Pet products DTC brand due diligence

Due diligence on a pet brand has one job once a letter of intent is signed: confirm that what was represented during negotiations is what actually closes with the deal. For most e-commerce categories that mostly means financial and operational verification. For a pet brand it means that plus a compliance review the rest of e-commerce due diligence does not usually have to run, because the consumable side of the business is not just a revenue line — it is a legally regulated activity that has to keep being legal after the sale closes. The findings below are the ones that most often change the terms of a pet brand deal, or end it. Work through them in roughly the order below, since the CFIA file and the co-packer relationship together decide whether the consumable revenue is even something a buyer should be pricing at all before the rest of the review begins.

Pull the CFIA file directly, not a summary

Request the complete, current import permit or licence file for every consumable product line, including any correspondence with the Canadian Food Inspection Agency about past inspections, holds or corrective actions — a clean current status on its own does not tell a buyer whether the file has a history worth asking about. Cross-reference what the file actually authorizes against what was represented during negotiations; a permit that covers one product but not a newer line the seller has since added is a common and easy-to-miss gap. Because these permits are generally tied to a specific importer, also confirm directly with the CFIA what its own reissue process requires once ownership changes, rather than relying on the seller’s understanding of a process the seller has likely never gone through themselves.

Get the co-packer’s confirmation in writing, not the seller’s word

A seller’s description of the manufacturing relationship is not diligence — a direct conversation with the co-packer, ideally documented, about whether it will continue supplying the business under new ownership and on what terms, is. This matters more here than in most acquisitions because the entire consumable revenue line depends on one contractual relationship that is not the buyer’s own, and a co-packer who has not been asked directly may simply assume the deal changes nothing, right up until it does. Where more than one co-packer is used, confirm the actual split of production between them — sellers describing a diversified supply chain sometimes mean two relationships where one does the overwhelming majority of the volume, which is a materially different risk than an even split.

Check the accessory line against product-safety requirements, not just the consumables

It is easy for diligence on a pet brand to focus entirely on the food and treat side, since that is where the regulatory language sounds most serious — but non-ingestible accessories and toys carry their own obligations under the Canada Consumer Product Safety Act, and a brand that has never assessed a toy or chew product against them is carrying an undisclosed risk that simply has not surfaced yet. Ask specifically whether any accessory or toy line has ever been the subject of a customer safety complaint, a return pattern outside the normal range, or informal contact from a marketplace about a listing, since any of those is an early signal of a problem the seller’s own numbers will not show. Where a chew toy or similar product uses novel materials, ask directly whether anyone has run it against the general product-safety framework at all — a brand that has simply never been asked the question is not the same as one that has been checked and cleared.

What each finding actually means for the deal

A handful of findings recur often enough in this sub-sector to be worth naming individually, because each means something different for how, or whether, the deal proceeds:

• Missing import documentation on a consumable line usually means the product cannot legally continue shipping until it is resolved — a stop-the-business problem, not a negotiating point
• A co-packer who will not confirm continuation in writing often means the buyer is inheriting a relationship that could end at any time after closing, regardless of what the purchase price assumed
• An undisclosed safety issue on an accessory line usually means there is a return spike, a recall risk or a liability exposure the seller either did not know about or chose not to raise
• Consumable inventory closer to its expiry date than represented usually means the real, sellable value of the inventory on the books is lower than the number in the seller’s financials

None of these findings automatically kills a deal — they change what the deal should look like. A missing permit can become a closing condition with an indemnity behind it; a shaky co-packer relationship can become a price adjustment or an earn-out tied to confirmed continuation; expiry-heavy inventory can simply come out of working capital. What matters is that each of these gets identified and priced before closing, not discovered afterward.