Website negotiation and buying process

Website negotiation and buying process

Approbo Tech No Comments
  Sell My Business

We get questions about what the actual process is to purchase a website (and many sellers are confused since this dates back to the origins of mergers and acquisitions). It’s a business like any other; the typical process applies for purchasing. For this example, we are going to use a broker scenario where they are the middle-man to the transaction.

 

Summary of the process:

  1. Broker emails out the listing(s), or you find a business through networking and outreach.
  2. Get/Request the prospectus if there is one.
  3. Do basic due diligence on the site and make sure it passes your “rules.” This includes running through SEMRush if you have it, and any keyword research you can perform.
  4. Customize and send a Letter of Intent (LOI) with your purchase price, terms, and offer. Try to spell out the main details that will be a negotiation point for the business sale.
  5. Do some negotiations back and forth probably through email; it may be quicker to jump on a phone call with all parties. This can happen before sending the LOI as well.
  6. Seller signs the LOI and returns to you.
  7. Do the complete due diligence – mainly financials, look through tax returns, P&L’s, sales data, etc. to make sure it all adds up. In the LOI you specified how much time is allotted for this, and they are not allowed to pursue other sellers (they can have a backup list but not sell it out from under you). This is where you are really looking into who the seller is as well, are they responsive? Are they willing to help you make this business work? If they go dark during due diligence, you can still walk away. Do not get too invested in a business at this point.
  8. Submit the purchase agreement with funding and closing dates, make sure financing is in place to meet the closing date. The purchase agreement should nail down specifics regarding training, payment dates, anything you think is important to finalize the deal. Often there is a deposit paid at this point that is non-refundable. This means the buyer is able to perform, and the seller gets the deposit if not.
  9. Close, fund, and post-sale transition. There is where the work beings, getting the business under your control. The seller should have documentation to help with this.

Many inexperienced buyers or sellers might want to skip right to the purchase agreement, but the issue is you don’t have any recourse if the financials don’t work out. You can add that language to the agreement, but that adds unnecessary complexity.

Interested in selling your business? Contact us and we can talk.

 

Keyword research for a website

Approbo Tech No Comments
  Due Diligence

When purchasing a website, you want to have free traffic from search engines (organic traffic). To see what kind of traffic that is, we want to determine what keywords the site ranks for. There are buying keywords and just research keywords. Having a nice mix of both is great, but the money is when people are looking to make a purchase (end of the purchase lifecycle).

A long time ago, Google Analytics gave us the keywords people used to find a website. You could just share the analytics accounts and be golden. Now that has moved into the search console, which is more of a private area. So how do we find the keywords a site ranks for without getting access to their accounts?

Well, our reliable tool SEMrush.com can do it! They offer a free trial if you want to test it out. There are also a bunch of other similar services (the same services you use to check backlinks). Most of them are paid services as you can imagine this data is worth real money.

To start with, let’s see how many pages Google has indexed for our site. Type in “site:airbnb.com” to see what pages they list (replace airbnb.com with the domain you want to research). Our search came back with over 15 millions results, wow! Approbo.com, a much more manageable <20 pages. With millions of pages, we can expect them to rank for quite a few keywords.

Let’s log in to SEMrush and type in our domain name, and click “top organic keywords” down near the middle; it brings you to this screen:

keyword research with semrush

 

That is a lot of information, but we can see it is sorted by keyword volume which is nice but doesn’t tell us how we rank for keywords. So first step is to sort by the position, click “Pos.” One interesting thing to note, Airbnb is so popular they rank for www which is crazy! Currently, they are at result number 47.

SEMrush is estimating their organic traffic at 3.8 million dollars! That is a gift that keeps on giving.

Now sorting by position:

website keyword research semrush

 

We can see they are ranking for a good amount of Long tail keywords, things like “cabins near tucson az” which doesn’t get many searches, but they are the first result (besides a bunch of ads of course).

