Due diligence is the buyer's chance to confirm that the business is what the seller says it is. This checklist sets out the legal areas buyers of Shopify stores, Amazon FBA brands and DTC businesses should review, and what to look for in each.
Corporate and ownership
Confirm the legal entity, its registration and good standing, who the owners are, and whether anyone else (investors, co-founders, lenders) has rights over the business or its assets. In a share purchase, review the constitution or operating agreement for transfer restrictions.
Intellectual property
Check that trademarks are registered to the business in the markets it sells into, and that logos, product designs, photography, copy and software were created by employees or assigned by contractors in writing. Search for conflicting marks and any infringement claims received or made.
Platform and marketplace accounts
Review account ownership and health for Amazon, Shopify, Etsy, TikTok Shop and payment processors. Look at policy warnings, IP complaints, suspension history and whether each account can legally transfer to you. For Amazon, check Brand Registry control.
Material contracts
Identify supplier, manufacturer, 3PL, agency, affiliate, influencer and software contracts. Check exclusivity, minimum commitments, termination rights and change-of-control or anti-assignment clauses that could end the contract when the business is sold.
Tax and indirect tax
Indirect tax is the most common hidden liability in ecommerce. Review VAT registrations in the UK and EU, US sales tax nexus and marketplace facilitator coverage, customs and import duties, and corporate tax filings. Unpaid amounts can stay with the business in a share deal.
Data protection and marketing
Check how customer data and email lists were collected, whether consent and privacy notices meet UK GDPR, EU GDPR and US state requirements, and whether the list can lawfully be transferred to you. Review cookie consent and SMS marketing compliance.
Product compliance and consumer law
Confirm products meet safety, labelling and certification requirements in each market, and that returns, refunds and subscription practices comply with consumer law. Supplements, cosmetics, children's products and electronics need extra attention.
Disputes, claims and employees
Ask for details of any litigation, threatened claims, chargeback rates, product liability incidents and regulatory contact. If staff or contractors transfer, review their terms and any employment law obligations on transfer.
Turning findings into protection
Diligence is only useful if findings shape the deal. Minor issues may just need a warranty; significant ones may justify a price reduction, a specific indemnity, escrow, or a requirement that the seller fixes the problem before closing.
This guide is general information, not legal advice for your situation. Speak to us about your specific acquisition.