How to Verify Seller-Reported Financials Before You Make an Offer

Start with the source systems, not the spreadsheet

Most listings arrive with a tidy profit-and-loss summary. Treat it as the seller's story. The truth lives in Shopify payouts, Stripe and PayPal settlements, bank statements and ad-platform billing. Ask for read-only access or screen-shared walkthroughs and match at least 12 months, ideally 24.

Reconcile gross sales in the store to deposits in the bank. A gap of more than a few percent needs an explanation: refunds, chargebacks, payment holds or revenue booked on a different entity.

Rebuild seller's discretionary earnings (SDE) yourself

SDE adds back the owner's salary and genuinely one-off costs. Sellers often add back too much: 'one-off' agency fees that recur every quarter, or personal travel that was actually a supplier visit. Rebuild SDE line by line and discount any add-back you cannot evidence with an invoice.

Check that cost of goods reflects landed cost (freight, duties and 3PL fees), not just the supplier's unit price.

Stress-test the marketing engine

For DTC and dropshipping brands, the business is the acquisition machine. Pull ad-account data directly: blended ROAS, new-customer CAC, and contribution margin after ad spend by month. Look for a recent spike in spend that inflated revenue, or a pause in spend that inflated profit right before the sale.

Red flags that should pause a deal

Revenue concentrated in one SKU or one supplier with no contract; a sudden margin jump in the last three months; refusal to share bank statements; and customer cohorts that churn faster each quarter. None of these automatically kill a deal, but each should change the price or the structure.

Trend Hijacking runs this reconciliation for buyers as part of buy-side advisory, so you go into negotiation with numbers you can defend.