Revenue Model
Start with source records and reconcile them across a consistent period. Bank or payment-processor records, accounting exports, marketplace statements and read-only dashboards can each answer different questions. The goal is not simply to reproduce the seller’s profit number, but to understand how revenue is earned, which costs are necessary to keep earning it, and whether reported performance is repeatable.
Normalize unusual items carefully. Owner add-backs, one-time costs, discretionary expenses and recent changes can be legitimate adjustments, but every adjustment should have a reason and supporting evidence. Compare monthly trends, look for seasonality and identify revenue or cost items that changed shortly before the sale process.
Translate findings into the deal. If an important number cannot be verified, model a conservative case rather than assuming the best outcome. Material uncertainty can justify additional diligence, a different price, a holdback or another structure appropriate to the transaction.
Retention
Look beyond the top-line recurring revenue figure. Review customer cohorts, gross and net retention where relevant, cancellation reasons, contract terms and the share of revenue represented by the largest accounts. A stable average can conceal deteriorating recent cohorts or a single customer whose departure would materially change earnings.
Understand why customers stay. Product necessity, switching costs, integrations, service quality and contract structure can support retention; discounts, founder relationships or neglected alternatives may be less durable. Speak with customers only through an appropriate, seller-approved diligence process.
Connect retention to valuation and operating plans. Weak retention may require more acquisition spend just to stand still, while high concentration can justify additional protections or a more conservative forecast.
User Acquisition
Review the acquisition engine at channel level rather than relying on total sessions or users. Separate organic search, paid media, direct, referral, email, social and marketplace traffic, then compare their trends over time. A business with several durable channels has a different risk profile from one whose economics depend on a single ranking, ad account or marketplace.
Ask for source access where practical and inspect the pages, campaigns, keywords or products producing the result. Look for sudden changes, tracking gaps, branded versus non-branded demand, paid spend required to sustain revenue and geographic or device concentration. For search-driven sites, examine whether a small number of pages or queries carry a disproportionate share of traffic.
The buyer’s question is transferability: will these acquisition channels still function under new ownership? Document accounts, permissions, creative assets, tracking, historical data and relationships that must transfer. If a channel depends heavily on the seller’s identity or a non-transferable account, value it accordingly.
Platform Risk
A red flag is a prompt for investigation, not automatically a reason to abandon a transaction. First determine the size of the exposure, how long it has existed, whether it is worsening and what evidence would reduce uncertainty. Concentration in a customer, supplier, traffic source, platform or owner can be manageable when it is understood and priced.
Stress-test the business with a downside case. Ask what happens to cash flow if the largest customer leaves, rankings fall, advertising costs rise, a supplier changes terms or the seller stops performing a key task. This turns a vague concern into an operating and valuation question.
Use the result to shape the transaction. Depending on the facts, a buyer may seek a lower price, transition support, representations, a holdback, seller financing or simply decide the risk sits outside the acquisition thesis. Material legal or financial risks deserve professional review.
Code Quality
Create an explicit asset schedule instead of assuming that everything used by the business is included. Domains, repositories, source code, content, trademarks, customer data, analytics properties, ad accounts, email lists, social profiles, supplier relationships, licenses and software subscriptions can have different owners and transfer rules.
Confirm control and transferability before closing. Check registrants, account administrators, contractor agreements and relevant license terms. Where an asset cannot transfer directly, identify the replacement process, cost and downtime risk. Credentials should be transferred through a controlled handover rather than informally shared in advance.
Plan acceptance tests for important assets. After transfer, confirm that domains resolve, applications run, analytics collect data, payment flows work and the buyer has administrative control. The purchase agreement and closing checklist should reflect assets that are genuinely critical to continued operation.
Data And Privacy
Create an explicit asset schedule instead of assuming that everything used by the business is included. Domains, repositories, source code, content, trademarks, customer data, analytics properties, ad accounts, email lists, social profiles, supplier relationships, licenses and software subscriptions can have different owners and transfer rules.
Confirm control and transferability before closing. Check registrants, account administrators, contractor agreements and relevant license terms. Where an asset cannot transfer directly, identify the replacement process, cost and downtime risk. Credentials should be transferred through a controlled handover rather than informally shared in advance.
Plan acceptance tests for important assets. After transfer, confirm that domains resolve, applications run, analytics collect data, payment flows work and the buyer has administrative control. The purchase agreement and closing checklist should reflect assets that are genuinely critical to continued operation.
Support And Updates
Map the operating rhythm by day, week and month. Identify tasks performed by the owner, employees, contractors, suppliers and software. Ask how exceptions are handled, not only how the standard process works; unusual cases often reveal where undocumented knowledge sits.
Estimate the real replacement workload. An owner may describe a task as only a few hours while relying on years of tacit knowledge, relationships or quick decisions. Document procedures, access, service levels and the cost of replacing work the seller currently performs.
A buyer should know what must remain stable during transition. Critical suppliers, contractors, fulfillment partners and customer-support routines deserve early attention so the first weeks of ownership do not accidentally disrupt revenue.
Transferability
Create an explicit asset schedule instead of assuming that everything used by the business is included. Domains, repositories, source code, content, trademarks, customer data, analytics properties, ad accounts, email lists, social profiles, supplier relationships, licenses and software subscriptions can have different owners and transfer rules.
Confirm control and transferability before closing. Check registrants, account administrators, contractor agreements and relevant license terms. Where an asset cannot transfer directly, identify the replacement process, cost and downtime risk. Credentials should be transferred through a controlled handover rather than informally shared in advance.
Plan acceptance tests for important assets. After transfer, confirm that domains resolve, applications run, analytics collect data, payment flows work and the buyer has administrative control. The purchase agreement and closing checklist should reflect assets that are genuinely critical to continued operation.