Business Name: Sign-in to view listing at https://fih.com/listing/7189630
Business Website: Sign-in to view listing at https://fih.com/listing/7189630
Business Start Date: 2018
Business Location: Italy
Business Valuation: €4,080,000
Employee Number (Inc. Owners): 9
Business Model: Art Marketplace and Reselling
Industry: Luxury Art eCommerce
Percentage Being Sold: 100%
Sales (TTM): €1,182,664.00
Net Profit (TTM SDE): -€27,106.00
Business Multiple (TTM Revenue): 3.45x
Users (TTM): 70,000+
Traffic (TTM):  87,000+
Tag Line: 5+ Y/O Art Marketplace w/ Picasso, Dali, and More

____________________________________________

Summary

This listing is for a 5-year-old luxury art marketplace that offers entry-to-market services for art dealers and galleries while providing a platform for investors and collectors to acquire select pieces. Functioning as a full-service reseller, the company extends its wide audience reach through a synergy between its website, and its network of marketplace partners. The company has grown to acquire an attractive part of the art market (given its inventory, distribution network, brand, & technology) and needs a new owner to take it to the next level. 

The Opportunity

The company, operating since 2019 in Italy and France, was originally founded in the UK by a mix of established art merchants, art historians, and digital marketers. Before entering the market, the founders focused on building a network of artists, art dealers, and gallerists, and organizing the virtual warehouse of listings. Today, the company’s growth is primarily driven by its relationships with the marketplaces, while continuing to dedicate time to increasing the number of listings.

The company has acquired 150 sellers and more than 40,000 listings for an aggregate value of EUR 90M of value. The revenues have significantly grown from EUR 0.5M in 2019 to EUR 1.6M in 2022.

The company’s focus was on acquiring and generating a substantial virtual warehouse. In just a few years, the company became the largest single provider of 1stdibs in Europe. It generates revenue by selling less than 2% of its warehouse’s potential, with most sales made through its partner marketplaces. Although the company maintains an average margin of around 19% for each sale, this margin increases to over 32% for sales finalized on the company’s website, representing 13% of the company’s 2022 revenues. Its primary goals for the coming years are to increase its revenues to 6% of its potential warehouse and gradually raise the sales over the company to 25%.

The company has a wide offering that includes from Prints to Sculptures and Designs. It covers several art movements such as Surrealism, Modern, Contemporary, and Art Nouveau.

General Highlights

• Highly trusted 5-year-old curated art marketplace with diversified distribution 

• International presence with buyers around the world and 50+ Galleries, Auction Houses, and Antique Shops in Italy, Frame, and Switzerland, 24+ Art Dealers in Fine Art, and 80+ Living and Emerging artists.

• A highly scalable model with 40,000 pieces of art for sale, representing 90M EUR of inventory 

• #1 art seller by volume in Europe for 1stDibs with a collective revenue of over $1.6M a year

• Sold turn-key with proprietary technology, an expert team covering from the art validation to sales and logistics, and everything needed for millions of sales in the future.

Niche

The company is an Art Marketplace that provides end-to-end services to sellers and aims to finalize sales via its website as well as through its partner marketplaces. The company provides a unique approach as an e-commerce aggregator by providing shipping, packaging, pre and post-sales, content validation, and customs services to its sellers.

The sellers chose the company because:

• It’s the easiest way for Artists and Galleries to enter the ART e-commerce space. The company addresses the pain points of many artists such as the shipping of the item overseas, sending invoices to foreign countries, handling buyer complaints, and preparing a well-detailed description and photos of their own art.

• Increased selling opportunities. The company sells through its own website as well as its community and partner marketplaces, significantly increasing the chance of making the sale.

• Cost-effectiveness. Unlike many competitors, the company does not charge monthly fees regardless of whether a sale is finalized or not. The company is free and takes its margin only when a sale is successfully completed.

 The buyers chose the company because

• Secure transactions. Buyers are protected by the company’s refund policy. Any complaints a buyer may have will be resolved with the company rather than with an unreachable artist.

• Secure payments. Buyers pay the company, which in turn pays the sellers only after the delivery.

• Customer Service. When a sale is finalized, a sales manager contacts the buyer and supports the transaction until delivery. 

Customer Base

The customer base of the company is made of both professionals and collectors. As a curated marketplace (or a high-tech art gallery), the business caters to B2B first as they part up with other art galleries and artists who need online distribution - then they cater to B2C as they showcase art, answer questions, and arrange sales of their art to investors, collectors, and otherwise enthusiasts. The average cart value is in the range of $600 to $700.

Traffic

From September 1, 2021, to September 1, 2023, here’s the company data.

Users and Pageviews

• Page Views Total: 329.829

• Page Views - Average per Month: 13.742

• Users total: 131.566

• Users – Average per Month: 5.481

There is growth especially when the company manages advertising and direct mailing campaigns.

