Follow an order through to its contribution
Start with net sales after returns and discounts, then examine product cost, freight, fulfilment, payment fees and customer acquisition. A sales dashboard may include amounts or periods that differ from the accounts. Reconcile the source data before treating platform revenue as maintainable earnings.
Look separately at wholesale, direct-to-consumer and marketplace activity. Each can have a different margin, payment cycle and service cost. A shift towards a lower-margin channel can lift revenue while reducing cash generation. Explain the channel mix rather than applying one growth rate across the whole business.
Separate repeat demand from purchased growth
Cohort data can help distinguish customers who return from customers acquired once through a promotion. Consider repeat orders, average order contribution, discount dependence and the cost of reaching existing customers. A large email list is not the same as an active customer base.
Assess concentration in advertising platforms, marketplaces, suppliers and products. If one platform supplies most new customers, consider what evidence supports future acquisition cost. Strong recent advertising performance should not be assumed to continue indefinitely without examining the underlying conditions.
Inventory can create both value and a funding requirement
Check stock age, landed cost, saleability, minimum order quantities and the timing of replenishment. Fast growth may require more cash tied up in stock before sales receipts arrive. Slow-moving inventory may need discounts or write-downs, affecting both earnings and the balance sheet.
An earnings-based operating value may already assume normal inventory and working capital. Establish whether stock is included before adding it to a headline price. Also identify ownership and transferability of the domain, brand, content, supplier arrangements and trading accounts.
The records that make the analysis clearer
Tell us whether the matter concerns a sale, a shareholder exit or another purpose. The business model and available data help determine whether a standard engagement is suitable or a broader scope is needed.
Before we begin
Your industry information checklist
- Financial statements and current monthly accounts
- Sales by channel, product and period
- Advertising spend and customer cohort reports
- Inventory ageing and supplier commitments
- Key account, platform and intellectual property arrangements
We confirm the documents needed once the purpose and scope are clear. For the common starting documents, see our valuation preparation guide.
General business valuation guidance. Service suitability, specialist input and fee are assessed for the individual matter.