What should I diligence when buying a DTC or CPG brand?

Start with the quality of revenue by channel, then the assets that make the brand transferable: trademarks and their chain of title, domains and social handles, marketplace accounts, co-packer and supplier contracts and whether they can be assigned, retailer terms and deduction history, inventory age, customer data and subscription practices, and product claims. Most of what goes wrong after closing in a brand deal was visible in diligence.

Buying a consumer brand looks simple: a trademark, a website, some inventory and a following. The value sits in relationships and accounts that don't always transfer the way a buyer assumes.

Revenue by channel

Break revenue down by DTC, marketplace, wholesale and retail. Ask what share comes from one platform or one retailer, what the ad spend behind it looks like, and whether retail sell-through is real or loaded into the channel. Read the deduction history. Net revenue after chargebacks and allowances is the number that matters.

The brand itself

Confirm who owns the trademarks, where they are registered and that the chain of title is clean, including anything a founder or a designer filed personally. Do the same for domains, social handles and product photography. Trademark clearance and filings go to trademark counsel; I make sure the purchase agreement delivers what diligence found.

Accounts and contracts

Marketplace seller accounts are governed by the platform's terms and don't transfer automatically, so plan the account transition into the deal. Read the co-packer, supplier, 3PL and retailer agreements for assignment and change-of-control clauses. A brand that can't keep its manufacturer after closing isn't the brand you priced.

Inventory, customers and claims

Look at inventory age and expiration dates, because they feed the working capital adjustment. Review how customer data was collected and whether subscription programs comply with state automatic renewal laws. Check product claims, labels and any history of complaints or recalls.

Paper it in the agreement

Most brand deals are asset purchases. The reps, the disclosure schedules, the escrow and the transition services the seller provides after closing are where diligence findings become protection.

Fractional GC for emerging and growing brands

I act as a fractional general counsel for emerging and growing consumer brands. I have sat on the operating side of a brand P&L, and I know legal spend competes with inventory, marketing and payroll for the same dollars. So I offer flat-fee packages for defined work, like a post-closing legal audit, and a monthly retainer when the legal work is steady. You know the number before the work starts.

After closing, I often stay on as fractional GC to run the integration: contract assignments, the account transfer and the first retailer conversations under new ownership. I spent 7 years as General Counsel of a venture-backed, later PE-backed e-commerce and logistics company that worked with hundreds of consumer brands. Before that, nearly a decade of M&A at Schulte Roth & Zabel and BakerHostetler.

Talk to Ian

Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, that link is the next step.