SOP 09: Reconstruct the P&L From Source (never trust the spreadsheet)

SOP 09: Reconstruct the P&L From Source (never trust the spreadsheet)

Sellers build P&Ls to sell. Rebuild it yourself from primary records.

— Revenue: pull from affiliate/ad network dashboards directly, not the seller's summary. PASS = network totals match the claim within 5%.
— Refunds/clawbacks: subtract reversed commissions. Many sellers report gross.
— Add back owner labor honestly: if content costs $2k/mo and they did it free, that's a real cost to you.
— Hosting, tools, email, freelancers: confirm every recurring charge against actual invoices.
— Seasonality: use trailing 12-month average for the monthly figure, never the best month.

PASS = your rebuilt SDE (Seller's Discretionary Earnings) is within 10% of theirs. FAIL = the gap is your negotiation leverage.

Save this — run it every deal.