The Ultimate Due Diligence Checklist for Online Business Acquisitions

When acquiring an online business, thoroughness can be the difference between a profitable investment and a costly mistake. This comprehensive checklist covers every critical aspect you need to evaluate.

Financial Due Diligence

Revenue Verification

**Request 2-3 years of financial statements**

**Verify revenue through multiple sources** (Google Analytics, payment processors, bank statements)

**Check for revenue concentration** - no single customer should represent >20% of revenue

**Analyze revenue trends** - look for consistent growth or concerning declines

**Verify recurring vs. one-time revenue** - understand the sustainability

Expense Analysis

**Review all operational expenses** - hosting, software licenses, marketing spend

**Identify owner-dependent costs** - what expenses might change under new ownership?

**Check for hidden costs** - taxes, fees, or obligations not immediately visible

**Analyze profit margins** - are they realistic and sustainable?

Traffic & Marketing Due Diligence

Website Traffic

**Verify Google Analytics data** - ensure you're seeing the full picture

**Check traffic sources** - avoid businesses dependent on single traffic sources

**Analyze seasonal patterns** - understand when business is strongest/weakest

**Review organic search rankings** - check for recent algorithm penalties

Marketing Channels

**Evaluate email list quality** - size, engagement rates, deliverability

**Review social media presence** - authentic followers vs. bought engagement

**Assess advertising spend** - ROI on current marketing efforts

**Check affiliate/partnership agreements** - will these continue post-sale?

Operational Due Diligence

Business Operations

**Document all processes** - how is the business actually run day-to-day?

**Identify key dependencies** - what would break if the owner disappeared?

**Review supplier relationships** - are terms favorable and contracts transferable?

**Assess technology stack** - is it modern, secure, and scalable?

Team & Resources

**Evaluate existing team** - who's staying, who's going?

**Review contractor agreements** - are they transferable?

**Assess training needs** - how much will you need to learn?

**Check for non-compete clauses** - are there restrictions on the seller?

Legal & Compliance

Legal Structure

**Review business formation documents** - proper corporate structure?

**Check for outstanding legal issues** - lawsuits, disputes, IP conflicts

**Verify intellectual property ownership** - trademarks, copyrights, patents

**Review contracts and agreements** - customer contracts, vendor agreements

Compliance

**Check regulatory compliance** - industry-specific requirements

**Verify tax compliance** - up to date on all filings and payments

**Review privacy policies** - GDPR, CCPA compliance where applicable

**Assess data security** - proper handling of customer data

Risk Assessment

Business Risks

**Evaluate market position** - competitive landscape and threats

**Assess customer satisfaction** - reviews, support tickets, churn rates

**Check for single points of failure** - what could kill the business overnight?

**Review insurance coverage** - adequate protection for the business

Technical Risks

**Security assessment** - are there vulnerabilities that need addressing?

**Backup and recovery** - proper data protection in place?

**Performance and scalability** - can the site handle growth?

**Code quality** - if custom development, is it well-maintained?

Red Flags to Watch For

⚠️ Major Red Flags:

Seller won't provide detailed financial records

Traffic or revenue has declined >20% in the last 6 months

Single customer represents >30% of revenue

Business depends entirely on one marketing channel

Seller is evasive about operational details

There are outstanding legal issues or disputes

Technology stack is severely outdated or insecure

Next Steps After Due Diligence

Once you've completed your due diligence:

1. Compile your findings into a comprehensive report

2. Negotiate price adjustments based on discovered issues

3. Plan your transition strategy - how will you take over operations?

4. Set up monitoring systems - ensure you can track performance post-acquisition

5. Prepare for handover - document the transfer process

Conclusion

This checklist might seem overwhelming, but remember: every hour spent on due diligence could save you thousands in the long run. The goal isn't to find the perfect business (they don't exist), but to understand exactly what you're buying and price it accordingly.

Need help with your due diligence? DealValid8's systematic framework guides you through each of these steps with detailed templates and expert insights.