The best way to massage this data is just to export it (click the export button) which lets you sort however you like inside excel. What we are really looking for is keywords that have a high number of results and high position ranking. NOTE: Not all keywords are alike. There are buying Keywords, research keywords, and what some call consideration keywords. These all target different things in the buying lifecycle. In the example above you can see “hire a beach hut”, these are buying triggers as users already know what they want, just trying to find it.

Another keyword like “Traditional townhouse” is a research keyword, they are looking for information about what a townhouse is, what they look like, etc. Those are nice but far away from being an actual purchase. These are great candidates for ad retargeting which we will write about soon!

 
Contact us to have a quick seller consultation and we walk through your business

Check Backlinks of a Web Property

Approbo Tech No Comments
  Due Diligence

Backlinks are one of the highest ranking factors in Google and many other search engines. These are links to your site (or the website you are going to purchase) from an outside site. They often have anchor text, which is the part of the URL that explains what the link is. The better the site linking to you (in the eyes of the search engine), the better the boost/juice you get from them. You can check previous articles on how to research the domain name, or how to sell your online business.

What are we looking for when checking backlinks?

Well we want to make sure they haven’t been using spammy SEO techniques that have links from thousands of bad sources. Once you start to learn what to look for, it becomes very apparent that’s what they did.

For example here is a URL: “<a href=”https://approbo.com/this_is_the_url”>Anchor Text</a>”

There are a massive number of tools out there for this, here are a few:

  1. SEMrush  (paid)
  2. ahrefs (paid)
  3. http://openlinkprofiler.org/r/ (free)
  4. Majestic (paid)

Since I have a subscription to SEMrush, here is an example using their dashboard and tools. Note, this is for researching a web purchase, not how to build your own backlinks. You can do the same thing to research competitors and go from there. There are tons of articles on building backlinks, just keep in mind, great content rules!

  • In SEMrush go to domain analytics -> overview and type in the domain name you are researching. Let’s start with airbnb.com.
    • In our search it shows:

Checking Backlinks with SEMrush

From here we can see there are 2.6 million backlinks and more importantly, 36.9 thousand domains that refer back. Domains have been shown to be more important from google, since having different web properties link back is a sign of higher popularity/good content. If the same website links back on every page, then it doesn’t get the benefit of each link individually. They are aggregated as one link (we believe).

  • Now we click on the 2.6M and start to view the types of links, anchor texts, and get an overall feel for what is out there.

Airbnb backlink profile

That’s a lot of info!  We can see they get 5.8 Million searches, the backlinks are mainly text based (91%), some images (8%), and it’s about 48% of follow links. Many believe follow links only matter, but it’s possible Google looks at nofollow links as well to guess how worthy a site is.

We can start to see the anchor text that shows up near the bottom. The page score is SEMrush’s belief in how trustworthy the page/site and how much it thinks the search engines like their content. We can also see how many links the page has to other websites (external) and to their own website (internal). The top result has many more external links than internal, which sounds like more of a directory type page.

From here we can click on each backlink and investigate, we want to see what type of sites of are linking to our target. This is often called the smell test, are these stinky sites? Spammy low quality content sites? If so, then that could mean trouble down the road.

It’s also a good idea to run this through multiple tools and see the difference between them. Some tools are better at finding the spammy links than others.

A good metric to look at is the percentage of links to domains. In this example we have 2.6M links with 36.9k domains, which computes to around 14%. This is a decent amount of domain diversity. We typically look for 10-40%. This also applies for the referring IP addresses, we want to see almost the same amount of different IP’s. In this case it’s pretty close, so that’s good.

Anchor Text Diversity

Now let’s click on the Anchor Text tab to see what the top fields are that people use to link to this site:

 

anchor text semrush

Here we can see the top result is “airbnb”, which looks pretty natural. The next one is empty, which means they only provided the URL and not something between the <a></a> tags.

So keep going down this list and see if there are any spammy texts, like pharmacy links, or random coupons. We are also looking for signs of a PBN or private blog network. These are going to be random sites that may or may not be in a related industry. Typically these are very thin sites running blog software with a few articles. They are just sending links/traffic to the web property. It is important to ask the seller if they are using these sites, and if so do they come with the sale. If not, what guarantee do you have they are going to stick around? We tend to avoid PBN deals.

