Many website buyers complete their due diligence and wonder if they have checked everything. This causes many buyers, especially inexperienced buyers, to freeze up, and hold off on moving forward to close the website purchase. Indecision can kill great investment opportunities. There’s a time for due diligence and there’s a time to close a deal.
Every website is different but they all have similar items that a buyer must verify during the due diligence process. The list below is not an exhaustive list because a website may have director due diligence additional items that need verifying. But, at the very minimum, it is mandatory that a buyer verify these items below.
I have outlined a checklist of 13 items that every novice website buyer or experienced website buyer must verify before acquiring a website. The research tools included tell the buyer where to go to research and verify these items.
Check the ownership information publicly available on the domain name. It’s important to start by establishing that the seller legally owns the domain name and website that he’s selling.
This may sound obvious but, as a buyer, this is where you must begin your due diligence. Don’t just assume that the seller is the legal owner of the website. Verify it. If the Whois data is private, then have the seller send you emails from the specific domain name to prove that he owns it.
You can use DomainTools.com for this research.
Whois will also provide you with extra details such as when the domain name was registered or acquired by the website seller. This should match the seller’s claims regarding how long he has owned and operated the website business. You can also verify the website’s history using Archive.org which we’ll discuss below.
It’s important to understand how long the website has been online and what it looked like in the past. Enter the website URL in Archive.org’s search engine to pull up its historical records.
Archive.org crawls and stores snapshots of web pages. This will tell you when the website was actually launched, which is often different from the registration date of the domain name. And you will be able to see what the website looked like in the past.
This will give you a good sense of the history and growth of the website. The information you glean here should match any claims made by the website seller regarding the history of the website.
Check traffic numbers for the website by requesting read-only user access to the website’s traffic account. The seller will add your email address to its traffic account such as Google Analytics. You may view data but you will not have the Administrator’s ability to edit any settings.
In this way, you can log in, click around, and dig through the data to verify that it matches the traffic claims made by the seller.
Just as with Traffic, you must verify the financials of the website. The method of verification will depend on how the website earns and receives its money as well as how comfortable the seller is in giving you direct access to his financial data.
If the website makes money by Google AdSense, as with Analytics, the seller can give you limited user access to the data. You can log in and verify it. If the website receives PayPal payments, a similar user access method can be used. Most online payment systems have comparable user access features that a buyer can use to verify financial data.
In other cases, you may need to verify credit card statements, bank accounts, tax statements, or audited financials. In some cases, a seller can send you records directly from his financial institution.
Some sellers prefer to use video conferencing or shared computer screens (via Skype or GoToMeeting) to log in to their accounts themselves and show buyers all the data that the buyer wishes to see. In this way, the seller doesn’t give the buyer direct access to his financial accounts but the buyer can still see and verify the data.
It’s also important to find out what other website assets are owned by a website seller. A buyer should find out if the seller owns other similar websites that could compete with the website being sold to the buyer.
SpyOnWeb.com’s research tool provides data on other online assets that belong to the same owner. A user simply has to enter the URL of the website he wants to research.