Website due diligence is a recently coined term to represent an investigation or a research done on a website which is up for sale. It is done when the buyer needs to verify the validity of the site and its commercial and practical viability. One of the most common scenarios for due diligence arises when a potential acquirer evaluates a company’s assets for acquisition.
When big or small businesses are being sold, there may be big scams making its rounds on the web related to ownership verification and sometimes with the fake stats. Hence website due diligence must be executed by the webmaster who is going to buy a website from a stranger.
Due diligence process would include checking the staff control system, the company’s records, customer reports, the financial records, etc since this information would throw light on the internal strengths or weaknesses of an organization and are necessary for a buyer to appraise its worth.
Before you invest in a website you need to know about some of the ways to perform due diligence checks. The checks may include ownership verification, history of the website, financial statistics of the website, among other key aspects.
Facts about website due diligence:
- Site due diligence is a normal business process which is common in most of the business mergers and acquisitions.
- The process or investigation should not be seen as an intrusion on the business and does not necessarily represent a lack of trust on the buyer’s part.
- Any mistakes or omissions discovered during due diligence may lead to the lack of trust from the buyer side. Hence it is very important that the information shared between the buyer and the seller is truthful and easily verifiable.
- Website due diligence is probably the last part before closing or freezing the sale, hence having a record or book organized and maintaining it for future references would help you a lot in reviewing the company’s info.
There are various tools available online to find out the owner of a domain. If you are unable to point out the owner’s information, it may a sign of something fishy.
History of the website:
The result of this check would give you info on how the domain was used earlier, what guarantee does the seller provide on maintenance, is the seller giving all the necessary stats regarding the traffic, sources of traffic, was the website running successfully in the past, earning made by the website, sources of earnings made, etc.
As more site flippers get into the business of selling websites, you need to dig and poke into everything during website transfer-from earnings to traffic pattern of the website.