The term ‘Due Diligence’ is applied to a number of different kinds of business concepts involving either the investigation of the market performance of a business or a business person or the performance of a particular business act.
‘Due Diligence’ can be an authorized compulsion, but in general this term is more often used for deliberate investigations in order to serve various business purposes.
One of the most common instances of exercising ‘Due Diligence’ is the procedure which a particular buyer uses to evaluate and scrutinize a target business or company together with its assets before acquiring or buying it.
What is Website Due Diligence?
In the contemporary age the Internet has emerged as a labyrinth of business paradigms where hundreds and thousands of individuals from all across the globe are performing online businesses, buying and selling websites and carrying out business transactions via the Worldwide Web. Given the diverse situations and nature of the huge number of site transfer and site buying and selling that take place at the online market on a daily basis, website due diligence is an obvious process that has emerged.
Currently, Website Due Diligence is a service that precedes any web based purchase or investment. Irrespective of whether this is the first time that you are about to buy or sell a website or whether you are a veteran website buyer, it is highly necessary to be able to understand, evaluate and judge the factors involved in the transaction.
The following factors are needed to be appraised while carrying out Website Due Diligence:
- Whether there are any legal actions in process
- Analysis of Market Competition
- Various marketing strategies used by the site you are about to buy
- Various accounting issues
- Various legal issues
- Technological issues which include errors, coding
- Fiscal factors
- Monetary Projections
- Operating Data
- Political factors
- Checking the financial statements in a particular chronology
- Commercial factors
You need to ensure that all the above mentioned issues are properly cross checked in order to appraise the site accurately. Website Due Diligence is an important process that needs to be carried out before you buy a website or transfer a website under your brand. It is a complex process and a challenging job and may require professional expertise if you are a beginner at it. This is more so because once you enter the sphere of Internet investments, you are likely to come across a number of complex site transfer challenges.
Why is Website Due Diligence necessary?
There are various problems that you are likely to face once you enter the online business paradigm. This makes Website Due Diligence an indispensable part of your online investment ventures. Some of the extraordinary advantages of Website Due Diligence are the following:
- Website Due Diligence helps you trace all the fake factors that are particularly used in order to falsely inflate the value and statistics of a site.
- Website Due Diligence enables you to cross check with most of the quality search engines like Google, MSN and Yahoo to check if there are any penalties or bans on the site you are about to buy.
- Website Due Diligence is an integral part that you will have to consider if you have plans of assessing the value of the website’s rank with that of Yahoo and Google.
- Before you transfer website or buy a new site, you should always grab the web statistics of the site through Website Due Diligence and carry out proper analysis for flawless functioning.
- Before you go for site transfer, with the help of Website Due Diligence you can scan the online neighborhood of the particular site. This is required as you need to trace all the secret connections that the site may have with prohibited, adult and hazardous sites.
How to carry out Website Due Diligence?
According to experts, Website Due Diligence is nothing short of an art. Like in any other business, even in online businesses the buyer who is about to buy a target business needs to start off quite early. Before making the investment he or she needs to put in a lot of effort and gain thorough knowledge about the business so that there is no confusion or dubiousness remaining.
In order to start off with your Website Due Diligence process you need to follow certain steps. Here you have a precise list of the various steps that you need to follow in order to carry out a successful Website Due Diligence investigation:
- Verify the possession and rights
- Enquire about the history of the domain
- Confirm the statistics and the traffic to the site
- Confirm the traffic stability of the business
- Try to understand the business model and the way in which the revenue flows enter
- While going through the papers read through the lines to find out possible loopholes
- Recalculate the net profit of the business keeping in mind the other financials