It is important to note that the backlink profile isn’t going to be complete. Many sites ban crawlers in their robots.txt file, so you probably are not going to find the good PBNs through this. They are only targeting google and other search engines, so they want to ban the rest.

So these are the main points of a backlink profile, the more you look at sites the quicker you can get a sense for what the site did for it’s historical SEO. Many sites tried to spam comments, find wordpress vulnerabilities, you name it they did it. While that worked for a bit, Google has a ton of PhD’s who’s entire job is to find these issues and weed them out. You can also check archive.org to see if any of the linking sites might have changed in the past as well!

If you are interested in selling your online business, send us a note and we can chat.

Domain Name Tools

Approbo Tech No Comments
  Due Diligence Sell My Business

What are the tools that we can use to check domain name information and its history? This is important so we can see where the domain has been, how many times it’s moved around (hosting companies) and how long it’s actually been in service. We can also research who owns it, and how many other sites they own that might be a conflict of interest.

The first tool we are going to use is “whois”. You can use this from a terminal (MacOS or Linux), or you can use an online one like:

Type in the domain name or run “whois domain.com” from a command line and you can see the details. Important fields:

Updated Date: 2017-01-19T08:19:54.000Z
Creation Date: 2006-01-18T14:10:49.000Z

Here we can see when the domain was last renewed and when it was originally created. If the seller is claiming the business is five years old but the domain creation date is only two years old, they will have to explain. There are circumstances where the domain is dropped and re-purchased from another provider, but that is rare if it’s a real business (everything is auto-renew these days).

Also check the owner of record, this is typically private so you won’t see much there.

The next tool is a whois history. This will show the information above, but how many times the domain has changed accounts and been renewed. Many of these are paid services now, so purchasing a domain report from domaintools is the way to go. If you are doing due-diligence on a website and have already submitted an LOI, this report could save you so it’s worth the $49.

There is some basis for SEO purposes on domain history. It is believed that google looks for clean domain history as a ranking signal. So if the domain has moved around a bunch, it might look spammy to them.

When doing domain research, it is also useful to see other domains registered to the same person or company. This is called reverse whois. Type in a name or email address, and their database will show other domains they might own. If they use privacy mode, then you probably won’t find much useful information.

Reverse whois: http://viewdns.info/

The next step on checking domain health is looking at blacklists. This can tell you if their domain has been reported for email spam in the past and can cause harm down the road.

An all encompassing tool: https://mxtoolbox.com/SuperTool.aspx

Run the blacklist check and make sure it comes back OK for all the lists. If there are some issues here, it could take time to fix them. If the business depends on email marketing, this will cause issues down the road.

The last step we recommend it checking the hosting history. See how many different IP addresses it’s had over the years will tell you if it has been moved around a lot. Ideally you want just a couple moves as this signifies a stable site. If it’s been sold a bunch of times, you will most likely see different IP addresses across many hosting providers.

Tool here: Viewdns Tools

Type in the domain name in the IP history box and it will show the different providers used. We like to see at least 1 year between hosting providers, better if its only a couple for the entire history. If it is an e-commerce site, they are most likely sticking with one of the big players (Shopify, BigCommerce, etc) so they are not going to move the site. It takes too much work and lost sales.

We hope these tools provide some value in your business!

How to price a SaaS business for sale

Approbo Tech No Comments
  Business Valuation Sell My Business

There is a great blog from a VC at Redpoint by Tomasz Tunguz. In it he discusses every kind of SaaS business you can think of. He has a great article that analyses pricing over the last six years (read more). The large trend in SaaS is about a 3-4 times multiple of net. Online businesses are typically calculated from their net profit (income minus expenses), so a business that generates $100,000 a year in free cash flow/profit would sell between $300k to $400k.

