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Red Flag Report

For sellers

Seller information request.

A buyer has asked us to prepare a Red Flag Report on your business. This is what we would like from you. It is deliberately short: we are not asking for a full data room.

48 hours means two business days, counted from when we receive the seller’s response to our information request and the material provided with it. We can work from partial disclosure: anything the seller doesn’t provide is recorded in the report rather than holding it up.

A

Corporate structure and ownership

General disclosure

  • Certificate of incorporation or company registration details

    Confirms the identity and existence of the selling entity.

    Standard

  • Latest list of directors and shareholders, with ownership percentages

    Identifies who owns and controls the business.

    Standard

  • Trading names and business locations

    Identifies the relevant operating identities and locations.

    Standard

  • Key personnel, including the owner's role and anyone essential to operations

    Assesses key-person dependency and continuity risk.

    Standard

Questions

  1. Does the seller own the material business assets being offered for sale?
  2. Are any material assets owned personally by the seller, a related entity or another third party?
  3. Are there any options, rights, disputes or other arrangements affecting ownership or control of the business or its material assets?

Confidential review: to FlipAudit only

  • Supporting records for any sensitive ownership or control matters raised above

    Optional

B

Financial performance and valuation

General disclosure

  • Revenue and net profit or EBITDA for the last 12 months

    Establishes historical performance.

    Standard

  • Current financial year-to-date revenue and net profit or EBITDA

    Shows the current trading position.

    Standard

  • Monthly revenue for the last 12 months, if available

    Shows trends, seasonality and any deterioration.

    Standard

  • Monthly net profit or EBITDA for the last 12 months, if available

    Assesses how consistent earnings are.

    Standard

  • High-level breakdown of the main products, services or revenue streams

    Shows revenue composition and dependencies.

    Standard

  • Owner remuneration and material non-recurring expenses included in reported costs

    Assesses potential earnings adjustments and add-backs.

    Standard

  • Material changes in revenue, profitability or costs since the latest financial statements

    Identifies recent adverse changes.

    Standard

  • Material loans, finance arrangements, unpaid tax liabilities and other significant commitments

    Identifies financial exposures.

    Standard

  • Revenue from repeat customers, subscriptions or ongoing contracts, compared with one-off sales

    Optional

  • Largest customer and five largest customers as a percentage of revenue

    Optional

  • Material customers lost, or significantly reducing purchases, in the last 12 months

    Optional

  • Monthly order, transaction or customer volumes

    Optional

Existing accounts, tax summaries, management reports and accounting-system exports are all fine. We don’t ordinarily need bank statements, general ledger records or a full reconciliation of the accounts.

C

Digital and customer performance

Only where digital traffic, online sales or paid acquisition is material to the business.

General disclosure

  • GA4 traffic overview: users, channels and conversions for the last 3–6 months

    Assesses traffic sources and performance trends.

    Where relevant

  • Google Search Console performance screenshots for the last 3–6 months

    Assesses organic search visibility and trends.

    Where relevant

  • Monthly advertising spend and the main advertising channels

    Assesses paid acquisition costs and reliance on advertising.

    Where relevant

  • Monthly sales, order or customer volumes for the last six months

    Compares traffic and marketing activity with actual sales.

    Where relevant

  • Main customer acquisition channels and dependencies

    Identifies reliance on particular channels or platforms.

    Where relevant

D

Legal, contracts and regulatory matters

General disclosure

  • Summary list of material revenue-generating customer, supplier, affiliate and other commercial contracts

    Standard

  • Summary of material software, hosting, platform and service arrangements

    Standard

  • Any material disputes, claims, threatened proceedings or regulatory issues

    Standard

  • Licences, registrations or regulatory approvals needed to operate the business

    Standard

Confidential review: to FlipAudit only

  • Copies of up to three material revenue-generating contracts with third parties, chosen by importance to the business

    Optional

  • Copies of material supplier, platform or software agreements where transferability or continuity matters

    Optional

  • Relevant notices, claims, demands or regulatory correspondence

    Where relevant

  • Existing privacy policies, website terms and other compliance documents

    Optional

Our compliance review is a limited red-flag screen of obvious issues: privacy and data handling, consumer protection and website terms, GDPR, CCPA or other overseas exposure, licensing, contractor classification and industry-specific risks. It is not a compliance audit, a privacy audit or a certification that the business complies with the law.

E

Intellectual property and digital assets

General disclosure

  • List of material domains, trademarks, software, content and other IP the business uses or relies on

    Standard

  • Any material IP owned by the seller personally, a related entity or a third party

    Standard

  • Any material IP disputes or infringement allegations

    Standard

  • Any material content or software created by external contractors or developers

    Standard

Confidential review: to FlipAudit only

  • Domain registrar screenshots or other evidence of domain ownership and control

    Optional

  • Existing evidence of assignment or ownership of material software, content or other IP, where readily available

    Optional

  • Correspondence about any IP dispute

    Where relevant

We don’t need every contractor agreement or historical IP assignment at this stage. The review identifies ownership gaps and recommends further investigation where needed.

F

Technology and operations

General disclosure

  • Summary of the technology stack and key software systems

    Shows the technical foundations of the business.

    Standard

  • Key suppliers, fulfilment partners and third-party platforms

    Identifies dependencies.

    Standard

  • Critical platform accounts, such as Amazon, Shopify, eBay or app stores

    Assesses control and transferability.

    Standard

  • Hosting and infrastructure, such as AWS, GCP or other providers

    Identifies hosting dependencies and continuity risks.

    Standard

  • Known material outages, downtime or operational interruptions, if available

    Identifies obvious reliability issues.

    Standard

Confidential review: to FlipAudit only

  • Platform account health screenshots

    Where relevant

  • Evidence of account ownership and control

    Optional

  • Known account restrictions, warnings, suspensions or transfer limitations

    Where relevant

  • Existing technical or infrastructure reports that identify material operational issues

    Optional

This is a high-level review of the stack and its dependencies. It does not include source-code inspection, penetration testing, security testing or a technical audit.

G

Cross-border considerations

A few targeted questions. "Outside the buyer’s home jurisdiction" means outside the country the buyer is based in; we’ll confirm which that is.

Questions

  1. Are any entities that own, operate or control the business incorporated outside the buyer’s home jurisdiction?
  2. Are any material business assets, domains, trademarks or IP held outside it?
  3. Does the business engage overseas employees, contractors, developers or service providers?
  4. Does the business have material customers or operations in other jurisdictions?
  5. Does the business collect, store or process personal information overseas, or transfer it internationally?
  6. Does the business rely on overseas payment processors, banking arrangements or financial accounts?

Where an answer raises a material issue, we may ask for supporting material through the confidential section of the data room.

Questions about a request?

If something doesn’t apply to your business, or you’re unsure what to share, ask us. A short answer is better than no answer.

Contact us