When buying an online business, performing due diligence is key. However, without deep expertise in the specific online business category (e.g., e-commerce, SaaS, content), it’s not advised for buyers to perform due diligence themselves.
The risks can be detrimental with you buying a business that doesn’t have longevity or utilizing growth tactics that are not long-term (i.e., high-risk SEO strategies)
That’s where third-party M&A agencies come into play.
In this breakdown, we compare side-by-side WebAcquistion vs Flippa’s due diligence service.
Let’s get into it!
Breakdown of Actual Reports – Case Study
A client reached out to hire WebAcquisition to perform a full unbiased due diligence analysis on an Amazon KDP business listed on Flippa. The same client was also offered a due diligence report by Flippa M&A advisors.
After finishing our report for the client, we gained access to Flippa’s due diligence report. We redacted personal identifying information on both reports.
Here are the reports:
Reviewing the reports shows that WebAcquisition goes significantly more in-depth whereas Flippa re-analyzes the surface-level information provided in the listing description.
We found significant red flags in this Amazon KDP business, such as:
- Incentivizing users to get free books in return for 5-star reviews (this is against Amazon ToS the way it was done by sellers)
- Amazon product listing descriptions have significant red flags in the language being used
- Customer reviews on books were purchased
- Flippa did not review Amazon PPC spend. Our review found that Amazon PPC is not profitable and thus the new buyer would not have a consistent way to get new revenue/customers.
- Flippa did not provide any suggestions on valuation. Since we are unbiased, we can provide deep insights into how this business should be valued.
To summarize, as an unbiased due diligence provider, we can go much further in-depth into our analysis. We can share all red flags, valuation suggestions, and ways to structure the acquisition. If we find too many red flags, we also suggest the buyer walk away from the deal.
These are the significant benefits when using an M&A due diligence provider like us.
Overview of Flippa vs WebAcquisition
Flippa is the #1 auction marketplace for buying online businesses. They were the first to market and well-known in this space. Sellers can list their businesses on the marketplace for a fixed fee plus a commission fee once the deal closes.
WebAcquisition, on the other hand, is a dedicated M&A agency helping acquisition entrepreneurs buy online businesses. We provide due diligence services, growth strategies, and more.
Flippa’s Due Diligence Service
What is Flippa’s due diligence service? Flippa is a marketplace that represents the sell-side (i.e., they allow sellers to list their business, and then take a commission on the successful sales).
However, they also provide due diligence services for buyers who are looking for help in vetting a deal. You can find more details here.
Their packages can be broken down as follows:
|$30K to $200K
WebAcquisitions’s Due Diligence Service
WebAcquisition is a dedicated due diligence M&A service. We have a team of analysts with deep expertise in running the businesses we are reviewing. Each of our analysts actively runs a portfolio of business one excess of 7 figures.
You are receiving world-class practitioners reviewing your deal as opposed to outsourced help just following standard procedures for putting together a report.
Buyers hire us to perform due diligence on an acquisition they want to make. We are paid for analysis and are not compensated by the closing of a deal (i.e., finder’s fee or commissions).
We are unbiased. We catch red flags that others miss.
For more details on our service, choose the specific business type:
Flippa Due Diligence vs WebAcquisition: Comparison
We performed a side-by-side comparison of these two platforms. We compared major factors like biases, team structure, pricing, and report structure.
|None. WebAcquisition does not broker or represent sellers
|Yes. Flippa is a brokerage marketplace that takes success fees from sellers once a business has sold.
|Launched April 2020 [source]
More details here.
|$1,900 and above depending on the complexity
|$1,500 to $2,500
|Each business has a customized analysis
|Unknown. Standard analysis for each business [source]
|No limit. We cover all aspects in a customized analysis.
|Up to 35 pages depending on how much the client pays ($1,500 to $2,500)
|Yes! Direct access to team for Q&A
|No details were provided of follow-ups [source]
Amazon FBA (view)
Amazon KDP (view)
|Quick Deal Review?
|Yes! See details here.
To summarize, here is a bullet list of important findings:
- Flippa represents sellers. There can be an inherent bias in the reports they provide to buyers.
- They have limits on page count which is not fair to a buyer if a specific report takes longer due to business complexities
- Not clear who is running the analysis at Flippa. Are they subject matter experts with experience?
The alternative is our firm, WebAcquisition. Here are some pros to consider:
- Team of real experts that have a decade of experience in online businesses; combined 50+ years through the entire team
- Buyers can ask follow-up questions to ensure they have answers
- Service all types of online businesses
- No limit on reports; e.g., a recent report took us 65 pages vs another report that took 30 pages. We ensure quality.
Verdict: WebAcquisition Provides Unbiased Due Diligence Reports
Our team at WebAcquisition prides itself on the quality of analysis that is unbiased and in favor of the buyer.
We acquire online businesses ourselves and thus deeply understand the intricacies and stress that is involved. We are on the buyer’s side through this process.
If you are looking for an unbiased world-class team to review your deal, make sure to use WebAcquisition.
We catch red flags that others miss.