Centurica's Proven Due Diligence System

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Proven on Over 500 Deals In The Last Few Years

You don’t know what you don’t know. If it’s peace of mind you’re looking for, don’t go it alone and miss hidden risks you didn’t know to check for. Outsource your due diligence to our experienced team. We treat your deal as if it were one we were buying ourselves including going through the same process we’d go through if we were investing our own money.

Through our systematized approach to due diligence and years of experience across multiple types of online businesses, we’ll uncover the hidden risks the Brokers or Sellers often try to down play. In the end, you’ll know exactly what risks you’re taking on so you can move forward with a smooth, transparent transaction.

How The Acquisition and Due Diligence Process Works

(Optional) Getting Started: The Search

Still haven’t found an online business you’re interested in? Trying to narrow down which one you want to pursue? Your Centurica Advisor will look over the listings you’re interested in and guide you down the best path for your situation.

Advisor Meetings

  • Project Kick Off Call With Centurica and You  – We’ll help you get crystal clear on which types of deals have the potential to meet your long term goals in terms of strategy, ROI, lifestyle, and budget.
  • Deal Review Calls – Discuss potential deals you’ve found with your advisor to get our opinion and answer your questions about the pros and cons of the deal.

Deliverables

  • Quick Deal Reviews – Quick written summary of potential deals. We’ll provide an objective summary of key risks or red flags and a go/no go recommendation.

Turnaround Time

1 Business Day Per Deal Review

Phase 1: Initial Deal Review, Valuation and Offer

Your Centurica Advisor will look over the listing you’re considering making an offer on (or one you already made an offer on) and guide you down the best path for your situation. When you find a potential deal, you need to move quickly and decisively. However, it can be challenging to not only determine the right price for a deal, but also to commit to a deal without fully understanding the risks and opportunities. That’s where we’ll help. We’ll ensure you fully understand the business, determine the proper deal structure, and help you avoid overpaying for the wrong business.

Fair Market Value Assessment

We are in a unique position with our proprietary database of thousands of listings of sold online businesses which we have collected through our Centurica Marketwatch tool. We’ll find comps for your prospective deal to help determine if you’re over paying.

Advisor Meetings

  • Pre-offer meeting – Speak to your Centurica Advisor about their assessment of the deal and determine the ideal price and terms to offer.
  • Due Diligence Kick Off Call With Centurica, You and the Seller – Your Centurica Advisor will setup a conference call with you and the seller to gather the information needed to value the business.

Deliverables

  • Initial Risk Assessment and Valuation Report
  • Prepare Checklist of Due Diligence/Valuation Items Needed From Seller
  • Letter Of Intent (LOI) Review – Non-legal representation assistance with the Letter of Intent with our in-house Mergers & Acquisitions attorney.

Turnaround Time

1-3 Business Days*

Phase 2: Financial Verification

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. 

Our goal will be to recreate the provided profit and loss statement with live data direct from the source. Once we complete our investigation, we send you the findings in an easy to understand report

Income Verification

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.

  • 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 health assessments. Can you be sure that all the revenue shown by the seller has originated only from the website being sold? Are the revenue accounts in good standing without policy issues? 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, issues with policy violations, and more.

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, shared staff or marketing costs from the buyer.

  • Transaction level verification. We’ll trace expenses from the claimed P&L to the originating bank or credit card transactions, compare to tax returns, invoices, bookkeeping records and more to verify accuracy.
  • 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.

FBA Business Due Diligence and Verification

Buying an Amazon FBA business is a different process than a standard website purchase. We have created a custom report for these types of businesses. With access to the Seller Central account we can verify not only revenue and traffic, but also the seller performance, refund rates and feedback. We then compare it to our averages and point out any potential issues.

We also analyze the review quality and other performance and policy notifications to make sure that the Seller is complying with Amazon’s policies.

  • Changes in Seller performance. We review the latest data in the account so that any recent changes in the account’s performances are noted and reviewed. We take data directly from the source.
  • Unlisted policy notifications. Often times a seller has be been contact by Amazon about problems with items or listings and this information is not always provided by Sellers. We review the history to see if there are unknown risks in the business.

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.

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.

Advisor Meetings

  • Screenshare Call With Seller – If we can’t get direct access to accounts, we’ll verify financials using live screenshare calls with the Seller.
  • Initial Findings Review Call With You – We’ll collaborate with you to develop a go-forward plan once our initial findings are in.
  • Seller Q&A call – Your Advisor will setup a conference call with you and the Seller to address detailed due diligence items which may have otherwise gone undiscovered.
  • Phase 2 Final Findings Review Call – You’ll get the opportunity ask our team for our opinion on our findings on a live call.

Deliverables

  • Prepare Seller Q&A Document Based on Findings – Often due diligence leads to unanswered, often difficult to ask, questions. Centurica’s team will be able to play “bad cop” and draft a list of questions for the Seller to clarify.
  • Live Financial Verification Report – Once we complete our investigation, we send you the findings in an easy to understand report comparing the claimed financials with the live, verified ones.

Turnaround Time

2-4 Business Days*

Phase 3: Marketing and Operations Verification

Loss of traffic and ultimately loss of revenue is one of the most common ways a new purchase will fail within the first 12 months of ownership. Many of the causes for traffic loss can be identified before the site is sold. Our Marketing and Operations verification will give you an early warning.

We analyze every major traffic source that brings new and existing visitors to the site. For each one, we look at the quality, sustainability and the overall dependence the site has on it. This helps identify problem areas upfront.

