A promising digital business does not become a good acquisition simply because its headline numbers look attractive. Before building a valuation model, build a short evidence map: what is known, what is claimed, and what would change the decision.

This practical framework is for an initial review, not a substitute for financial, legal, tax or technical due diligence. The example below is hypothetical and does not describe an Acquiry client or a business for sale.

1. Define the business you are actually assessing

Write one plain-language sentence describing who pays, what they receive and how the business delivers it. Then list the assets that make delivery possible: domain, code, content, customer relationships, supplier arrangements and operating know-how.

Do not assume these assets all belong to the same entity or will transfer together. Turn uncertainty into a question for the appropriate adviser rather than a confident statement in the model.

2. Give each claim an evidence label

Use four labels in your working notes:

• Claimed: stated in a presentation or conversation, without supporting records yet.
• Observed: visible in a source you inspected, with its date and scope recorded.
• Reconciled: compared with another relevant source and any differences explained.
• Unresolved: missing, inconsistent or not yet understood.

A dashboard screenshot may support an observation about that dashboard. It does not, by itself, establish cash collected, profitability or ownership. Avoid upgrading evidence merely because the same number appears in several slides.

3. Reconcile the revenue story

Ask how revenue is earned and recognised, which period the figures cover, and whether refunds, discounts, taxes and currency conversion are treated consistently. Compare like with like before concluding that two reports agree or disagree.

For recurring revenue, separate contracted, invoiced and collected amounts. For a marketplace or agency, distinguish gross transaction value from the amount the business retains. A good first-pass note makes the definition explicit and leaves accounting conclusions to qualified review.

4. Find the dependencies that could change after a sale

Identify what the business relies on: a major customer, an advertising channel, a founder’s personal reputation, a key contractor or a platform account. Ask what evidence would show that each dependency can continue under new ownership.

This is not a reason to reject every concentrated business. It is a way to identify which assumptions require testing, transition planning or specialist advice before an offer becomes more committed.

5. Test one downside case without pretending it is a forecast

Suppose a hypothetical business earns 40% of revenue from one customer. If that customer’s spending fell by one quarter, total revenue would fall by 10%, before any offsetting changes: 40% × 25% = 10%.

That is a sensitivity calculation, not a prediction. It says nothing by itself about the probability, timing, cash impact or value of the business. Costs may not fall with revenue. Record the assumption and ask what contractual and operating evidence could make the scenario more or less relevant.

6. End with a decision and a short request list

Choose a provisional next step: investigate, pause pending evidence, or decline because the opportunity does not fit your criteria. Record the reason. A first screen should reduce uncertainty, not create a false impression that full diligence has already happened.

Keep the next request list specific: the record needed, the question it answers, who should review it and what decision it could affect. Use secure, authorised channels for confidential material. Never put customer data, passwords or sensitive deal details into public worksheets.

A simple working-note format

Question: What must be true for this acquisition to fit? Evidence: What source supports it, from which period? Gap: What remains unverified? Next step: Which record or adviser can resolve it? Decision impact: What would change if the assumption failed?

The aim is not to make every answer look positive. It is to make the next decision better informed.

About: Acquiry is a Melbourne-based M&A advisory firm founded by Joash Boyton, focused on digital business acquisitions. Explore Acquiry.

Prepared with AI assistance for Acquiry. General educational information only, not personal financial, investment, legal or tax advice. Examples are hypothetical; no transaction outcome is promised.