Strategic Due Diligence for Online Businesses: Insights from Angel Investor Katie Dunn

In the evolving landscape of online business acquisitions, due diligence remains a critical yet often challenging aspect for both buyers and sellers.

Katie Dunn, an angel investor and finance expert with 25 years of commercial real estate finance experience, shares valuable insights on approaching business acquisitions strategically and methodically.

Making It Easy to Sell Online Businesses
Flippa provides owners and investors with the tools and expertise to sell.

From Real Estate to Angel Investing

After spending over two decades underwriting commercial real estate deals, Katie transitioned to angel investing, focusing on supporting underrepresented founders in CPG (Consumer Packaged Goods) and tech.

With over 25 investments in her portfolio, her approach combines rigorous financial analysis with a passion for the industries she invests in.

The Foundation of Strategic Investment

Katie emphasizes several key principles for evaluating business opportunities:

1. Passion with Purpose

• Invest in industries you genuinely find interesting
• Combine emotional interest with objective analysis
• Ensure the business aligns with your long-term goals

2. Core Due Diligence Elements

• Analyze competitors and market differentiation
• Evaluate the business’s defensive moat
• Scrutinize financial metrics specific to the industry
• Assess growth potential and improvement opportunities

3. Emotional Balance

• Remove emotion from the decision-making process
• Create objective criteria checklists
• Use yes/no questions to qualify opportunities systematically

Leveraging Resources Wisely

For those considering business acquisitions, Katie recommends:

1. Financial Strategy

• Consider leverage carefully based on risk tolerance
• Develop multiple scenarios (best case, worst case, realistic)
• Ensure sufficient cash flow for debt service if using financing

2. Team Building

• Create a diverse board of advisors with complementary skills
• Consider fractional C-suite help for larger operations
• Utilize affordable virtual assistance for smaller operations

Preparing for Investment or Exit

For business owners looking to attract investment or prepare for exit, Dunn advises:

1. Documentation

• Maintain organized financial records from day one
• Create quarterly reports tracking progress and goals
• Document both successes and failures

2. Foundation Building

• Choose appropriate business structure
• Maintain clear financial records
• Create comprehensive data rooms
• Develop clear pitch materials

3. Progress Tracking

• Keep positive feedback and testimonials
• Document key decisions and their outcomes
• Maintain a business “diary” of progress

Connect with Katie

For entrepreneurs interested in learning more from Katie and her services, connect with her on LinkedIn:

Katie’s LinkedIn: https://www.linkedin.com/in/katie–dunn/

Making It Easy to Sell Online Businesses
Flippa provides owners and investors with the tools and expertise to sell.