What is the Empire Flippers Vetting Process Like?
You’ve decided to sell your business with Empire Flippers. Curious about the next steps?
When an entrepreneur submits their business for sale, it undergoes our proprietary vetting process. We evaluate the company, look at its history, and make sure everything is above board before we list it on our marketplace and assign it a value.
Our vetting advisors have years of experience valuing businesses. This means that you, as a seller, will get the most accurate and fair valuation of your business. It also means that our buyers can trust they’re paying a fair price. Still have questions? Keep reading to learn exactly what we do.
What is Vetting?
Vetting is the investigative process every business undergoes before being listed on our marketplace. We evaluate the following criteria to get a full picture of the business:
- Traffic sources
- Customer base demographics
- The legitimacy of both the seller and the business
Once this process is complete, we’ll decide whether a business is a candidate to be listed on our marketplace and whether the site is a good fit for our buyer pool. Then, we’ll determine its value.
Our vetting approach is incredibly thorough. We dig deep into the business and gather information directly from you to obtain more data and answer any questions.
Some sellers are surprised by the number of questions our vetting advisors ask. Keep in mind that because this is on average a 2-4 week process, it’s necessary that we thoroughly understand your business to get the most accurate valuation possible.
Having a clear picture and all the details about your business also helps our marketing and sales team answer questions from potential buyers without having to follow up with you constantly while your business is listed. This streamlines the process: buyers can act quickly, and deals get closed faster.
Because we operate a curated marketplace, the vetting process is valuable to both buyers and sellers by ensuring that only top-quality businesses make the cut. In a curated marketplace, the broker (that’s us) actively vets each business. This saves buyers from having to sift through poor-quality listings. It also ensures that both the buyer and the seller get a fair rate based on objective business metrics.
In contrast, an open marketplace allows any owner to list their business and set a price, placing the onus on the buyer to determine if it’s worth the price listed. There’s no vetting process or third-party valuation involved.
What Happens Now?
There are two ways to get started with Empire Flippers:
Set up a call with a business analyst who will perform an initial assessment of your business to see if it meets our requirements. If so, you’ll be invited to submit your company for review.
Go directly to empireflippers.com/submit. It takes less than 5 minutes to complete the required fields. At this stage, you’ll provide some initial information about your business. Once you submit your site, your information goes directly to the Empire Flippers vetting supervisor to begin the vetting process.
Once we’ve begun vetting your business for eligibility and valuation, you can expect updates every one to two days with additional information and instructions. Our vetting advisors will also be available to field your questions.
How Long Will This Take?
After you submit your business for review, you’ll receive an email within 24 hours with an initial set of instructions to begin the vetting process. In some cases, the email will request a quick follow-up call to gather more information or clarify some details.
If your business is not approved for vetting, you’ll receive an email notifying you that it doesn’t meet the minimum requirements. However, this email will contain information on what to do to meet the requirements and potentially resubmit in the future.
The length of the vetting process varies depending on the complexity of your business and its monetization model. Small affiliate sites can be submitted and listed within about a week, but product-based e-commerce businesses can take up to four weeks. In general, we ask that our business owners plan for the vetting process to last between three and four weeks.
How Can You Speed up the Process?
Think of the vetting process as a collaboration. We work together to understand your business almost as much as you do! We are incredibly thorough, and the extra days we take now can make a significant difference, both in your valuation and in how quickly your business sells once we list it.
There are some things you can do to help accelerate the process, though. Make sure you have accurate revenue and expense data, especially for product-based businesses. We require this information for up to three years or the life of the business, whichever is longer. The more data you have up front and the easier it is for us to access, the more quickly we can proceed.
Another tip is to be responsive to our team. This helps keep the momentum going and speeds up the overall process.
Why is Vetting Important?
Vetting ensures that sellers get the most value for their business and lets buyers trust that their acquisitions are priced fairly and accurately.
