A new verification & assessment service offered by Flippa.
Due Diligence Includes:
- Initial Consultation
- Financial Analysis
- Traffic Analysis
- Sales & Marketing Analysis
- Operations & Legal Analysis
- Industry & Competition Analysis
- Pricing Analysis
- Seller Analysis
Buying a business is stressful, and there is some risk involved. Our official Due Diligence Report provides deep analysis, insightful recommendations, and peace of mind. We combine our expertise, along with data from 100,000+ Flippa transactions, to help you uncover the unknowns, identify problem areas and hidden risks, and independently assess the value of the business you are considering purchasing.
After an initial consultation, your dedicated expert will perform due diligence along eight dimensions:
1. Business Owner Analysis
2. Financial Analysis
3. Traffic Analysis
4. Sales & Marketing Analysis
5. Operations & Legal Analysis
6. Industry & Competition Analysis
7. Pricing Analysis
8. Seller Analysis
We highlight what the business is doing well, what could be improved, and pinpoint areas of risk. We show how the business stacks up against benchmarks, where it falls short, and even offer recommendations & guidance on next steps.
Sit back & relax. Every business has a story. We’ll find out what the story is, and tell you what you need to know.
Who will be doing your due diligence?
Meet Stefan von Imhof. Stefan has a wealth of experience working with buyers and sellers of online businesses and has bought & sold over half a dozen businesses himself.
- Phone call. We start with a 15-minute phone chat to understand your needs, goals, and concerns
- After the phone call, we’ll assign a dedicated team member as your point of contact going forward.
Business Owner Analysis
- Personal details. We verify the seller’s telephone number, government-issued ID, and social media accounts.
- Duplicate accounts. Any duplicate or alternate accounts will be identified.
- History & trust. What businesses have they bought & sold in the past? Are there any other businesses they currently have?
- Other key employees. Who else is critical to business operations?
- Seller Score. Each seller gets a score from A through F
- Revenue verification
- Verify all revenue streams at the source. Review payments and confirm the flow of money from end to end
- Ensure revenue claims are accurate and match what the seller has claimed
- Uncover revenue-boosting
- Are there payments from personal accounts to boost profits?
- Does the revenue claim originate only from the website being sold?
- Expense verification
- Trace expenses back to the source. Confirm the flow of money from the invoice back to the original bank or credit card transactions.
- Verify expenses against bookkeeping records
- Uncover hidden costs, including those which may be deliberately masked, such as staff or marketing expenses.
- Are there other business owners doing work “off the books?”
- Insights & benchmarks. How does the business stack up against similar businesses in the industry? Cross-check to ensure expenses are reasonable for the site and the industry it operates in.
- Tax returns. If available, we verify tax returns for the past 12 months.
- Profit risk assessment. How likely is the site to continue earning profit? What are the risks?
- Traffic sources
- Where does the traffic come from?
- What is the quality, sustainability, and dependence the business has on each source?
- Direct Traffic
- Is there any bot traffic?
- Referral Traffic
- Most Prominent (Top 10 by number of links)
- Most Recent (Top 10 by First Seen Date)
- Top 10 indexed pages
- Organic Traffic
- Number of Organic Keywords
- Top 20 Keywords (sorted by Traffic)
- Top 10 “non-branded” (filter Exclude Keywords w/ Sitelinks – sort by Traffic)
- Top 10 Pages with Number of Keywords, Traffic, & Traffic Percentage
- Paid Traffic
- Number of Google Ad Keywords
- Google Ad Traffic
- Unique Visitors/month
- Pages per Visit
- Visit Duration
- Bounce Rate
- Backlink analysis
- Number of Backlink
- Number of Referring Domains
- Percent follow vs. no-follow (using export columns of follow & no-follow counts)
- Geography & demographics
- What countries/regions does the traffic come from?
- What is the persona of the typical visitor?
- Blacklists and penalties. Has the site ever had any known blacklists or penalties?
- Insights & benchmarks.How does the site’s traffic stack up against similar sites in the industry?
