Deal Breakdown: Lambos and watches and yachts, oh my!

Welcome!

I’ve looked at thousands of businesses for sale, and learned to read between the lines. Every issue, we'll take a deeper look at a listing, learn something, and I'll rate the deal at the end! 

This week’s listing: a “technology platform to expedite the sale of luxury items” — basically an online brokerage that connects hyper-rich buyers and sellers moving stuff like Lambos, Birkin bags, art, yachts… you know, Bond villain stuff.

They also sell services layered on top, like identity verification, item authentication, and buyer and seller loans. 

(But listen, if you need a loan to buy a Hublot watch… don’t buy one.)

By the numbers: $3 billion in luxury items sold, $23M in earnings on $127M gross.

The biggest thing to like here: when a marketplace works, it really works.

That’s thanks to the network effect—once you start attracting buyers and sellers, it gets easier to attract more. Buyers come because of all the sellers, and sellers come because of all the buyers. 

So your platform can get very big, very fast and stay that way for a long time. (Amazon and eBay are both great examples.)

That means it’s not a crowded field. When I Googled luxury goods platforms, there’s only a handful of options. So there’s more than zero competition, but based on my read, I’d bet this business is one of the big players — my money’s on JamesEdition. 

Another thing to like: customers of these types of goods are price insensitive and largely immune to the economy. 

Sure, some of the Lambo buyers are crypto millionaires, but you’re mostly dealing with generational wealth or hyper-generational wealth. So you’re pretty recession-proof.

Lastly, I love the high ticket prices on this stuff. It’s way easier to get rich taking 12% on $100K watches than it is selling $12 watches. And as the world keeps getting richer, the outlook’s pretty rosy for luxury goods.

(Not to mention with interest rates what they are, earning interest on escrow money is a pretty good deal.)

Something about this listing gives me the heebie-jeebies.

It could be that it’s listed on WebsiteClosers.com. It’s a fine platform, but it’s normally selling stuff like online puzzle sites. So why is this massive luxury market maker selling on a pretty down-market platform?

It could also be that it’s moving fine art around. When a painting sells for $100M, it’s often for one of two reasons: it’s either using art as a kind of currency to move money around more easily, or it’s a scam to avoid taxes by creating artificial losses on their books.

So I’m not sure I want to be involved in that kinda shadiness.

Or maybe I’m spooked by the seller story (or lack thereof). It sounds like this group has been printing cash for the last few years. Why do they want out now? Something doesn’t add up for me.

I can’t pinpoint exactly what spooks me here, but those red flags make me nervous.

So I’d want to do some super thorough due diligence. 

Like, I’d hire every due diligence provider on the planet, plus their backup and their best friend, and have them break down quality of earnings, market studies, forensic accounting — the works. ;-)

There’s a lot of room for this to be sketchy.

It really depends! If it’s legit and it’s sold at the right price, I love this business.

But I’d want to be very, very, very sure I knew what I was getting myself into.

I’ll give it a tentative 🌶️🌶️🌶️🌶️👻 out of 5 (4 chilis of interest, one ghost because I’m spooked).

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Want to go deeper? We did a whole episode of Acquisitions Anonymous breaking down this listing! Listen here.