Buyers are more likely to act quickly when they know that a business has been vetted properly through a process they can trust. They also feel secure in knowing they’re paying a realistic price. Our advanced vetting process gives sellers the best chance of selling their businesses faster and at a potentially higher price point than they could through a marketplace without such thorough vetting.
At Empire Flippers, we continually evolve our vetting procedures to ensure that our valuations give potential buyers the most realistic picture. To be more transparent, we recently included an add-back feature in our profit and loss statements (P&Ls). In the past, non-operating expenses were omitted from the profit and loss statements. These expenses included an owner’s salary, travel, meals and entertainment, home office expenses, conferences, and anything that lowers the tax burden but isn’t necessarily material to day-to-day operations.
The add-back section lists these types of expenses, such as when a seller takes a salary or hires a writer or photographer for a one-off piece of content. This allows the buyer to see the actual expenses associated with the business and to make judgment calls about necessary expenses. Traditionally, costs such as content, link building, and photography were one-time expenses that weren’t part of the core expense. Now, buyers can see these line items as an “add-back.”
The Difference Between Due Diligence and Vetting
The terms due diligence and vetting are often used interchangeably, but they are actually two different processes. Vetting is a systematic and objective investigation of a business. It analyzes the cash flow, ensuring that the revenue is real and accurate, and it evaluates the business’s traffic data. During vetting, our team examines where the customers are located and ensures that they are all real people who have done business with the company.
In addition to dissecting the business, we evaluate the seller. Both the business and the individual seller must pass the vetting process.
Vetting is all about accurate data and providing an objective business valuation based on measurable inputs. The best comparison is Carfax, a service that uses vehicle history and features to determine a price.
Due diligence, on the other hand, is a buyer-driven process through which the buyer assesses a company to see if it’s a good fit personally, usually from a risk standpoint. They may look deeper into certain elements, such as content and backlinking. Due diligence also involves performing a competitor analysis, evaluating the risk of new competition, and studying the consumer market. Part of this process consists of reviewing a SWOT analysis, where the buyer evaluates the strengths, weaknesses, opportunities, and threats that the business currently faces and may encounter in the future.
What is Required and Common Mistakes to Avoid
To be listed on our marketplace, businesses must meet some basic requirements. These thresholds vary based on the type of business.
The first items we look at are the profit and earnings history. We require the following:
- For dropshipping, e-commerce, subscription, and software, we need to see a 12-month earning history, and the site must show at least $1,000 profit in each of those months.
- For content, affiliate, and advertising, we require a six-month earning history, and the site must show at least $500 in each of those months.
In addition to revenue and profit data, we require at least three months of data from either Google Analytics or Clicky.
Some business models are automatically precluded from eligibility in our marketplace. These include:
- Blackhat or illegal/gray niches such as drugs, gambling, porn, etc.
- Foreign language businesses unless Fulfillment by Amazon (FBA). For all others, at least 50% of the revenue must come from English-speaking countries.
During the vetting process and while the business is listed on our marketplace, we require access to dashboards that allow us to pull revenue reports. These could be Amazon Seller Central, Amazon Associates, Shopify, BigCommerce, etc. If you can’t add a second user to your accounts, we will require revenue screenshots from the different dashboards.
Once your product is on our marketplace, you might be tempted to take your foot off the gas and coast until a buyer comes along. However, we strongly encourage you to keep the key drivers of your business going while it’s listed. One of the reasons is that we perform price updates each month. If your business declines substantially, you risk having it delisted. Keep your ads running, make sure your products are in stock, and maintain the status quo of your business as much as you can.
Because we are so diligent in our vetting process, this all might seem like a lot of work, but the potential paycheck at the end is well worth it. Remember, our goal is to get you the maximum value for your business. The more accurate we are, the faster your site will sell. By ensuring accurate valuations, we attract serious buyers who know that Empire Flippers works with only the best.
Ready to sell your business? Click here to start the process.