There are many factors that determine pricing, but a few of the mains ones are:

  • Age of the business – is this a track record of earnings more than a couple years or is this business only a year old?
  • Quality of the product – do customer really need and value what you are selling? Do they stick around? What’s the churn rate?
  • Easy of management – does the Buyer have a long road ahead to on-board this business or can they take it over easily? Businesses that are setup correctly where the owner can swap out are worth a premium. This means to have processes and employees in place to handle the day to day tasks.
  • Longevity and potential growth – is this a fad based business or is there a real growth path? How has the business been faring the last few months/years, growing or declining? Have they been keeping good metrics and have quality customer lists?

There are many other factors that go into a great web business (brand-able is huge), but this covers the top level. We have written about due diligence before, so business owners should conduct their own version of it before trying to sell. This can often pay for itself by fixing a small issue the Buyer can work the price down with.

Interested in selling your business? Contact us today and we might buy it.

How to setup DNS redundancy on your website

Approbo Tech No Comments
  Consulting Transfer Web Properties

Most websites have their domain name DNS connected with whoever they bought the domain from. So for instance if you use GoDaddy for your domain name, they also host the DNS. Just to clarify, DNS is what maps your domain name (approbo.com) to an IP address that your computer/web browser uses to find the server your connecting to. There are DNS servers that your local computer connects with to resolve the websites you go to. Typically this is your ISP’s (your local internet connection provider) server, unless you use opendns.org’s servers (which are free and great).

The main issue with using your registrars DNS server is redundancy. They typically don’t do a great job of world-wide server deployments and they don’t allow you to make complex changes very easily. External DNS is also much more flexible in how you manage traffic once your site grows to a large size.

A second issue is if you are moving your website from one IP to another (changing hosting providers for instance), you want your TTL (time to live) to be very low so the IP is removed from the DNS cache quickly. This let’s you switch with minimal downtime to your users. This is also good to have in case your hosting provider has a catastrophic failure (AWS does go down) and you can switch hosting providers pretty quickly.

So how do you use an external DNS provider?

The first step is to find a company you can trust, we use Dyn.com which has been around for awhile. They offer managed DNS which is what you are looking for (the service is called “DYN Standard DNS”). Providers call this service by different names, but it’s DNS hosting at the end of the day.

Create an account, and setup the paid plan. At the time of this writing it’s $60/year.

Now setup the domain you would like hosted. This will not affect anything until you tell your domain registrar (GoDaddy or someone else) which DNS to use for your domain name. The IP Address for your A record (which is the main record that connects a domain name to an IP Address) comes from your web host that actually serves your website. This is often the same as your domain registrar (GoDaddy), but if you are using a custom app this can be Heroku, AWS, Digital Ocean, etc. You can also just ping www.yourdomainname.com and see what the IP Address comes back as.

Don’t forget, if you are using things like gmail or office365, there are things such as MX records (mail exchange) that must be copied as well. There are also SFP records, which are authentication records for mail sending (if your emails are being sent to SPAM often, this might be missing). There are most likely CNAME’s which are aliases to your domain name (app.approbo.com, support.approbo.com, etc), so copy those over as well.

Once you have the DNS provider setup, then you need to update your domain name registrar with the DNS hosting information. If you are using dyn.com, they will tell you which DNS servers to use. They will look like “nsXXXX.dns.dyn.com”, where XXXX is a 4 digit number. They should provide four of these hostnames for you to use. Login to your domain registrar and find the DNS configuration for your domain name. Click “external DNS” and paste in the four hostnames Dyn.com provided.

Once that is setup, it will take some time for the DNS servers to update, but it should be complete within a day. You can check DYN.com to make sure the configuration has synced (they will show it as managed or not) and your now setup with world-wide DNS redundancy.

This should all happen with no downtime since your not changing the IP address people use to connect to your site.

If your site expects a great deal of traffic, you can also pair this with hosting in different countries, and setup specialized DNS to send people to different data centers based on their geographic location. Exciting stuff!

Need help doing this? Give us a shout, we can help.

Quick tips on using Google Analytics

Approbo Tech No Comments
  Consulting Sell My Business

GA or Google Analytics is a great resource for any business owner. The amount of useful reporting and analysis that can come out of the platform is staggering. Many businesses are not using even a small percentage of the power of GA, so let’s discuss a couple things you can do right now to get better data out of it.

