Asset Profile: The High-Margin Affiliate Blog

Key Metric	Listing Information (Seller Claim)
Niche	Personal Care Products (High-Ticket)
Monetization	Affiliate Program (90% of Revenue)
Asking Price	$140,000
Claimed Monthly SDE	$3,500
Implied Multiple	40x (3.3x Annual)

🔍 Discovery Phase: Financial Discrepancy

The seller provided affiliate dashboard screenshots showing an average income of $3,800 USD/month over the last 12 months. However, our client (the Buyer), using the DD Request Templates from our kit, demanded read-only access to:

1. Google Analytics (GA): 24 months of traffic history.
2. Affiliate Dashboard: Raw payout transaction data.
3. Bank Statements and P&L: 12-month history.

The Challenge: The seller’s P&L sheet showed minimal operating expenses (hosting, plugins) of only $150/month. Upon reviewing the financials, a critical discrepancy was found in the Quality of Earnings (QoE) analysis.

🛑 The Critical Red Flag: Hidden Operating Expenses (OpEx)

The QoE audit, the central focus of our Kit, revealed the key financial misrepresentation in the Operating Expenses (OpEx):

• Hidden Content Expense: The seller had hired a freelancer to write 8 articles per month at a total cost of $1,000 USD per month.
• Seller’s Rationale: The seller claimed this expense was «non-recurring» because they paid it personally outside the business account, but admitted that the site’s organic growth was directly dependent on this continuous monthly content production.
• P&L Impact: This $1,000 USD/month expenditure was essential to maintaining the asset and therefore had to be classified as a recurring OpEx for the new owner.

📉 Impact on Valuation (Net Profit Adjustment)

The asset’s true Seller’s Discretionary Earnings (SDE) had to be adjusted significantly:

Concept	Seller’s Claim	Due Diligence Adjustment	Actual SDE (Adjusted)
Average Gross Revenue	$3,800	$0	$3,800
Recurring OpEx (Reported)	-$150	$0	-$150
Recurring OpEx (Hidden)	$0	-$1,000	-$1,000
Monthly SDE	$3,650	N/A	$2,650

• Initial Valuation (40x): $\$3,500 \times 40 = \mathbf{\$140,000}$
• Adjusted Valuation (40x): $\$2,650 \times 40 = \mathbf{\$106,000}$

🔑 Result: Negotiating Leverage and Capital Protection

Armed with the irrefutable data from the QoE audit, the buyer had a rock-solid basis for renegotiation.

• Negotiation Outcome: The buyer demonstrated the asset’s fair value was $106,000. Following negotiation, the final purchase price was settled at $107,500 USD.
• Capital Protected: The buyer successfully avoided a $32,500 USD overpayment ($140,000 – $107,500).

This Case Study proves that Due Diligence is not a cost—it is self-amortizing capital protection realized before the acquisition is even finalized.

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Lessons Learned for the Investor:

• All Essential OpEx Counts: If an expense is required to maintain current traffic or revenue, it must be included in the SDE calculation, regardless of who currently pays for it.
• Go to the Raw Source: Never accept the seller’s P&L without verifying expenses against raw bank statements or invoices.
• DD is Leverage: The cost of performing Due Diligence will always be less than the financial risk of overpayment.

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