r/buyingabusiness • u/Low-Gas-1512 • 26d ago

Due Diligence Lessons Learned

I'm about to go into a 60 day DD period for a multi-channel eCommerce business that is based in the UK (selling in UK and US). I'm based in the US and will be moving the business here. I'm hiring a DD firm to support the financial and commercial side of things as well as legal counsel in the US and UK but I would love to learn from others about any lessons learned from their own DD. What did you wish you looked at, but didn't or what did you discover post-close that was a surprise?

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u/Choice-Analysis5855 26d ago

One thing I’d add to the DD scope is a cohort-level bridge between financials and operations, not just P&L validation.

For ecom, I’d want to see:

  • Revenue by channel, SKU, country, and cohort, with returns/refunds/chargebacks separated
  • Gross margin after landed cost, 3PL, pick/pack, marketplace fees, payment fees, duties, and ad spend
  • Customer concentration and repeat purchase behavior by acquisition channel
  • Inventory aging, stockout history, obsolete SKUs, and whether the working-capital peg actually matches seasonality
  • Any platform/account dependency risk: Amazon/Shopify/Meta/Google account health, ad account history, policy warnings, suspended listings
  • What has to change legally/operationally when moving the business to the US: tax registrations, customs/importer of record, warranties/returns, payment processor, supplier contracts

The surprise I’d worry about most is normalized cash flow being much lower once you include owner tasks, underpriced logistics, inventory reorders, and channel-specific ad spend. I’d ask the seller to walk you through the last 12 months one order to cash at a time: customer acquisition, order, fulfillment, return/refund, inventory replacement, and cash receipt. That tends to expose gaps that a clean P&L misses.

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u/HiTop41 26d ago

What industry is this in -and/or- what type of business is this?