A. To start with, do you have GA enabled on every web page? If you are using WordPress, the cleanest plug-in I have found is called “insert headers and footers”. It’s very simple and you just paste the GA <script>stuff</script> code into the header section of this plugin. This will then track every web page that users visit and send a “pageview” to GA.

If you are using a custom site, make sure your code is sending a pageview event on each page that you want to track.

B. Next up, are you showing test data in your account?

If you are developing and using the main site to test against, that data is also getting recorded. There is a function called a filter to remove this from your statistics.

To setup a filter, go to the Admin section of the Analytics portal.

  • Filters are setup per View, so find your web property, and go to the views area
  • Pick the view you want to change (most just have one view), and click “Filters”
  • Create a new filter by clicking “Add Filter”
    • Let’s setup a filter to exclude any traffic that is going to a certain web page on our site that only developers go to.
    • Give your filter a name, “Filter Dev Testing”
    • Click “Custom”
    • Click “Exclude” – we are going to remove any traffic that matches the URL
    • In the Filter Pattern – enter a URL – “/testing” for our example. Anything you do not want to show in the Analytics view you can add there. Case sensitive then check that box.
    • Click Save, now you have a view that is filtered. This will be retroactive as well so you view won’t show any of the testing data now.
    • Photo:
    • Google Analytics Filters

C. Are you tracking visitors across their different devices? GA let’s you connect users with an ID so you can see if they came from a web page, switched to mobile and tablet. This helps to see how users are interacting with your site. If they constantly start on mobile and switch to browser, maybe the mobile experience needs some work.

This is setup by enabling the User ID functionality of GA. Read up on it here: https://support.google.com/analytics/answer/3123666.

Basically you need to connect google analytics with an anonymous ID that you can pin to each user. So if they login to your site, you can send a userID each time they login (that’s how we connect them from different devices). The function is: ga(‘set’,’userid’, {{id}});  It also must be enabled in the admin->property->tracking info->user id section.

D. Are your properties separated? Many people like to use the same analytics account for multiple properties, but they also use the same tracking ID as well. While this makes it nice to have just one screen, it’s very difficult to discern which property/app people are coming from. A better approach is to use different properties for every domain (approbo.com, app.approbo.com, etc) and if you need to link something together, enable cross-domain tracking (site linking). Read more about that here: https://support.google.com/analytics/answer/1034342?hl=en
E. Custom dimensions – You can create 20 different “dimensions” or data collection points in GA. This let’s you add data that GA doesn’t collect, an easy example is classifying different types of people into prospects or customers. So you can classify people who have visited certain sections of your site and filled out a form vs. people who have never interacted with you. Once they fill out a form, you can send in a custom dimension with the form name or some other identifier, and then you can track people and what else they do on your site, only related to who have filled out that form. Read more here: https://support.google.com/analytics/answer/2709828?hl=en
F. Custom metrics – along the same note as dimensions, you can collect your own metrics to measure against. An example would be someone clicked the play button on your landing page video. You can track how many people visit the page vs. how many people click the button and create goals against these custom metrics.  Read more here: https://support.google.com/analytics/answer/2709829?hl=en

G. Goals – Do you have goals and funnels setup in GA? This is the best way to see if users are actually doing what you think, otherwise they might not be completed all of the actions you’ve identified. The best way to see if someone is completing your user wizards, or finishing the start-up steps is to setup a funnel and goal. You can send custom pageviews to GA that let you track pieces of your application, or steps in a process.

 

Those are the main GA features and enabling or using them will let you get into much more details on what users are doing on your site, and where they drop off. If many users are leaving on the same page, it’s a great place to experiment with exit polls or some other form of exit interaction.

 

How to transfer a domain name to a buyer

Approbo Tech No Comments
  Consulting Transfer Web Properties

Preparing for a sale before-hand makes this process much quicker. The best option is to open a new domain register account for just the business/domain you want to sell. This means a new GoDaddy/NameCheap Account, or a new Google ID/Google Domains Account.

