Frank Kosarek is the co-founder of BizPort, an M&A marketplace that launched in November 2025. Before that, he was the head of acquisitions for a large e-commerce aggregator.
He says e-commerce buyers today are focused on discretionary earnings, not revenue, and are looking for repeat sales such as subscriptions.
In our recent interview, he covered these items, the state of e-commerce mergers and acquisitions, and more.
Our full audio is embedded below. The transcript has been edited for length and clarity.
Eric Bandholz: Who are you and what do you do?
Frank Kosarek: I’m the co-founder of BizPort, a marketplace that helps founders exit their companies. I lead the e-commerce division of BizPort, connecting buyers and sellers. Before BizPort, I was Head of M&A at OpenStore, an aggregator in Miami, where I acquired about 50 Shopify brands. This experience exposed me to e-commerce transactions and what founders should and shouldn’t do when preparing to sell their businesses.
One of the most important concepts in exits is the seller’s discretionary earnings. It is the basis of most e-commerce reviews. SDE starts with the company’s annual net income (what’s on the tax return), then the owner’s salary and benefits and any one-time or one-time expenses are added back.
For example, if the business makes $250,000 in net income, the founder pays herself $100,000, has $40,000 in benefits, and incurs $10,000 in one-time legal expenses, the SDE would be about $400,000. This number is then multiplied by a valuation multiple, typically 2x to 2.5x for most e-commerce brands and up to 5x for category leaders.
The best advice for founders is to monitor SDE monthly. Find out your real net income and allowances. It gives you a clear picture of growth and future appreciation.
Eric Bandholz: What is the demand for e-commerce acquisitions?
Frank Kosarek: E-commerce has experienced extreme acceleration in 2020. We have seen years of growth condensed into around 12 months as Covid has changed consumer behaviour. During this period, valuation multiples increased and many e-commerce companies started operations that probably shouldn’t have. Some lacked product-market fit or a dependent, repeat customer base.
What has changed since then is buyer behavior. In particular, aggregators have stepped back or refined their strategies. As a result, sellers can no longer assume that an easy and quick exit awaits them. Buyers are more selective and disciplined in what they buy.
Companies that exist at the highest multiples tend to resemble subscriptions. A one-time purchase product such as a children’s tricycle does not create long-term value if the customer never returns. Contrast this with categories like skin care or supplements, where consumers can subscribe and re-order. Buyers have a strong focus on lifetime value and what revenue they can generate from a customer after they pay to acquire them.
This is why brands without recurring or subscription-based revenue often see leaner valuations, while strong, high-subscription brands can still command multiples approaching 5x SDE.
Eric Bandholz: What is the minimum income level for eCommerce sales?
Frank Kosarek: At BizPort, we generally look for brands that achieve at least $1 million in annual revenue before we get involved. At this level, e-commerce margins usually provide enough cash flow to underwrite the deal, either through a loan, an equity injection, or both. This is usually the minimum size where acquisition is feasible.
When annual sales reach $30 million, potential buyers include private equity firms or larger strategic buyers. These acquirers are more likely to value businesses using revenue multiples instead of revenue multiples. There’s no hard line, but it’s an important distinction for founders to be aware of as their brands expand.
Eric Bandholz: How do founders separate a personal relationship from fair market value?
Frank Kosarek: M&A for small e-commerce brands is much more art than science. There is no one-size-fits-all agreement structure. Most e-commerce founders have very high expectations for the value of their company and often think in large multiples of revenue.
This is understandable, as building a brand from the ground up requires a huge amount of work, much of which does not show up on the income statement. This effort is intangible and external buyers cannot fully appreciate it from financials alone. Additionally, many founders don’t realize that e-commerce businesses are typically valued at a multiple of discretionary earnings, not topline revenue. This often leads to a reality check.
Eric Bandholz: How often do earnings fail?
Frank Kosarek: Some sellers want a complete exit with no ongoing involvement, and buyers generally understand that. However, a smart buyer will usually negotiate a transition period, often three to six months, to help transition operations and institutional knowledge. Additional support can turn into a short-term consulting contract where sellers receive a fixed monthly fee. In that case, sellers no longer have equity or performance-based raises; they just help with continuity.
I have seen situations where sellers and buyers clash operationally or strategically. When this happens, profits often suffer. Sellers miss targets and don’t receive additional payouts, and buyers struggle because the transition isn’t smooth.
Bandholz: What can stop a deal or hurt an appreciation?
Kosarek: One of the top pieces of advice for sellers is to sell when your numbers are strong. Don’t wait until performance starts to decline or the market turns against you. Be open to exploratory conversations, especially after a banner year. Waiting for the turn to collapse makes exits much more difficult.
Another common mistake is overspending on marketing to inflate sales. For smaller e-commerce brands, valuation is usually based on profit, not revenue. Pumping the top line at the expense of the bottom usually does not earn a premium.
Another red flag is a lack of operational structure. Buyers don’t want to go into a business and have to build everything from scratch. They want to see the systems and processes in place. This includes working with a third-party logistics provider for fulfillment and returns, clear ownership of marketing functions and documented processes.
Buyers’ confidence in the business increases when they can quickly understand how the company operates and distributes work.
Bandholz: Where can people follow you, reach you?
Kosarek: Our site is Biz-port.com. You can find me on LinkedIn.