know, realistically, can you, I think if you can't make north of 70 % gross margin, don't do it. Because it's going to be, there's too much fluctuation in the world. The P &L will go north and south and you won't be able to keep up. And by the way, most econ businesses fail because they can't keep up with their growth. so heavily reliant on inventory you don't want to get into a situation where you've got to immediately go off and raise capital and you you know you haven't proven yourself enough you're going to get killed on valuation you're going to end up giving away 30 to the company just to stay in stock that's never good um so you know do your financials once the financial model is sound you can sleep at night you know everything else can be tackled and solved anyone who's listening to this who's an entrepreneur entrepreneurship is your life is just one big problem that has to be solved and you solve one you get on to the next and you have a passion for doing that um my my advice to e-comm sellers as well is sell when you're on the up you know it's uh e-comm is high growth high energy the landscape changes on a weekly monthly basis you know it's not like dusty old brick and mortar where things sit on shelves it's exciting but uh you know in my experience you give give an econ business enough time to mess up and it it it often will so you want to sell on the up you want to have enough uh headway made on your forecast to get people excited to get the valuation you want but uh you know don't don't get too greedy we all think we're

53:03Olly:the next steve jobs and few of us are segues nicely into beauty value lab yeah the new project that you're launching um that's all around helping brand owners get above above that target valuation or an outcome that they would be thrilled by when they go through this process give us a bit of background and give um some info to the listeners a bit on what that is and

53:28Paul Hanley:how you're looking to help the category yeah that's right so as we say you know value isn't lost at the negotiating table or most of the value isn't lost in the negotiating table it's lost years before by by not making the right moves and you know the reality we all live in is your your ceiling of what you can achieve is the circle you surround yourself by so you know if i'm a beauty founder i should want to be surrounding myself by successful beauty founders who've solved all the problems that are ahead of me. I should want to get involved. You know, if I'm really thinking about an exit in the next two or three years, I should want to get involved in an M &A firm that offers a commercially friendly way to do that.

54:12Paul Hanley:You know, I don't want to pay, you know, hundreds of thousands in retainers over years, years of work because I'm a certain size and that doesn't make sense. So Beauty Value Labs was created to bring high quality beauty founders together that are doing anywhere from north of 10 million revenue to 200 million in revenue um together to um get a sense of where their valuation is today and where their valuation is for where they they want to grow to to stress test their forecast and then what we do so that's the direct kind of valuation work that we're doing actively with members then what we host is we'll host webinars with acquirers and we'll you know do something similar to this where we stress test acquisition criteria that they're looking for you know it's like you go to sell your house a real estate agent comes in and say i can get you a million you know and great but it's not he or she who'll set the market it's the person buying your house and if you're left with one one buyer and they only value it at 700k then that's what your company is worth your company is worth what the market will pay for it so double clicking in on what acquires value how they build value and model up value is really important to understand because it'll either expand your timeline or shorten it and then um you get the opportunity to obviously build relationships with those acquirers understand where the blind spots are in your forecast and i love to think of beauty value labs as like we all have our our growth strategy it's all internal you know it's it might be developed with your c-suite it might be developed with some advisors but it's it's about getting the twitter blue tick mold school now calling it twitter but the the the blue tick seal of approval on that internal growth strategy by stress testing it with what the market wants.

56:17Paul Hanley:Because if you don't do that, ultimately, you're not going to get the best valuation. So it's about showing founders if their valuation expectations are real, what they truly are today. And we are in a great position to do so because it's what we obsess over every day. And we've got that unemotional, impartial view, the financial lens that an acquirer will take on the business. And then, you know, you're meeting and networking with fellow entrepreneurs who can help you solve any problem that comes up or give you guidance. Because often founders will find themselves in sat in a dark room with an AI model, asking them all these questions, swearing at them through the keyboard, saying you're wrong.