What we typically recommend to sellers is to get a new google email address, then create a new domain holding account just for the business they are selling, and transfer the domain to that account. Then it’s as simple as giving the email/password to the buyer, and they change the payment information and password. Domain transferred! This goes for the hosting provider as well, if the hosting details are in the same account as other web properties, that makes it very difficult to transfer.

The second option is to initiate a domain transfer to the buyer. The buyer should already have a domain holding account, and the seller must unlock the domain in their domain control panel. This can take a few days to process, so make sure to take that into account.

What’s the best way to transfer a domain with little to no downtime? Host the DNS externally. Many businesses don’t understand the complexity that goes into a URL, approbo.com for instance. The DNS is usually hosted at the web provider, or the domain registrar. Well if you switch web providers to the buyer, the DNS system is going to change (which takes time)  and possibly cause loss of access to the site. Not to mention customers will be connecting to the old site for a few days while DNS propagates across the interwebs.

How to fix that? Well use an external DNS provider that allows for quick changes. DYN.com is our favorite provider, and you can switch your domain in under a few minutes. Once the buyer has the new site setup, it’s a quick submission to change. If you planned ahead and have the business on its own hosting, then there is no change at all!

So more things to think about when your selling a business.

We do this all the time, so if you need technical help or want to sell your business, contact us today!

 

 

Is a business that’s less than a year old worth much?

Approbo Tech No Comments
  Business Valuation Sell My Business

To start with, if your a seller, then the business is going to be worth a great deal more to you than it is to a buyer. This is one of the due diligence points that we look through when purchasing a business (real site age). Finding out the true age of a site can be tricky. Domain names that are only a year old doesn’t necessarily mean the business is only a year old. A quick trick is to use archive.org to see what the site looked like in the past.

So let’s say the business is less than an actual year old, and we want to assign a value to it. There are quite a few ways to do this, the way we use at Approbo is straight income valuation/estimation.

We start with the revenue from the past year or number of months, and subtract the costs of running the business. We typically will remove anything related to building the site out, since this is mainly a one time cost (unless there is constant upkeep on a site, then the expenses are estimated).

The actual multiplier on a new site is going to be less than one that has been around for more than 3 years. We are seeing those in the 2.5-3x range for matured companies, so a company less than a year old is at the very low end, typically 1.5x – 2x.

Seasonality plays a large part as well, similarly fad based businesses. Is this a hit once and done? Are the dollars received the last year going to be the highest ever?  If it’s a new niche that is gaining traction, that is worth much more than a company following something fun in the news.

To get to a price, we look at the monthly net incomes (income minus expenses) and calculate the monthly growth rate.  We average out the month to month growth rates, and use that to calculate an estimate of the revenue for the next year.

An example just with two Months of data:

Month 1 Income: $1000

Month 1 Expenses: $200

Month 1 Net: $800. ($1000 – $200)

Month 2 Net: $950

Month 1 to Month 2 Growth Rate: 950 / 800 = 1.188

Month 3 Net: $1050

Month 2 to Month 3 Growth Rate: 1050 / 950 = 1.105

We continue with these growth calculations until we have as much data as available.

Once we have the month to month growth rates, we add those up and divide by the amount of months (average).

So for our two month example: 1.188 + 1.105 = 2.293

2.293 / 2 = 1.1465

So our average monthly growth rate is 14.65%

We can then fill out the rest of the year with this estimated growth. Note: if there is an outlier month, say a campaign of some sorts, we typically remove this from the data set as it will skew the data too high.

So Month 4 net we can estimate as $1050 * 1.1465 = $1203.83

And Month 5 would be $1203.83 * 1.1465 = $1380.19

Once we have built out the entire year, we then sum up the net profits (800 + 950 + 1050 + 1203.83 + 1380.19 ….etc) . We then multiply this value by our multiplier of 1.5x – 2x depending on the type of business.

 

So as you can see there is a way to put a price on a new business. Typically we advise against purchasing anything this new as there is no clear sign it will continue. Most sites with a quick growth curve are using a PBN, or Amazon based businesses which can change over-night. As always do your due diligence!

