Digital products business due diligence

Once a digital products deal is under letter of intent, diligence is almost entirely a paper-trail exercise: proving the catalogue is owned free and clear, confirming the platform will genuinely transfer, and checking that the numbers the seller has been quoting hold up against the platform’s own records rather than the seller’s own summary of them.

The ownership chain is the core of this diligence

For every product in the catalogue, trace who actually built it. Where a contractor or co-creator was involved at any point, the signed work-for-hire or IP-assignment agreement is the single document that matters most, and its absence is not a minor administrative gap — it is a live claim someone else could assert against the buyer after closing, on a product the buyer has already paid for.

Registry checks worth running — and their limits

Copyright exists automatically in Canada the moment original work is created, so there is no registry search that proves ownership the way a land title search proves who owns a property; ownership has to be established through the contracts and assignments themselves. Where the brand or product name is also a registered trademark, a Canadian Intellectual Property Office trademark search is worth running to confirm the mark is actually registered to the selling entity, currently active, and not sitting lapsed or held in a founder’s personal name. Where any part of the catalogue was itself licensed in from a stock library, font foundry or third-party asset provider, confirm that licence actually permits resale of derivative products to end customers, since that is a distinct question from who wrote the code or built the template.

Testing the platform and the numbers, not just trusting them

Request direct access to the seller’s actual marketplace or platform dashboard rather than relying on exported reports or screenshots, and reconcile the payout statements against real bank deposits over a meaningful stretch of time. Get written confirmation from the platform itself, not just the seller’s assurance, on whether the account, its listings and its review history can actually transfer to a new owner — this is exactly the kind of claim that is easy for a seller to get wrong in good faith and expensive for a buyer to discover is untrue after closing.

Confirm the licensing mechanism actually behaves as claimed

Do not rely on the seller’s description of how licence keys, download limits or access controls work — buy the product through the live storefront and watch how the mechanism actually behaves, and ask the seller directly for any record of past unauthorized-resale incidents and how they were handled. A licensing system that looks robust on paper but is trivially bypassed in practice is exactly the kind of gap that only surfaces through direct testing, not through a document request.

CASL and privacy records deserve their own diligence line

Pull a sample of the consent records behind the purchaser and licence-key email list and confirm they actually support the delivery, licence and renewal emails being sent under Canada’s anti-spam law, rather than assuming a list built over several years is automatically compliant. Separately, ask how purchaser data has been stored and secured, since a buyer effectively inherits the privacy exposure attached to a customer database the moment the deal closes, regardless of who collected the data originally.

Confirm you are buying exclusive rights, not just a licence to use them

Read the purchase agreement’s assignment language closely rather than assuming a sale automatically transfers full, exclusive ownership. A poorly drafted deal can leave the seller technically free to keep selling the same templates, code or content elsewhere, or to license them to a third party, which is a very different thing from acquiring sole ownership outright — and it is far cheaper to fix that language before signing than to discover after closing that you bought a licence rather than the asset itself.

The findings that actually kill this kind of deal

An unresolved contractor ownership claim with no signed assignment and no contractor who can be located to fix it is the most serious finding in this category, because it clouds title to the actual asset being bought. A platform that turns out not to support account or listing transfer at all is close behind it, since it can mean rebuilding the store from zero rather than acquiring a going concern. Unauthorized resale or piracy that has already materially eaten into the addressable market for the product belongs in the same tier — it undermines the very revenue the deal is priced on.

What a finding actually means once it surfaces

Not every finding carries the same weight, and the response should differ accordingly. A contractor who is reachable and willing to sign a retroactive assignment turns a serious-looking gap into a solvable one within days. A platform that genuinely will not transfer the account, or piracy that has already become systemic across the product line, is a structural problem no amount of paperwork fixes after the fact, and it belongs in the price or the decision to proceed, not in a checklist to tidy up later.