Before you sell a consumer brand, check six areas the way a buyer will. Financials: a monthly profit and loss that ties to bank deposits and payouts. Channels: Amazon revenue tied to settlements and a healthy account. Customers: repeat buying by cohort. Products: a cost per unit for every item. Ops: stock, suppliers and contracts. Then a data room that holds it all.
Meet Priya. She runs a made-up coffee roaster brand.
On Friday she signed a buyer’s letter of intent. She opened a bottle of wine.
On Monday the buyer’s request list arrived. It ran to eleven pages.
Item twelve: show that each month’s sales match the cash that came in.
Priya opened her spreadsheet. One month was off by $16,500.
She did not know why. The buyer would ask.
You do not want to meet that gap for the first time on a buyer’s deadline.
This checklist lets you run that check on yourself first, so you find the gaps before a buyer does.
It covers six areas. Each item says what buyers ask for and what a red flag looks like.
For where this check fits in the sale, read how to sell a consumer brand. For why each gap costs money, read how consumer brands are valued.
Due diligence is the careful check a buyer makes before buying a business. It usually means going through financial records and other key papers (Cornell LII). This list is how you get ahead of it.
The six areas at a glance
| Area | The buyer’s question | The most common red flag |
|---|---|---|
| Financials | Are the earnings real? | Revenue that does not match deposits and payouts |
| Channels | Will each channel keep selling? | Amazon numbers that do not tie to settlements |
| Customers | Do people come back? | No cohort data, or repeat buying falling |
| Products | What does each item really earn? | Products with no unit cost on file |
| Ops | Can the business run without surprises? | No written supplier terms, stock running out |
| Data room | Can we check all this quickly? | Files scattered, answers taking weeks |
1. Financials
Start here. This is where most price cuts start. A buyer pays a multiple of earnings. Any dollar of earnings they cannot prove is worth a multiple less.
☐ Monthly P&L for at least the last 24 months. P&L means profit and loss statement. - Buyers ask: monthly revenue, costs and profit, split by channel if possible. - Red flag: only yearly totals, or months that were rebuilt from memory.
☐ Revenue ties to bank deposits and marketplace payouts. - Buyers ask: show that each month’s revenue matches the money that arrived. - Red flag: a gap you cannot explain. Even a small one makes a buyer doubt the rest.
☐ Add-backs documented. Add-backs are costs a new owner would not pay, added back to profit. - Buyers ask: a list with dates, amounts, receipts and a reason for each. - Red flag: large or vague add-backs, such as “marketing tests” every month. A cost that happens every year is not one-off.
☐ Books on the accrual basis, or a clear bridge to it. Accrual means costs and revenue are booked in the month they belong to, not when cash moves. The IRS puts it the same way: income counts when you earn it, not when you are paid (IRS Publication 538). - Buyers ask: profit by the month it was earned. - Red flag: a big stock order booked as one month’s cost, making that month a loss and the next a windfall.
☐ Tax returns and sales tax filings. - Buyers ask: returns that roughly match the books, and proof sales tax was collected and filed. - Red flag: profit on the tax return far below profit in the pitch, with no clear reason.
Here is Priya’s gap. Like every number in this post, it is illustrative, for a made-up brand.
| Illustrative month | Amount |
|---|---|
| Revenue in the P&L | $210,000 |
| Store payouts received | $62,000 |
| Amazon settlements received | $131,500 |
| Total cash received | $193,500 |
| Gap to explain | $16,500 |
Part of the gap may be timing, refunds or fees. Each part needs a line that explains it. An unexplained gap is a red flag.
The good news? Most gaps like this have dull causes. You just need to find them first.
2. Channels
☐ Amazon revenue ties to settlement reports. A settlement report is Amazon’s statement of what it actually paid you, after fees and refunds. Amazon makes these on its own schedule, and sellers cannot request them (Amazon developer docs). Save each one as it arrives. - Buyers ask: revenue and fees rebuilt from settlements, by month. - Red flag: revenue taken from the orders report, which shows sales before refunds and many fees. See the settlement report vs the orders report for how far apart they can be.
☐ Account health on every marketplace. - Buyers ask: account health pages, past warnings, suspensions and how each was fixed. - Red flag: open policy warnings, a recent suspension, or a falling health score. - Good to know: as of October 2026, Amazon’s Account Health Rating runs from 0 to 1,000. It reflects the last 180 days and shows the risk of the account being shut off (Seller Central help). Screenshot it each month.
☐ Sales by channel for each month. - Buyers ask: how much of revenue and profit each channel brings. - Red flag: one channel holding nearly all sales, with no proof another can grow.
☐ Ad spend by channel and its return. - Buyers ask: spend per platform, tied to each ad account’s bills. - Red flag: profit that only holds because ads were cut just before the sale.
☐ Brand and listing control. - Buyers ask: who owns the trademark, the brand registration and the listings. - Red flag: a trademark in the owner’s personal name, or listings another seller can edit.