Contact us to have a quick seller consultation and we walk through your business

Web Site Due Diligence – where to start?

Approbo Tech No Comments
  Due Diligence

Doing proper Due Diligence on a web site can be daunting. Don’t despair! The more you do this, the quicker and better you get at it. There are tools all over the internet that can drill  into where traffic comes from and what the site has been up to.

The main question we are trying to ask is: “Is the seller properly representing this business, and is this something I want to own and manage”. There are always going to be problems, you have to determine if your level of problem-solving and knowledge matches up with the business you are looking at. If not, can you easily outsource those missing parts? Many times a seller has custom programmed a business from scratch, and they say it’s easily taken over by someone else. That is rarely true, many are not good at documentation, so taking over someone else’s code is time consuming and expensive.

Before digging into the business, thoroughly review what the seller has provided, so you can match it up with what you find and ask pertinent questions.

Let’s start with the “location” part of a web business:

  • What software is the site built with or written in? Are you familiar with this type of programming?
    1. You can use web browser tools such as Built With to find out information about a site.
  • Who is the hosting provider?
    1. Can this be transferred over easily or is it shared with their other websites?
  • Is this a completely managed provider, or does the seller run part of the server? VPS?
    1. Do you have to maintain a server? Do you know how to do that? Might be extra costs if not.
    2. Do you understand Windows server architecture vs. Unix/Linux?
  • How many servers does it run on and what are the costs for this?
    1. We are looking to see if the server’s are not sized properly for the application which might increase costs down the road.
  • Where is the domain stored?
    1. Verify this with whois information (http://whois.domaintools.com/)
    2. Who is the registrar for the actual domain name?
    3. Can they hand the account holding the domain over, or do you have to initiate a transfer process since they own multiple domains (typical and takes time)?
  • What does history say about the domain itself?
    1. If you have a membership to domaintools.com, run a domain history and see where it’s been
    2. Another free alternative is http://whoisrequest.com/history/
  • Check out archive.org to see how long the site has really been around in it’s current state, and what it looked like in the past.
    1. Did the seller only add content in the last year?
    2. Was it a spam site before then?
    3. Was it something that company web filters are going to catch and limit your user base?
    4. We are looking for the true site age, if it’s really only a year old then the numbers are probably misleading. This may be due to a PBN (private blog network) providing traffic.

 

Ownership

  • When was the business last sold or when did the seller pick it up?
  • What did they pay for it if you can find that out. Many auction sites list old auctions to see this.
    1. In this regard, how many times has the site been sold or tried to sell?
  • What things did they add to the business? Did they add value or just sit on the property?
    1. If they state they have not added anything, and traffic is going up significantly, then something is likely amiss.
  • Check is the website blacklisted, or spammy content inside the site itself. You can also check the domain name against mail black lists to see if they have sent spam with the domain name. This could give issues down the road if you want to email customers: https://www.dnswatch.info/dns/rbl-lookup
  • Also check legality of the site, does it infringe on copyrights?
    1. Does the domain name itself infringe? Do they have permission to use it?
    2. Are they licensed for the software or plugins they are using?

 

Engagement

Here we need to dive into their analytics report(s), typically start with screen captures that are provided and we can verify these numbers in the Live Screen Share portion. Sellers are able to inflate some of these numbers with scripting so trust but verify.

Metrics that matter:

  • What is the bounce rate (this is people who only see 1 page and leave)
  • Average time on site / session duration (depends on the site, should be more for apps)
  • Pages per visit (do they only see 1 page and leave)
  • Unique visitors per month vs. returning (we want unique but also a healthy number of returning)
  • Are they capturing any unique events and getting custom data? This is great if so, we can see if people are clicking on certain items, if they are using e-commerce goals, or have some sort of funnel.

