A phase-by-phase framework for evaluating e-commerce businesses with $1M–$5M in revenue — covering traffic, inventory, platform risk, and supplier dependencies.
Find E-commerce Acquisition TargetsAcquiring an e-commerce business requires validating revenue sustainability, platform account health, and supply chain reliability. Unlike traditional businesses, e-commerce value can evaporate overnight from an Amazon suspension or paid ad channel collapse. This guide walks buyers through every critical verification step.
Confirm that reported revenue and margins are accurate, sustainable, and not artificially inflated by one-time events or concentrated SKUs.
Request accrual-based P&L statements broken down by channel — Amazon, DTC website, wholesale — and reconcile against tax returns and bank statements for each year.
Identify what percentage of revenue comes from the top 3 SKUs and top 20% of customers. Heavy concentration in either signals fragile, high-risk revenue streams.
Review all owner add-backs including salary, personal expenses, and one-time costs. Confirm normalized EBITDA aligns with SBA lender expectations before valuing the business.
Assess the sustainability and transferability of the traffic and platform accounts driving revenue — the most e-commerce-specific and highest-risk due diligence area.
Review account standing, review integrity, TOS compliance history, pending suspensions, and whether the account is transferable under Amazon's current policies without disruption.
Export 24 months of Google Analytics or equivalent data. Identify the organic vs. paid vs. marketplace split and assess whether organic traffic is trending up, flat, or declining.
Assess list size, open rates, and revenue attribution from owned channels. Strong email and SMS performance signals low-cost customer retention and reduced paid ad dependency.
Validate physical inventory accuracy, supplier contract terms, and whether the business can operate independently without the founder post-close.
Reconcile reported inventory value against actual stock on hand, including aged or slow-moving inventory. Confirm inventory is valued at cost and excluded from goodwill calculation.
Obtain all supplier contracts and confirm exclusivity clauses, minimum order quantities, payment terms, and average lead times. Identify any single-source supplier dependency.
Review documented standard operating procedures for fulfillment, customer service, and reordering. Confirm the business can run without the seller within 90 days post-close.
Platform dependency is the top risk. An Amazon account suspension or sudden ad cost spike can eliminate revenue overnight. Always verify account health, traffic diversification, and organic demand before closing.
Reconcile reported P&L against bank deposits, payment processor records like Stripe or PayPal, and marketplace settlement reports. Cross-reference at least 24 months of data across all channels to spot inconsistencies.
Yes. Most profitable e-commerce businesses with clean financials and 2–3 years of operating history are SBA 7(a) eligible, covering 80–90% of the purchase price with seller financing often filling the remaining gap.
Typically 30–60 days. Financial and platform verification can move quickly with organized records, but inventory audits and supplier confirmation often extend timelines for product-heavy FBA or DTC businesses.
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