13 Item Website Due Diligence Checklist for Website Buyers
Many website buyers complete their due diligence and wonder if they have verified everything. This causes many buyers, especially inexperienced buyers, to freeze and pause to close the purchase on the website. Indecision can kill great investment opportunities. There is a time for due diligence and there is a time to close a deal.
Every website is different, but they all have similar items that the buyer must verify during the due diligence process. The list below is not an exhaustive list because a website may have additional items that need verification. But at a minimum, it is mandatory for the buyer to verify these items below.
I’ve outlined a 13-item checklist that every novice website buyer or seasoned website buyer should check before purchasing a website. The included research tools tell the buyer where to look and verify these items.
1. Whois
Check the publicly available property information on the domain name. It is important to start by establishing that the seller legally owns the domain name and the website that they are selling.
This may seem like a no-brainer, but as a buyer, this is where your due diligence should begin. Don’t just assume that the seller is the legal owner of the website. Check it out. If the Whois data is private, have the seller send you emails from the specific domain name to prove that they are the owner.
You can use DomainTools.com for this research.
Whois will also provide you with additional details, such as when the website seller registered or acquired the domain name. This should match the seller’s claims regarding how long they have owned and operated the website business. You can also check the history of the website using Archive.org, which we will discuss below.
2. Archive.org
It is important to understand how long the website has been online and how it looked in the past. Enter the website URL into the Archive.org search engine to get your historical records.
Archive.org tracks and stores snapshots of web pages. This will tell you when the website was actually launched, which is often different from the domain name registration date. And you can see what the website was like in the past.
This will give you a good idea of the history and growth of the website. The information you obtain here must match any claims made by the website seller regarding the website’s history.
3. Traffic
Check website traffic numbers by requesting read-only user access to website traffic account. The seller will add your email address to your traffic account, such as Google Analytics. You can view the data, but you will not have the administrator’s ability to edit any settings.
This way, you can log in, click, and examine the data to verify that it matches the traffic claims made by the seller.
4. Finance
As with Traffic, you should verify the finances of the website. The verification method will depend on how the website earns and receives your money, as well as how comfortable the seller is in giving you direct access to your financial data.
If the website makes money from Google AdSense, as with Analytics, the marketer can give you limited user access to the data. You can log in and verify it. If the website receives payments from PayPal, 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 finances. In some cases, a seller may send you records directly from your financial institution.
Some sellers prefer to use video conferencing or shared computer screens (via Skype or GoToMeeting) to log into their accounts and show buyers all the data the buyer wants to see. In this way, the seller does not give the buyer direct access to their financial accounts, but the buyer can still view and verify the data.
5. SpyOnWeb.com
It is also important to find out what other website assets are owned by a website marketer. A buyer should find out if the seller owns other similar websites that could compete with the website that is being sold to the buyer.
SpyOnWeb.com Research Tool provides data on other online assets owned by the same owner. A user simply has to enter the URL of the website they want to investigate.
Most of the time, sellers will own other websites. It is important for the buyer to find out if all of these websites share costs, such as website hosting. Or if all the income from the websites is combined and reported in the same financial account, such as having an AdSense account for multiple websites.
In this way, the buyer can clearly separate these income and costs from the website they are interested in and get a clear picture of their independent finances.
6. backlinks
The backlinks tell the buyer how popular the website is online. The higher the number of backlinks, the higher the website’s ranking in search engines and, in general, the higher the traffic.
Unfortunately, there are numerous backlink checking tools and they all provide different results. Therefore, it is better to use all of them to understand the entire portfolio of backlinks pointing to the website.
A buyer can use Majestic SEO, Open Site Explorer (Moz), Alexa, and Google Webmaster Tools to verify backlinks. The results of each resource will be very different. The buyer can click on the backlinks to find out which websites are linked to the website for sale. High authority website backlinks are very valuable.
7. UDRP
The last thing any website buyer wants is to acquire a website and its domain name and find out that the domain is involved in some awkward legal situation.
The reason buyers acquire assets from websites and not registered businesses (such as partnerships or corporations) is to avoid inheriting business responsibilities. Similarly, a website asset buyer doesn’t want to get into legal trouble that a domain name might be involved in.
A quick search of the UDRP will tell the buyer if there are any pending past or current legal issues related to the domain name.
8. Patents and trademarks
Selling a website may involve the purchase of registered patents or trademarks owned by the seller. If the buyer is going to acquire this intellectual property in the website package, he should check the status of these records.
Where these patents and trademarks are registered will determine where the buyer conducts their research. The largest public databases are the United States Patent and Trademark Office (United States), the Canadian Intellectual Property Office (Canada), and the Office for Internal Market Harmonization (European Union). Other countries have their own intellectual property databases.
A buyer should verify that the website seller is the legal registrant of the patents or trademarks by searching these databases.
9. Copyscape
When purchasing article-based websites, due to the high level of content theft online, it is always a good idea to conduct a Copyscape investigation.
This will establish if the website has unique content or if the content was plagiarized from another website.
10. Evaluation of domain names
If the website for sale was created with a premium domain name, it is important to establish how much the domain name is worth on its own. A domain name appraisal may be required.
Both buyer and seller can opt for an in-depth formal appraisal report provided by Sedo or Moniker. Or they could run a quick self-assessment using online services like Estibot and DomainIndex.com. Automated appraisals tend to be less accurate than formal appraisals, but can sometimes provide a reasonable price range for the domain name.
If the domain name had changed hands in a previous sale, knowing the previous sale price is ideal for conducting a domain appraisal. This price could be discovered from historical records available on NameBio, Estibot, Sedo, or DNJournal.
11. Google Penalty
Due to the enormous importance of Google search engine traffic to most websites, it is a good idea to verify that the Google search engine has not penalized or de-indexed the website.
There are numerous free online investigation tools that can verify this, including Pixel Groove’s Sandbox and Penalty Checker.
12. Registered users and subscribers
Most websites have a list of email subscribers or registered members. It is important to check these email marketing accounts to verify the number of members claimed by the seller.
Most email marketing services, such as MailChimp and Constant Contact, have features that allow an administrator to add users with limited access. A buyer can be added as a user to log in and verify the data. Or a seller can use video conferencing to show and test these numbers to the buyer.
13. Consult forums
Most website owners and users are registered members of forums related to the website’s niche. Visiting forums is a great way to understand what people “on the street” think about your website and its products or services.
A simple Google search of the website URL will usually show the forum pages where the website has been discussed in the past. The great thing about forums is that a buyer can also see the dates that the forum comments were posted. It tells the buyer what the world thinks about the website, good or bad, over time.
These are 13 items that every website buyer should check during due diligence and these are the tools to use to perform these due diligence tasks. Combine these with a little common sense and any buyer can, and will, quickly perform due diligence on any website.