The P&L in an FBA broker listing is a sales document. It was assembled to support the asking price, and every number in it deserves to be tested before you wire six figures. This is the checklist we work through when a buyer hires us for due diligence, and it’s the same one we’d use buying for ourselves. We sell on Amazon FBA too, so none of this is theory.
Trace the revenue, don’t admire it
The only revenue that counts is revenue you can follow from Amazon’s settlement reports into an actual bank account. Not a dashboard screenshot and not the broker’s spreadsheet. Settlement reports are generated by Amazon and show gross sales, refunds, fees, and the net payout for each settlement period, which is usually every two weeks. Each of those payouts should match a deposit in the bank.
When they don’t match, you’ve found something. Common finds: refunds quietly excluded from “revenue,” Amazon reimbursements counted as sales, and deposits from a second unrelated business mixed into the same account to fatten the trailing twelve months.
Rebuild the real cost of goods
Many broker P&Ls quote the supplier’s invoice price as cost of goods. That’s not what the products cost. True landed cost adds freight, duty, brokerage, and inbound prep, and on imported products that stack commonly adds 20 to 40 percent on top of the factory invoice. A business marketed at a 35 percent margin can easily turn out to be a mid-20s margin business once we rebuild landed cost from the actual supplier, freight, and customs paperwork.
We also pull the most recent purchase orders. If the supplier raised prices six months ago, the trailing P&L is showing you margins the next owner will never see.
Find the expenses that left the P&L
Adjusted P&Ls remove expenses the seller says you won’t have. Some of those add-backs are fair. Plenty aren’t. Our test: we lay the bank statements beside the P&L and account for every recurring debit, one by one: software subscriptions, prep centre invoices, product liability insurance, storage fees including the Q4 surcharge, and advertising.
The ad spend trend gets special attention. If PPC as a share of sales has been climbing, the ranking may be getting propped up by spend, and that cost structure is the one you’re buying.
The biggest missing expense is usually the seller’s own time, added back at zero. Twenty hours a week of product sourcing and account management doesn’t disappear at closing. You’ll do it or you’ll pay someone to.
Check the Amazon account itself
The financials can be clean while the asset is rotting. Before closing we look at account health history, policy warnings, and intellectual property complaints, plus whether the brand is enrolled in Brand Registry and what happens to it at transfer. We also compare review velocity against the sales curve, since a mismatch suggests review problems ahead, and read 24 months of price and rank history on the main listings, because a trailing year juiced by discounting shows up there immediately.
One more structural point: an Amazon seller account generally can’t be handed to a new owner, which quietly shapes how the whole deal should be structured. That question matters enough that we wrote about it separately in asset sale versus share sale for FBA deals in Canada.
Frequently asked questions
How do I verify an Amazon business’s revenue before buying it?
The only reliable way is reconciling Amazon settlement reports to bank deposits over 24 months, which is the first thing we do on every engagement. Dashboards and P&Ls can be edited or framed; settlement data plus the bank trail is very hard to fake. We wrote more about why in how to verify an Amazon business’s real revenue.
What financial documents should I ask the seller for?
Settlement reports and date range reports for 24 months, sales and traffic reports by ASIN, FBA fee and storage reports, bank statements, supplier and freight and customs invoices for recent purchase cycles, the corporation’s recent tax returns and GST/HST returns with any CRA notices (essential if you’re buying shares), and the P&L the asking price was built on. None of this requires access to the seller’s account.
How long does due diligence take on an FBA deal?
Diligence windows on these deals commonly run three to eight weeks. The financial review itself takes about two weeks once documents arrive, so the real schedule risk is a slow seller, not a slow accountant.
What are the biggest red flags?
Revenue that can’t be traced to the bank, one product carrying most of the sales, a supplier price increase the P&L hasn’t caught up with, climbing ad spend, and a seller who resists providing settlement reports. Any one of these is a reason to slow down.
Related guides
- Amazon FBA due diligence (our buy-side review service)
- How to verify an Amazon business’s real revenue
- Buying an FBA business in Canada: asset sale or share sale?
- Accounting for Amazon sellers
- E-commerce bookkeeping
About to sign a letter of intent?
We do fixed-fee buy-side due diligence for FBA and e-commerce acquisitions, delivered inside your diligence window by a CPA firm that sells on Amazon. No commission on the deal, no reason to talk you into closing. Get in touch before the clock starts.
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