3. Customers
☐ Cohort table of repeat buying. A cohort is the group of customers who first bought in the same month. - Buyers ask: what each cohort spent over the next 3, 6 and 12 months. - Red flag: no table, or newer cohorts coming back much less than older ones.
☐ New vs returning sales. - Buyers ask: what share of revenue comes from returning customers, by channel. - Red flag: nearly all sales are first orders that needed an ad to happen.
☐ Subscriptions, if you sell them. - Buyers ask: active subscribers, how many cancel each month, and the discount given. - Red flag: active counts that include people who have not been charged in months.
☐ Reviews and returns. - Buyers ask: star rating trend, return rate and the main reasons for both. - Red flag: rising complaints about one issue, such as damage in shipping.
4. Products
☐ A full product list. Every SKU, meaning your code for each product version, with its status. - Buyers ask: each active product with price, channel and sales. - Red flag: products listed on one channel that are missing from your own list.
☐ Cost per unit for every product, with dates. - Buyers ask: landed cost per unit, the full cost to get a unit to your warehouse. That includes factory price, freight and duties. - Red flag: products with no cost on file. They look like pure profit. Our guide to COGS and landed cost shows how to build one.
☐ Margin by product and channel. - Buyers ask: which products earn after fees and ads, not just which sell. - Red flag: one hero product carrying the brand while the rest lose money.
5. Ops
☐ Stock on hand and on order. - Buyers ask: units and value by product and location, plus open purchase orders. - Red flag: frequent stockouts, or a pile of slow stock the buyer would have to pay for.
☐ Supplier list with terms. - Buyers ask: who makes each product, prices, lead times, minimum order sizes and payment terms. - Red flag: one supplier for everything with no written agreement, or terms only in email threads.
☐ Contracts in one place. - Buyers ask: agreements with suppliers, warehouses, agencies, creators and staff. - Red flag: contracts that cannot move to a new owner, or that end if the brand is sold.
☐ Who does what. - Buyers ask: a list of roles, who fills them and what only the owner does. - Red flag: the owner holds every supplier contact and every login.
6. The data room
Last, the place it all lives. A data room is a shared, access-controlled folder with every document a buyer needs. Build it before anyone asks.
Keep old records, too. The SBA notes you may need your company records when you sell. It adds that common advice is to keep tax and staff records for three to seven years (SBA guide to selling a business).
☐ Folders that match these six areas. - Buyers ask: to find any document in under a minute. - Red flag: files named “final v3” with no dates.
☐ One set of numbers. - Buyers ask: the same revenue in the pitch, the P&L and the tax return, or a clear bridge between them. - Red flag: three documents with three different totals for the same year.
☐ Someone who can answer fast. - Buyers ask: questions every week, often many at once. - Red flag: answers that take weeks, which makes buyers nervous.
How to use this checklist
- Go through each item and mark it done, partly done or missing.
- Fix the financials and channel tie-outs first. They hit the price hardest.
- Give every product a dated unit cost.
- Build the cohort table.
- Put the files in a data room now, even if a sale is a year away.
Wrap-up
Due diligence is a buyer checking your numbers against the source. You can run that check yourself first, on your own schedule.
Synthesis does part of this every day, and only part. It connects stores, ads, email and books and checks numbers against their source. For example, Amazon sales tie to settlements and ad spend ties to each account. It does not replace your accountant, your lawyer or a buyer’s own review. Contracts, tax and legal files are still yours to gather.
Exactly what a buyer asks for will vary, so treat this as a starting list, not a full one. It is general information, not legal, tax or financial advice.
Questions people ask
What do buyers look at in due diligence for an ecommerce brand?
They check that your earnings are real. That means monthly profit tied to bank deposits and marketplace payouts, proof for every add-back, product costs, repeat buying, account health on each channel, stock, supplier terms and contracts. They also look for anything that could go wrong after they own it.
How do I prepare my brand for due diligence?
Start months before you plan to sell. Close each month on books that tie to cash. Keep proof for add-backs. Give every product a dated unit cost. Build a repeat-buying table. Put contracts in writing. Then put it all in one shared folder, a data room, before a buyer asks.
What is a data room?
A data room is a shared, access-controlled folder that holds every document a buyer needs to check your business. It usually has financials, tax returns, marketplace reports, contracts, product costs and legal files, sorted into clear sections.
What are red flags for buyers of an Amazon brand?
Revenue that does not tie to settlements, warnings or suspensions on the account, one product carrying most sales, stock that keeps running out, reviews trending down, and costs missing for some products. Each raises doubt about how long the earnings will last.
What are add-backs in a business sale?
Add-backs are costs added back to profit because a new owner would not pay them. Examples are a one-off lawsuit, a trade show you will not repeat, or the owner’s own salary. Buyers accept the ones with proof and strike the rest.
How far back do buyers check the numbers?
Often two or three years of yearly figures, with the last twelve months in monthly detail. Ask your adviser or buyer early. It varies, and missing history is hard to rebuild later.