57:06Paul Hanley:it needs to be this i've heard it's this and ai will say you're absolutely right you know so it's trying to get the the real honest answers from people who've been there done that so there's there's strength in a network there's strength in growing together and there's strength in tapping in and engaging with the market ahead of an exit process the great thing about beauty value labs is um we get to speak with acquirers and we get to speak with beauty entrepreneurs and we get to double-clicking on that niche. Beauty entrepreneurs get to network with peers and acquirers. They're not contractually obligated to use us as an M &A firm, although the more we learn about the business, there's strength in doing so.

57:51Paul Hanley:But they have freedom of movement there. And it's commercially sensitive to a long engagement. It's not really cost-heavy. it's significantly less than hiring one advisor to come and help you on your business. So you're almost getting like a peer-tested board of advisors and tap in with the market. It's going to inevitably lead to higher valuations, more secure valuations. You talk about for founders achieving higher valuations. In today's market, it's about achieving an exit. It's getting harder and harder to exit your business. so it's actually about achieving that exit but then yeah building on what gets me a higher valuation

58:37Olly:makes sense and I think I like the form of like category specific I feel like a lot of founders maybe shy away from spending time with direct competitors people operating very close to their space or close to their territorial customers and I actually think that's where you'll often that's where you'll find the most value 100 and you're so much to go around you're not you're not

59:04Paul Hanley:coming into this disclosing all of your data and your network so you get full control of what you disclose it's about you know this person has solved this problem and it's a big one for me you know i want really the step by step how they've done that that's invaluable um and you're right we've we see we introduce it because we see so many e-com networks where it's not category specific but everybody's got category specific problems um the problems that a beauty entrepreneur will be facing on a daily basis very different to what you might be facing fashion fashion or you know high returns in fashion well i don't really have that you know so so you know getting access to who's actually going to solve problems and help you is great.

59:54Paul Hanley:And it's not just about your competitors. In that community, there are people who've exited businesses who want to give back. There'll be access to acquirers and stuff. So at our conference, we run an annual conference every year in New York that's exclusively focused on acquirers. It's a leading e-commerce acquirer event globally. We've been running it for the last four years. It's a room in the beautiful convene building in downtown New York that's full of private equity, strategic acquirers, ultra high net worth individuals and brand founders coming together to discuss what are the key trends in value drivers of e-com businesses and evaluations of e-com businesses.

1:00:40We'll do a hard launch of the Beauty Value Labs network there.

1:00:46Paul Hanley:so um you know we're really excited about that we think the network's going to grow big i would just say you know for anybody that wants to listen and get involved in that reach out to any one of us at the fortia group um and and we'd be happy to have a conversation we'll put the link

1:01:03Olly:to the um to the one pager or on the direct and the direct landing page in the description so they can go straight through and we'll be tagging yourself there so yeah but i think if you're in that space if you're in that category it's a no-brainer to surround yourself with that kind

1:01:17Paul Hanley:of circle and get access to that kind of information yeah just you know everybody wants to scale quicker and without as many mistakes you know so it's like the classic your product of the five closest people to you and if those closest people are those that you know you're aspiring to become and that have

1:01:35Loukas:been through what you've been through then it will accelerate that yeah it's funny you say that

1:01:40Paul Hanley:because we recently ran a podcast with successful sellers. And the most common theme was, you know, before AI, it was so lonely. It's so lonely to exit your business. Can't tell your team, can't tell your customers, obviously. You're having a lot of soul conversations. And these are big, high value, life changing conversations. It's hard not to get excited about that and passionate about that. Sorry. but um so when ai came along you know one of the founders on the podcast said i started speaking to ai as sad and all as that is you know i started sharing the news with i'm gonna do this i had to tell somebody because often you know um private uh entrepreneurs you know they don't want to disclose the value that that's coming because they want it to remain secret you know that everybody's gonna know their friends their family you're gonna treat them a little different so it's not really something you want to disclose um so they need to talk to someone about it so who you surround yourself with is super important because especially as you near conversations you know hey i'm speaking with such and such an acquirer you know oh i've spoken with them before have they have they spoken about this or you know um those kind of conversations are not something that typically founders would would have um directly with folk that are speaking to

1:03:08Olly:the same acquirer so that that's really interesting makes a lot of sense so you you can kind of plot like the you mentioned interest rates when we're looking at like the last few years of the market and how that's kind of like trends with um like trends with obviously captivate availability and therefore is often like a leading indicator of where the market is going um there's an inverse