KPI

• Bounce Rate: 72%

• Sessions-per-users: 1.21

• Average session time: 00:01:23

• Page per session: 2.08

Search Rankings

• Organic Search: 63%

• Direct: 15.7%

• Social: 12.9%

• Paid search: 5.9%

• Other: 2.5%

Traffic by Country

• USA: 30.20%

• United Kingdom: 18.42%

• Italy: 12.91%

• France: 6.18%

• Canada: 2.69%

• India: 2.48%

• Germany: 2.38%

• Spain: 1.80%

• Australia: 1.18%

• Netherlands: 1.14%

Demographics

• Male: 50.5%

• Female: 49.5%

Age

• 35-44: 19.28%

• 25-34: 18.43%

• 45-54: 17.11%

• 18-24: 15.88%

• 55-64: 15.65%

• 65+: 13.64%

Major Referral Traffic providers

• lm.facebook.com

• m.facebook.com

• l.facebook.com

• youtube.com

• bertolamifineart.com

App vs Web

• Mobile: 54.98%

• Desktop: 39.11%

• Tablet: 5.91%

Revenue Sources

The company is an e-commerce that acts as a reseller, taking a variable margin of the sales, that’s never less than 30%. The process is:

• Sellers, when submitting content, set a desired price.

• Once the content is approved, the company proceeds with the distribution of the item on the various sales channels (the company’s website and partners), increasing the item's price to secure its margin. The typical company margin is 40%.

• The buyer makes payments to the company.

• The shipping tariff is paid by the buyer.

• Sellers are paid after the delivery of the item.

Financials 

Sales (EUR)

2019 – 513,361

2020 – 1,380,325

2021 – 1,683.038

2022 – 1,642,006

2023 – 1,579,338

2024 – 1,089,820

2025 (through May) – 594,380

Profit/SDE (EUR)

2019 – (44,248)

2020 – 2,587

2021 – 21,082

2022 – 5,060

2023 – -49,603

2024 – -92,579

2025 (through May) – 42,041

Operations

The end-to-end company operation is a combination of people, technology, and processes. The company’s operation can be divided into three phases: Content Acquisition, Distribution, and Sales & Shipping.

Content Acquisition: This phase involves the B2B operations of closing agreements with sellers. Once a seller has signed, the company provides the seller with an account in the company’s Seller BackOffice, which is the company’s proprietary software designed for loading listings. It also offers content creation services to customers who may not have the ability or skills to generate proper descriptions.

Distribution: Every uploaded item is validated by an expert for approval. This prevents incorrect items from being circulated and ensures the quality of listings before they go public. Once approved, the item is automatically moved into the core distribution platform, and the team begins distributing the items across various marketplaces (including the company’s website).

Sales & Shipping: When a sale is finalized, the Sales team processes the sale by sending a notice to the seller. The shipping manager is also informed to initiate the shipping process.

Team

The company organization is very light.

• CEO and Founder

• E-Commerce Manager

• Accounting and Vendor Manager

• Digital Strategist and Sales

• Delivery and Customer Care

• Support Sales

• Product Specialist

• Person 1

• Finance and Founder

Sales/Marketing

The marketing channels for the business are their digital stores and message centers on several Marketplaces, emails, professional sales, and advertising. The company is going to spend 14,000 EUR on advertising in 2023.

The company has over 40,000 products online, with the majority of them artworks or design items by Italian famous masters. It stood out from its competitors because of its strong presence in the international marketplaces, its excellent customer service, as well as its worldwide shipping.

The company is comprised of a team of internationally established experts and art dealers with over 5 decades of experience and skilled professionals in the realm of digital innovation experiences.

Partners

The company’s marketplaces are:

• 1stdibs: 32k+ listings (The company is the biggest 1stdibs supplier in the EU)

• Artsy: 15k+ listings

• Artsper: 15k+ listings

• Pamono: 15k+ listings

• Artspace: 1k+ listings

The company has developed an in-home seller tool, which is the core of its technology and process. The technology used is asp.net. The website is made using Magento.

It has integrated a payment system with both Stripe and PayPal.

It uses several couriers based on destination, country, and items to ship. The usual couriers are MailBoxes, FedEx, DHL, TNT, GLS, and AlpiWorld.

The company manages its marketing internally. It does not use marketing agencies or ad companies, except for some on-demand consultancy.

Main Expenses

The company's main expenses are

• COGS - 59% of the total costs

• Cost of Marketplace fees - 13% of the total costs

• Employee- 11% of the total costs

Work and Skills Required 

The 3 owners have different roles and responsibilities.

•  The CEO (32%) serves as the sole administrator and is the only shareholder fully dedicated to the company. He works as general manager overseeing all the operations.

•  Another founder (20%) provides advice on the financial process and the overall strategy. He assumes a CFO Non-Executive role.

•  Another person (48%) is a financial investor who supports the company by offering his extensive experience in the art industry.

In the event of the sale, the financial investor doesn’t need to be replaced, while the CEO’s responsibilities can be easily transferred to the buyer’s organization. If the CEO were to leave, a new General Manager would be required. The optimum solution for a buyer would be to hire two senior levels and divide the CEO’s responsibilities among them.

