None of them are valuation. All three are visible from inside the business a year before anyone starts diligence, and all three are fixable in that year.
By Gerry Morton, Founder & CEO, NutriScience
It starts as a channel. Then it is 30% of revenue, then 55%, and at some point it is the business. Nobody signs off on that. It happens one good quarter at a time.
A buyer sees a revenue line controlled by a company you have no contract with, that can change its fee structure, suppress your listing, or launch a competing private label in your category. Heavy marketplace dependence is one of the clearest multiple compressors in this sector, and the reason is not snobbery about the channel. It is that the buyer cannot underwrite it.
The fix is not leaving Amazon. It is building a second channel that is actually yours: a direct subscription base, a retail footprint, an international distributor. Getting Amazon from 55% to 35% takes about eighteen months and is worth more than any negotiating tactic.
Every claim on your label and your website needs substantiation sitting behind it. Structure and function claims, the clinical study you cite, the “clinically proven” line a copywriter wrote in 2019 that nobody has looked at since.
In supplements this is the issue that ends deals outright rather than repricing them. A buyer’s counsel asks for the substantiation file. If it takes you three weeks to assemble and two of the claims turn out to rest on a study of a different ingredient at a different dose, you are no longer negotiating price. You are explaining why the buyer should take on the regulatory exposure.
Audit every claim against its evidence. Anything you cannot support, change the copy now, while it costs you a label revision instead of a deal.
The co-packer relationship is yours. The formulation knowledge is in your head. The buyer at the retailer takes your call and nobody else’s. The QuickBooks login is yours.
From inside, that feels like being on top of the business. From across the table it reads as a company that stops when you do. The buyer is not purchasing an asset that runs, they are purchasing a job, and they price it as one or they structure the deal to keep you in it for three years.
List every relationship, decision and login that runs only through you. Hand three of them to someone else this quarter. Then take two weeks off and see what breaks.
Every one of them is invisible from inside the business and obvious from outside it. Every one takes twelve to eighteen months to fix properly, which is exactly why they get discovered in the fortnight when there is no time left to do anything about them.
If you are two years out, work on these three before you work on anything else. If you are not selling at all, they are still the three things most likely to be capping what the business earns you.
A revenue line the buyer cannot underwrite, controlled by a company you have no contract with. Getting it from 55% to 35% takes about eighteen months.
The one that ends deals rather than repricing them. If the substantiation file takes three weeks to assemble, you do not have one.
If the supplier relationship, the formulation and the retail contacts all live in one head, the buyer is purchasing a job and prices it that way.
Read the exit-readiness checklist, or send us a note and we will tell you which of the three would cost you the most. No NDA needed for that conversation.
