Centurica's Website Due Diligence

Ensure the seller's claimed details have been accurately represented.

It's estimated that more than 40% of web-based business transactions have inaccurate, inflated or misrepresented figures. In most cases, these are genuine errors on behalf of the seller or broker, but approximately 20% of these transactions are simply fraudulent attempts by a seller to deceive the buyer into paying more for their business.

Once you've agreed to purchase the website, we work with the seller to verify that the revenue and traffic claims they've made are true and accurate. Once we complete our investigation, we send you the findings in an easy to understand report. You can see what's included or download a sample report below.

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Income Verification

It's highly likely that the website will have a significant part of its valuation attached to the amount of profit it generates. This makes reliable financial verification a key part of the acquisition process, potentially saving you thousands. We work directly with the seller to verify their income as it's generated from the source, making recommendations and observations where appropriate.

We look at:

Income Verification
  • Verification of gross sales or income. Does the amount of income generated match what the seller has claimed? We use live screen shares, access to electronic accounts and spot checks on individual transactions to spot any difference between claimed and verified amounts.
  • Revenue legitimacy assessments. Can you be sure that all the revenue shown by the seller has originated only from the website being sold? We look for evidence of transactions that may have been generated elsewhere but processed through the same account in a fraudulent attempt to boost revenue.

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Expenditure Assessments

Having undeclared expenditure is a common situation with web-based businesses. Sometimes, the seller will make payments from personal accounts and simply forget to report them. In other cases, it can be a deliberate attempt to boost profits by hiding, for example, full staff or marketing costs from the buyer.

While there's no way to establish every amount a seller has ever paid, we can spot omissions or errors based on our experience running similar businesses.

We look for:

  • Potentially missing expenses categories. We run the website's expenses against our own custom profiling system to identify any expenses that the seller may have forgotten to include.
  • Substantial discrepancies against benchmark figures. We look at the expense amounts being claimed and report on whether those amounts seem reasonable for the site and the industry it operates in.

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Refunds and Chargebacks

Refund and Chargeback Rate Verification

A seller's claimed refund rate will often go unchecked, but without verification you could be missing potentially damaging information. A high or increasing refund rate is often a sign of product or supply issues. Likewise, a high chargeback rate shows the same, but can also put the company's merchant account at risk of being suddenly closed.

We take a snapshot of the last 12 months of merchant account transactions, and look for discrepancies between the seller's claimed refund and chargeback rates and the actual figures.

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Verification of Tax Returns

Where possible, we verify tax returns submitted by the seller as further proof that their claimed income is accurate.

Having verified tax returns available with the business will also help if you plan to apply for funding (e.g. SBA loans) to purchase or to leverage a purchase of the business.

Tax Return Verification

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Traffic Levels

Traffic Level Verification

The traffic received by a website doesn't always affects the business's selling price, but visits often have a direct correlation to sales in web-based business. Decreasing or inflated traffic levels are early warning signs of more serious problems that follow.

We compare the seller's traffic claims, to live data reported by a trusted analytics environment. Any significant differences are reported and brought to your attention.

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Claimed Traffic Source Verification

Often, a seller will claim to receive traffic from various on or offline sources, but knowing how accurate these claims are can make a substantial difference.

We look for significant discrepancies between the seller's claimed traffic sources and those that they actually receive. For traffic sources that can't be easily interpreted (e.g. visits from offline magazine adverts), we assess whether those claims are reasonable for the business model and the industry that the website operates in.

Traffic Sources

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Mailing List Verification

Mailing List Verification

When a business relies on email or customer data to promote its services, bad data or inflated subscriber counts will ultimately fail to deliver results when you take over as a new owner.

If the business has customer or subscriber mailing lists, we verify the existence, size and health of that list.

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Agreement and Commitment Verification

For businesses that have agreements with employees, contractors or key suppliers, those relationships can sometimes play a key role in the website's successful operation.

We verify agreements between key stakeholders in the business to assess their existence and validity.

Agreements and Commitments

Download a free sample Due Diligence and Live Verification Report

Sample Report

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