An important part of any purchase is performing due diligence on the asset(s) or business that you are planning to purchase. Financials, performance, history - everything needs to be reviewed and checked to make sure that what you are considering purchasing is what you expect it to be and is performing as claimed.
We strongly recommend that a sales agreement for a listing contains a clause that the sale is dependent on the satisfactory completion of a due diligence assessment.
Flippa recommends Centurica due diligence services. Centurica is an independent risk assessment company that specialises in online business and asset due diligence. Since starting in 2013, Centurica quickly became the industry leader for due diligence and has been trusted with performing due diligence on over $100 million in businesses.
There are two packages that Centurica recommends if you are considering purchasing an asset or business on Flippa:
Package 1 - Standard Live Verification Report = $549
Verification of gross sales or income.
- Live verification of the gross income into payment accounts and backend systems.
- Centurica use live screen shares, access to electronic accounts and spot checks on individual transactions to spot any difference between claimed and verified amounts.
- Live investigation of the link between sales/orders from a website or business and the steps until the money is deposited into a bank account.
- Centurica trace random payments from orders to deposits in bank accounts to establish a link between accounts and the business.
Revenue legitimacy assessments.
- A review to determine the likelihood that revenue claimed was generated from other businesses or websites.
- Centurica look for evidence of transactions that may have been generated elsewhere but processed through the same account in a fraudulent attempt to boost revenue.
- Having undeclared expenditure is a common situation with web-based businesses. While there's no way to establish every amount a seller has ever paid, Centurica can spot omissions or errors based on their experience reviewing similar businesses.
Review of expenses to identify potentially missing categories.
- Centurica run the website's expenses against their own custom system to identify any common expenses that the seller may have forgotten to include.
Benchmarking of expense figures
- Centurica look at the expense amounts being claimed and report on whether those amounts seem reasonable for the site and the industry it operates in.
Refund and Chargeback Rate Verification
Refund Rate Verification
- A high or increasing refund rate is often a sign of product, supply or customer service issues.
Chargeback Rate Verification
- A high chargeback rate shows potential issues or fraud and can also put the company's merchant account at risk of being suddenly closed.
Verification of Tax Returns
Tax Return Comparison to P&L
- Where possible, Centurica verify tax returns submitted by the seller as further proof that their claimed income is accurate. This is an important step when applying for funding from the SBA and others sources.
Traffic Level Verification
- Centurica compare the seller's traffic claims, to live data reported by a trusted analytics environment.
Traffic Trend Analysis
- A review of traffic trends for the top sources.
Traffic Source breakdown
- A breakdown of the main traffic sources to the website to understand the traffic’s sustainability.
Content Development Verification
- Verification with the Seller to understand how they created the content on the website. Plagiarised or duplicate content can create a large risk for buyers.
- A review of the Seller’s backlink strategies to determine the link profiles health and potential risk of penalties.
Mailing List Verification
Mailing List Verification
- A live verification for the size and location of the mailing list.
Mailing list health assessment
- A review of the recent mail campaigns to determine the health and engagement levels for the current list.
Agreement and Commitment Verification
Supplier and Employee Verifications
- Centurica verify the existence of agreements between key stakeholders in the business to assess their existence and validity.
Account Ownership Review
- Verification of the ownership entity of the key company accounts
Package 2 = $899
Contains everything detailed in All of Package 1, plus the following:
Domain and Server Assessments
- Website ownership verification
- Server and domain change review
- Email blacklist check
- Website age assessment
On Site Checks
- Plagiarised content check
- Trademark search
- Google Guidelines check
- 3rd party dependency review
Traffic and Marketing Assessments
- Google Analytics code verification
- Traffic breakdown and sustainability review
- Geographic traffic breakdown
- Keyword trend analysis
- Backlink review
- On-site engagement verifications
- Undisclosed paid traffic check
- Social profile verification
Revenue and Monetization Checks
- Revenue breakdown and sustainability assessment
- Revenue per use and revenue per mille benchmark comparison
- Revenue transferability assessment
Operations and Maintenance Assessments
- Outline of the standard tasks and jobs required to run a similar business
Information About the Seller
- Searches to identify other businesses potentially owned by the seller
- Review of identified businesses to determine if they compete with the business for sale
If you have any questions about Centurica services or to make an enquiry, please contact us for more information.