 

Traffic sources

  • Only from organic? Did they ever test out a paid search strategy? A single traffic source can cause issues especially if it’s only from Google. What happens if the algorithm changes?
    • Preferably less than 60% organic, and the rest a mix of referral, social and paid.
    • If there is paid, how much do they spend on it? Is this managed by them or a service?
  • Unique content? Try some copyscape.com searches and see if anything comes up as a duplicate.
  • Check the referral sites, these should be mixed and less than 50% of traffic.  If a majority are from one or two links, that could end at any point so take this into consideration.
    • Are the referral sites relevant or somewhat spammy?
  • Check the keywords the site ranks for, you can do this with tools from Moz, ahrefs, semrush
    • Are these keywords relevant?
    • Are they high value or high competition?
    • Are there others you can easily add and rank for?
    • This research should also include competitors, and what you can learn from them.
    • Are there easy wins to add value if you purchase the site?

Note:  Google analytics can be changed with imported data, so it’s not a 100% reliable source. Have the seller add you to their analytics account to verify the numbers, but take it with a grain of salt. Also see if the seller has a webmaster tools/search console account setup, and see what the main keywords they rank for are. If they don’t, this could be an easy way to increase the business traffic if you choose to buy it (add a sitemap, write content to the string keywords, etc).

 

Revenue

This is the fun part, see what the numbers are and make sure you can correlate where the revenue came from.

  • What are the sources? ads, Amazon, affiliates, direct advertising, services, products, etc
  • Are they seasonable or temporary?
    1. Will this impact your ability to own the business?
  • How easy can they be replaced?
    1. Are there other sources you can swap out if one goes south?
  • Can you transfer the revenue source account or do you need to open a new one? What is the approval process for that?
    1. Adsense accounts typically can’t switch so you need to change the Adsense ID on every page, is this script-able?
    2. Many affiliate accounts need approval before you can become a seller, what is this process?
    3. Which country are the affiliates in? Are you allowed to even be part of their program?
  • Is the revenue from recurring billing? Can this account be transferred or does that need to be setup again for every client?
    1. If it can’t be transferred, be prepared to lose many clients who won’t re-add their information
    2. Paypal cannot be transferred unless purchasing the LLC, which brings up more issues of outstanding debts. Consult an attorney if you are considering an LLC purchase instead of an asset only purchase.
  • What is the repeat customer percent? Is there high churn or do people keep coming back? This of course depends on the type of business.

 

Live Screen Share

If we have made it this far, then we are very serious about the business. We are going to coordinate with the seller and see a live screen share of their processes and revenue sources. We are looking at their accounts, whether it be Paypal, Commission Junction, Square, etc to see if the revenue numbers match up. This is also the best time to ask detailed questions about what we have found in our due diligence. Does the seller know the answers quickly?

  • Check the local DNS / hosts file on the shared computer to make sure it’s going to the internet and not their local “fake” servers
  • Watch how they login to the revenue accounts
    1. You click and run the revenue reports (so take control)
  • Check period snapshots – 4 months, 1 year, 2 years for the various revenue sources
  • Paypal – use caution, you cannot see what site the sales are coming from, it just goes into the account
    1. Do they pay for Paypal? For awhile you were able to get the merchant accounts for no monthly fee, make sure to take the fees into account if you need a new account. There is also an approval process that can take time.
  • Check country origin of transactions, are they all foreign or the same country as the business.

 

Competition – internal and external

  • What sites exist that are competitors, does the seller know of them?
    • Check keywords and ads your competitors place with the SEO tools above
    • See the backlink profile on their sites, where does the traffic come from?
    • Can you find other similar sites and get similar links?
      • It’s often a waste of time to try and get the exact same links, instead find other sites that you can work with that have similar audiences
  • What other domains or websites does the seller own that could be competition now or down the road?
    • Are there any that have been neglected that could be re-purposed? Make sure they include those in the sale.

 

PBN – Private Blog Network

Does the seller use a PBN? They can be hard to detect, if there are backlinks from random sites that don’t seem to be relevant, this might be the case.

There are many arguments on either side of why they can be good strategies, from our perspective if too much referral traffic is coming from these sites, it’s a no go. It only takes one Google update to wipe out all of the PBN sites and your main traffic sources.

 

So does this sound like a lot to check? It is! We can help, contact us and we can take care of the technical due diligence for you.