The expertise is well-distributed among the employees, so no particular skills are required, however, looking for one manager with good expertise in the market and one manager with experience in e-commerce and marketing is suggested.

Additionally, appointing a CEO with an interim CFO role, whose main responsibility would be to define strategy, finance, and communicate business progress to the owner. 

Who is the ideal buyer for this business?

The best buyers for the company are either private equity firms or industrial buyers seeking the company’s assets (brand, technology, contracts, and listings) and an Italian subsidiary. A private equity firm should be prepared to invest additional funds to restructure the leadership team and continue the growth strategy. The company has a tremendous value, just consider that selling 10% of the actual value of the company’s virtual warehouse could generate EUR 9M.

What (if any) post sale support is included with the sale?

The CEO will be able to work full-time post-acquisition for the required months. Another founder is not currently working full-time for the company, but he would be available to provide the required support to complete the transaction (preferably 6 hours per week). The CEO is also available to consider a role after the acquisition.

Valuation

The company is valued at 3.45x its current revenue. 

SEO/ASO Analysis:

Authority Score: 28

Backlinks:962

Referring Domains:832

Ranking Keywords:1K

Percentage of Links that “Do Follow”:77%

Social Media

These are the company’s social channels.

Instagram - 9,335 followers

Twitter/X - 430 followers

Facebook - 5,423 followers

LinkedIn - 94 followers

Pinterest - 28 followers

There are 4.000 users subscribed to the company’s newsletter.

Expansion Opportunities for New Owner

The company runs its business via both B2C and B2B(2C).

The growth strategy (B2C) revolves around the website. Currently, it is operating with no investment and is generating no more than 12% of revenues. The new site was released in September 2023, and an investment in advertising (ADV) will be required to significantly increase revenue.

Another growth strategy (B2B2C) focuses on continuing the existing business by utilizing and expanding marketplace operations. The company aims to acquire as many sellers and artists as possible, increasing the distribution of listings across art marketplaces. This strategy requires a modest investment in expanding the existing personnel to support the increased activity.

The second strategy is preferable at this stage, while once the company is more structured, it could consider moving to the first strategy, optimizing the more substantial required investment and benefiting from price reductions resulting from reducing the weight of marketplaces on revenues (which represent a cost of 13%/15% of revenues).

Barriers to Entry

There are several barriers to entering the industry. The art business in e-commerce requires a deep understanding of customs regulations and expertise in the art. A new marketplace entering the market requires a significant number of listings. Amassing a large number of listings requires B2B activities to achieve seller agreements.

The company has already signed agreements with 100+ art dealers, resulting in a total of 40,000 validated listings and a large community of artists that would take years to assemble.

In addition, art is unique. A catalog of artworks cannot be replicated by a competitor.

Reason for Sale

All the investors strongly believe that a capital injection could enable the company to grow significantly. Today, the company is experiencing a shortage of personnel, and an investment is required to increase team and business.

However, 68% of the equity is owned by non-executive founders who have other businesses and are open to considering an exit and a return on their investment if the proposal aligns with their expectations instead of supporting a capital increase. 

Miscellaneous Details

There are no licensing requirements for the business

The acquisition can be done also as an asset sale even if a stock sale is preferred. 

The company owns its trademark.

___________________________

All Assets Included with Sale

All assets used to run, maintain, and grow the business are included with the sale - including but not limited to 

1. Domains and all IP brand assets?

   1. The company’s website is a registered trademark in several countries including the US, USA, China, India, Japan, Korea, and Taiwan.  

2. Website and all website contents

   1. The sale includes the website as is, including all the contents, magazines, posts, and newsletters with 4000 subscribers.

3. Proprietary SaaS Software

   1. Sales include all software that is entirely homemade and owned by the company:

   2. The company’s sellers: This software allows sellers to upload new items with their metadata. It also manages all communication between sellers and handles notifications when a sale is completed.

   3. The company’s Quality Team to validate items submitted via the company Sellers tool before moving them into the core repository. It also incorporates several algorithms to ensure data integrity within the repository.

   4. The company Repository is the main database where all listings, along with their metadata and photos, are collected and prepared for distribution and sale. As of September 2023, it contains 40,000 validated listings

4. All Customer information

   1. Sale includes all customers' details (8k)

5. All Partner Accounts

   1. Sale includes all partner accounts such as 1stdibs

6. Social Media and Marketing Accounts

   1. All social accounts

7. Employee contracts

   1. Sales includes all employees

8. All distribution contracts

   1. Sale includes the contracts with Sellers and  Curriers

9. Bank accounts

   1. Sale includes all the bank accounts

___________________________

About the Agent

FIH.com is a Manhattan-based M&A advisory firm specializing in the sale of remotely-run successful digital companies (around the world) from $1M-100M in revenue, including apps, marketplaces, freemium + enterprise SaaS, ecommerce, affiliate/advertising groups, and more! We are proud to work with the very best entrepreneurs and investors, so if that’s you and you are in the market to acquire or sell a relevant business, then we encourage you to reach out for a complimentary consultation.