You’re about to close the deal of the century: the purchase of a thriving online business found on online-businessforsale.com. But before you sign the contract and pop the champagne, there’s a crucial step ahead: financial due diligence.

This meticulous investigation will enable you to verify the company’s financial health and detect any irregularities or hidden risks. In this article, we’ll take you step by step through this process, outlining the key documents you’ll need and the points to watch out for.

Essential documents: your key to unlocking financial secrets

1. Financial statements :

• Balance sheet: presents the company’s assets and liabilities at a given point in time, detailing its assets, liabilities and shareholders’ equity.
• Income statement: This shows the company’s income and expenses over a given period, enabling it to calculate its net income.
• Cash flow statement: Shows cash inflows and outflows linked to the company’s activities, investments and financing.
• Appendices : These provide additional information on the accounting methods used, significant events, off-balance sheet commitments, etc.

2. Tax returns :

• Income tax returns: These are used to verify the consistency between the figures declared to the tax authorities and those presented in the financial statements.
• Tax notices: These certify that the company is up to date with its tax obligations.

3. Contracts and commitments :

• Customer and supplier contracts: These enable you to assess the company’s dependence on certain customers or suppliers, as well as the commercial conditions in force.
• Employment contracts: These give an idea of the company’s payroll and social commitments.
• Commercial leases and rental agreements: These give an idea of the costs of premises and equipment.
• Borrowings and financial debts: These give an idea of the company’s level of indebtedness and repayment terms.

4. Documents specific to e-commerce:

• Website analytics data: for analysis of traffic, conversions, average basket, etc.
• List of suppliers and partners: to assess the reliability of the supply chain.
• Returns and refunds policy: gives an idea of the level of customer satisfaction and the risk of disputes.