- Traffic risk assessment. How much risk is there of the site losing traffic from each source
Sales & Marketing Analysis
- Customer Acquisition Cost. How much does it cost to acquire each new customer? (CAC)
- Top-sellers. Which items are responsible for the majority of sales, and how dependent is the site on these? Does inventory sell well across the board, or does the 80/20 rule apply? How easy or difficult is it to keep top inventory in stock?
- ROI by channel
- Which channels bring in the majority of sales? Which marketing channels are working, and which ones are not working?
- Show changes in ROI over time. Is the business getting more or less effective with ad spend over time? Identify the wasted ad spend
- Average order value. What is the AOV, and how has it changed over time?
- Revenue consistency. What is the holiday & seasonal effect? Is the revenue consistent over time, or is the business susceptible to wild swings? What causes them?
- Inventory depreciation. How quickly does inventory depreciate each year? How will depreciation affect future earnings?
- Growth opportunities. What are the biggest unexplored or under-explored growth channels?
- Insights & benchmarks. How does the site’s ad spend, profit margin, ROI, refund rates, and monetization efficiency stack up against similar sites in the industry?
Sales & marketing risk assessment. How dependent is the business on the effectiveness of advertising in each sales/marketing channel? What are the biggest ROI risks?
Operations & Legal Analysis
- Time commitment. Full breakdown of the minimum amount of time it takes to run the business, and the true amount of time it takes to grow the business. Is the owner ignoring or glossing over anything?
- Efficiency opportunities. What is the owner spending too much time on? What opportunities exist for
- Skills required. What are the typical functions and skills required to operate the business?
- Legal analysis. What licenses are needed to operate the business? Are there any current or past lawsuits, patent infringements, or other hidden legal issues?
- Seller feedback. How is the business rated? Are there any active claims from BBB or other agencies?
- Violations and warnings. Are there any past or current policy violations or warnings the seller has not disclosed? Ensure the Seller is complying with Facebook/Google/Amazon policies.
- Mailing list validation. Verify email addresses in the customer mailing list.
- Geographic limitations. What potential issues could arise if the business were to be run from another location?
- Supplier contract validation. Validate contracts & pricing sheets with suppliers are up-to-date.
- Asset transfer risk. Identify potential issues with transferability/migration of business operations. For example, income tied to an account that cannot be migrated (PayPal), or domain names that cannot be transferred without a business license (such as .com.au domains).
Operations & legal risk assessment. What are the critical operational & legal risks that could harm the business in the future? What risks are not critical, but are being ignored or downplayed?
Industry & Competitive Analysis
- SWOT analysis. A breakdown of competitive strengths, weaknesses, opportunities, and threats.
- Top competitors. Who are the top 5 competitors? Where does the business stand in relation to them?
- Trends. What are some interesting trends across the industry? Using data from Google trends, Glimpse, Exploding topics, and more.
Industry analysis. Where has the industry been, and where is it headed? How does the growth rate compare to others? Is the site’s niche a “fad,” or is it evergreen? What is the future resale viability?
- Fair market value assessment. Is the price reasonable? Would you be getting a bargain, or would you be overpaying? We perform a full pricing analysis based on:
- Standard multiple
- Median industry multiple
- Profit per 1,000 pageviews
- Profit per 1,000 uniques (RPM)
- Profit per 1,000 real uniques
- Profit per 1,000 real free uniques
Comps. Where does the price fall in relation to similar businesses? What multiple have similar businesses sold for in the past?
Recommendations & Next Steps
- Questions to ask the seller. We summarize what you should specifically ask the seller before agreeing to purchase.
- Negotiation tips. We tell you what levers you can pull, and provide tips for negotiating a lower price, if possible.
- Interest from other parties. How much interest does the listing have on Flippa? How do the views & watchers translate to likelihood of a sale. Should you make an offer before the auction ends? What is the risk of waiting?
- Letter of Intent. We draft a LOI for you to review and send to the seller.
Go-forward plan. Finally, we summarize all of your actions and next steps.