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7 Most Common Website Due Diligence Mistakes

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Bryan O'Neil from Centurica explains the 7 most common mistakes made when conducting due diligence on websites and online businesses being bought.

Published in: Business, Technology
  • hello, I love the points that u have mentioned, through simple words .Buying and selling of websites can be very tedious and confusing if you don’t have much experience .I remember the first time I wanted to sell my website.I was a complete mess and eventually it did take me a long time to understand the working of the internet market world dimensions . Here in this comment I have given some guidance, as what I have learnt while working in this industry. First and foremost , understand the fact that when you intend to buy a website you should earn a profit buying the asset and not on eventually selling it . The owner doesn’t update his website regularly, he doesn’t care about the business or he isn’t able to generate much revenue out of it Build your own ad campaign .While doing so make sure you are targeting the right section of audience be it men, women, youngsters, business men, which ever kind of segregation or categorization suits you. There are a number of market place sites which offer you great deals .Sites such as trademysite can be a great platform to sell the website when the need arises. Thanks Trademysite
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  • Great Presentation and thanks for the mention!
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7 Most Common Website Due Diligence Mistakes

  1. 1. 7 Most Common Website Due Diligence Mistakes Bryan O’Neil Website Acquisitions Consultant
  2. 2. Agenda  Mistake #1 - Not understanding the differences between traditional and online due diligence  Mistake #2 - Not knowing what to look out for  Mistake #3 - Not paying attention to external factors  Mistake #4 - Taking information at face value  Mistake #5 - Ignoring minor red flags and not looking at the big picture  Mistake #6 - Overlooking seller's other business ventures  Mistake #7 - Failing to Ensure Revenue Streams are Transferable
  3. 3. Mistake #1 - Not understanding the differences between traditional and online due diligence  Main focus needs to be on traffic, rather than the internal workings of the business.  In the online world, traffic sources are often unstable and unsustainable  Especially true in cases where the website relies on organic traffic  Lack of audited books - 9 times out of 10  In many cases, online businesses are sold as assets, rather than companies  Often the seller is a private individual  Maintenance burden: online businesses are often owner operated  Sellers tend not to account with their time spent running the business
  4. 4. Mistake #2 - Not knowing what to look out for  Having expert knowledge is crucial  Educational Resources and Tools:  FlipFilter – http://flipfilter.com/  Flippa.com Blog – http://flippa.com/blog/  My own publications – http://bryanoneil.com/
  5. 5. Mistake #3 - Not paying attention to external factors  Link Profile Analysis  For websites that rely on search engine traffic, the quality of its link profile determines the sustainability of this traffic.  Website present in Spam Black Lists  Often not obvious but can pose a major threat to the website in the future, especially for sites that utilise e-mail lists for selling their products/services.  Unsustainable sources providing traffic / clients  Majority of the website’s traffic is referred by a single site  Website depends on “free” traffic that can stop any day
  6. 6. Mistake #4 - Taking information at face value  The industry is extremely prone to fraud  Especially true in cases where the transaction value is small (<$20k) and the parties never meet in person.  Deals are often international, making contracts extremely difficult to enforce.  Some sellers misrepresent unintentionally  Sellers are often missing important details, especially when the business is owner- ran and was started as a hobby.  Important to verify information live  Revenue proof screenshots can easily be tampered with.  Everything should be verified through live screen sharing or in person.
  7. 7. Mistake #5 - Ignoring minor red flags and not looking at the big picture  Each property has at least some red flags  There are seldom websites that pass all DD checks  Most red flags are insignificant in nature and easy to counter  Often there are a number of red flags that alone aren't significant, but as a collection pose a great risk  Important to look at the DD results as a whole  Categorise shortcomings into those that can be fixed/countered within 1 month from the acquisition and those that can’t
  8. 8. Mistake #6 - Overlooking seller's other business ventures  It is extremely common online for one person/company to have many competing websites  When working with organic traffic, having more than one website offering the same product/service is often beneficial  These different websites often share elements of their infrastructure and benefit from volume discounts  In many cases, only one website of the bundle is sold  Identifying these websites can take some time and effort  It is often not obvious which other sites the seller owns  Non-compete contracts not easily enforceable, especially in cases of international transactions
  9. 9. Mistake #7 - Failing to Ensure Revenue Streams are Transferable  Most common situation: PayPal Subscriptions  Subscriptions are not transferrable  Asking customers to re-subscribe typically results in losing 35%+ subscribers  Many advertiser contracts are not transferrable from one individual to another  New contract is an option, but may involve downtime  Approval processes differ from advertiser to advertiser. Buyer needs to make sure they are eligible for working with the advertisers beforehand.  Transferring accounts partially often results in the loss of special arrangements and/or volume discounts
  10. 10. Thank you! Liked it? Share it! More information: Bryan O’Neil Website Acquistions Consultant E-mail: bryan@bryanoneil.com Web: http://BryanONeil.com/

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