We also examine the business for sale, and look at typical functions and skills required to operate it. Based on our own experience, we identify potential issues with transfer-ability of the operations as well as operational risk.

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.

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.

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.

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.

Advisor Meetings

  • Screenshare Call With Seller – If we can’t get direct access to accounts, we’ll verify traffic, marketing channels and operations using live screenshare calls with the Seller.
  • Initial Findings Review Call With You – We’ll collaborate with you to develop a go-forward plan once our initial findings are in.
  • Seller Q&A call – Your Advisor will setup a conference call with you and the Seller to address detailed due diligence items which may have otherwise gone undiscovered.
  • Phase 3 Final Findings Review Call – You’ll get the opportunity ask our team for our opinion on our findings on a live call.

Deliverables

  • Prepare Seller Q&A Document Based on Findings – Often due diligence leads to unanswered, often difficult to ask, questions. Centurica’s team will be able to play “bad cop” and draft a list of questions for the Seller to clarify.
  • Basic KPI Calculation and Benchmarking – We’ll calculate the most essential KPI’s and compare them to our benchmark numbers to help you identify risks and opportunities for improvement.
  • Detailed Marketing and Operations due diligence report – We’ll cover over 200 checklist items with our customized due diligence report.

Turnaround Time: 2-4 Business Days*

Phase 4: Business Specific Risk Analysis

Every business for sale is unique. It’s very common for a Seller to have a deep understanding of the future viability of the business…and in many cases they see something on the horizon which makes them want to sell.  In the worst case, they try to hide this. More commonly, they try to down-play these risks.

It takes a company like Centurica to do a forensic level of digital analytics using their first-hand experience operating digital businesses to uncover and understand these risks. 

In addition, our best clients have strategic ideas for growth with their potential acquisitions. Our job is to take their ideas and back those ideas up with data directly pulled from the target acquisition.

For instance:

  • Would you like to know the customer acquisition cost only of the B2B (not B2C) customers generated from Google Adwords? We can get that for you and present it in an easy to understand KPI dashboard.
  • Want to know if the Facebook ads account has peaked or if there’s still room to grow it profitably? We’ll evaluate the wasted spend, changes in Return on Ad Spend over time, how much impression share still remains, and more.
  • Want to know why a product category has declined by 20% year-over-year and project how that will affect the upcoming holiday season’s sales? We’ll dig in to find the root cause and forecast your sales based on actual transaction and traffic level data.

Advisor Meetings

  • Screenshare Call With Seller – If we can’t get direct access to accounts, we’ll verify traffic, marketing channels and operations using live screenshare calls with the Seller.
  • Initial Findings Review Call With You – We’ll collaborate with you to develop a go-forward plan once our initial findings are in.
  • Seller Q&A call – Your Advisor will setup a conference call with you and the Seller to address detailed due diligence items which may have otherwise gone undiscovered.
  • Phase 3 Final Findings Review Call – You’ll get the opportunity ask our team for our opinion on our findings on a live call.

Deliverables

  • Custom Root Cause Analysis of Risk or Discrepancies
  • Custom KPI Calculation and Assessment
  • Business Model Specific Audit Report
    • Ecommerce Specific Risk
    • SaaS Specific Risk
    • Content Business Specific Risk
    • Service Business Specific Risk
  • Detailed phase 4 due diligence report – We’ll update the report with our findings of the custom analysis.
  • Live financial verification report– We’ll verify the trailing twelve months plus the previous two calendar years of revenue and expenses. Our goal will be to recreate the provided profit and loss statement with live data direct from the source.

Turnaround Time

2-4 Business Days*

Phase 5: Growth and Transition

It’s time to transfer money and receive access to your new business. This can be an exciting and scary time. We’ll be by your side to help prevent and address any unexpected transfer issues if they occur. A smooth closing helps ensure the business continues to perform at or above its current levels of profit.

Advisor Meetings

  • Pre-escrow funding meeting – We’ll answer any final questions you may have before transferring funds to escrow.
  • Account transfer meetings – We’ll be live by your side as the transfer of each account happens to avoid any transfer issues.
  • Pre-escrow release meeting – We’ll confirm you are fully in control of each account before releasing escrow funds.
  • Opportunity discovery with Seller – Your Advisor will setup a conference call to brainstorm additional growth opportunities with the Seller.

Deliverables

  • Purchase Agreement Review – Non-legal representation review of the Purchase Agreement.
  • Asset and liability transfer plan – We’ll write up a detailed plan on how the transfer of assets and liabilities will occur including planning for transferability issues.
  • Growth and risk reduction plan – We’ll help you prioritize the top growth and risk reduction opportunities discovered through all phases of the deal so you can improve the value of your new business from day one.
  • Operations manual review – It’s important to understand how to operate the business after closing so you don’t experience a drop in profits. That’s why we review all training and documentation provided by the seller to ensure it’s comprehensive enough for you to take over operations right away.
  • Pre-Closing Due Diligence Recheck – Often there are due diligence items which remain pending until escrow is funded and we’ll do our final checks before the transfer begins.

Turnaround Time

2-20 Business Days*

After Closing: Post Closing Verification and Operations Takeover

Now it’s time to focus on increasing the profits and value of your business. We’ll help you develop your game plan for the first year and connect you with the team and resources you need to implement your plan.

  • Rolodex – We’ll open up our rolodex of quality contractors and more to ensure you have the team and resources you need to implement your plan.

*All turnaround times assume a responsive seller.