1:03:33Paul Hanley:correlation between interest rates or global m &a trends for sure yeah over the last 30 to 50 years

1:03:39Loukas:down equals up sorry i got the wrong words wrong um and i think a lot of that is is obviously and i

1:03:46Olly:also think you can do the same with growth rate of brands somewhat because they've got available capital to invest and that creates like a more favorable environment for them to maybe take fund take growth capital on use that to fund next stage of growth yeah um we mentioned ai but and we in in terms of like building in the business but i see ai as potentially being another facilitator of this next era of e-commerce where ai allows brands to strip off meaningful percentages of opx yeah and for use that and divert like what is going to be the biggest winner of ai efficiency should be marketing spend because you should just be able to take your p &l just like rebalance the p &l yeah and therefore we enter hopefully this this next era of rapid more accelerating growth and efficiency if it continues to play out like that what you just

1:04:47Paul Hanley:wondered what your thoughts were on that yeah and again like it's two schools of thoughts so you don't get caught out by making all these efficiencies in your side and then the acquirer looks at and goes i'm not doing this uh you know i i can't i can't match that or or you're doing something so niche to being like too lean like you said yeah too lean i've got to you know manage my risk here so so that's one i think the more common thing though is uh you know that's gonna happen it's gonna it's probably gonna happen not necessarily in-house you know i don't think you're going to be building anything but the agencies and growth partners that you're getting

1:05:27Olly:involved in this will be crucial for them already is for us yeah yeah sure like uh so so um it'll be

1:05:35Paul Hanley:more commercially friendly maybe or just the results will be more friendly in terms of what you get out of that spend. So that'll be really important. So you'll be able to scale quicker, smarter. Again, have more data versus building AI kind of like building LLMs that are completely automating MPD development for us. and therefore there's zero cost or minimal cost associated with that you know an acquirer is more than likely going to go yeah i then have to scrutinize what that is and what that looks like and is that investable versus do i even understand it yeah no i'm just gonna do this so uh again i see it as being like really important in terms of the hygiene of a p and l and efficiencies you can make i don't see it being something that an acquirer is going to go gosh i love that asset but it's going to become super common in the agencies and partners that you work with

1:06:38Olly:i wonder if we will see that 100 million dollar econ brand with one person running it that everyone keeps talking about is like the theoretical end state i mean i'm assuming

1:06:48Loukas:anything with sass yeah i've certainly come across you know i've come across 50 to 100

1:06:53Paul Hanley:million DTC companies with three FTEs running it and just highly leveraged and with expert agencies and stuff like that. So I think that's what's super attractive about it as well versus brick and mortar where things get fragmented really quick and you have to start doing negotiations and you've got category data and stuff like that. You know, you can really just build from a lean team really quickly with e-com.

1:07:25Olly:yeah perfect well yeah final final question for a founder listening wanting to exit in two to three years what should they do this week next week as a starting point other than reach out to

1:07:36Paul Hanley:well well reach out to the 40 yeah no well reach out right up there reach out to an m &a firm yeah you don't need to hire an m &a firm you should you don't need but please speak to an m &a firm it's like it's like walking into an interrogation room without your lawyer you know you just don't do that you're dealing with experts you're dealing with m &a machines you know if if you're really interested and serious about exiting over the next 12 to 18 months and speak to an advisor and see where the market is at it's too much of a heavy lift unless you know you've got all these ai models and you've all this free time and you're twiddling your thumbs going god e-com's easy it's too much of a heavy lift to truly understand and you know the fortior group we spend a lot of money on on systems and tech and access to data that's just not available to the the average founder so we're spending the capital um engaged with an m &a firm that has access to this data perfect well yeah

1:08:41Loukas:thank you so much for coming on i think it's been super super valuable um as i say we'll put your information down below so anyone listening please get in touch with Paul but yeah, thanks a lot for coming on

1:08:52Paul Hanley:Great, thanks for having me guys

1:08:53Loukas:Appreciate it