If you have some disposable funds and are looking to get into the online world, buying a content based website and/or blog that throws off a revenue stream may be something that could interest you. There are a number of sites that act as clearinghouses for domain names, websites and blogs, but probably the most well known one is Flippa. No matter where you are looking, when purchasing a website or blog then the following are important considerations.
I assume that the seller doesn’t own, and you won’t buy anything in your individual names but rather through an LLC or corporation. Don’t be the gal or guy that gets sued personally for something that goes wrong with your business, you don’t want business creditors coming after your house, cars, accounts, etc.
Further, when I say you are buying a website, I am assuming its a content based site, with plenty of users/visitors with the revenue coming from advertising. If you are buying a website that sells products, and part of the purchase involves purchasing the products or equipment that makes the products, then the website is only part of the transaction, and you would perform typical due diligence as in any M&A transaction. Some of the following may assist with respect to the website portion of the business only. But again, this is targeted at content based sites, and with respect to those, you should be sure to:
- As part of due diligence, make sure you review all pertinent records. Some of which are the traffic reports, revenue numbers, affiliate program agreements, advertising agreements, corporate documents for the entity which owns the domain name and content, intellectual property filings.
- These are generally private and the seller will usually only present them to you if you have a signed non-disclosure/confidentiality agreement in place. Some sellers won’t even provide all of the information unless an actual purchase agreement is in place (watch out for these as without the actual information you can usually not come to a fair purchase price). Others will not show you things unless you ask them, and most of the agreements and numbers are online, meaning the seller will have to give you their login id and password (unlikely), or they have to print out the reports from their sites. Pdf’s are unfortunately easy to modify these days.
- Ensure all content is original and drafted by the website’s owner, or if the owner otherwise has a license or proper authorization to use all content.
- Is part of the sale of the domain or site include the associated social media accounts? If not and the social media accounts exist (in the same or similar name of the site), I would usually not advise purchasing the domain or site.
- Determine if the traffic to the site is drive by any particular social media accounts. If so determine who owns/controls them. If its the seller or a related party/relative of the seller, they should be included in the sale.
- Determine whether the traffic to the site is driven mainly by a personality (either the owner or someone that posts on the site for the owner)? Will the traffic dry up if that personality is not a part of the site anymore? If the answers to the foregoing are yes, then be skeptical. Even if you have that personality as a part of the site going forward, whether it be writing articles or doing whatever, the traffic may drop.
- You can always have the seller agree to keep posting in their own name, or for you to be able to post in the seller’s name (with them having an approval right over any content). That may help in the transition, but remember that people follow people online, and unless the site’s brand is strong enough so that the readers trust it (more so than any individual), it may not be worth what the seller thinks.
- Also check for email accounts linked to the site – you want to buy the email list, but also any accounts which communicate with the users/readers.
- Look for diversified income streams. A lot of sites make their money off Google AdSense or other advertisers, but some rely to heavily on one or two and when those dip, the cash flow drops.
- Make sure you are knowledgeable of all the income streams. Each stream is usually different and can depend on different metrics. Also advertisers can change their terms usually on a whim, and that can cause cash to drop – the seller may know something about an upcoming change.
- Look for diversified posts or other content that brings people to the site. If the site has a hundred posts, but only a few are regularly searched on Google which brings the traffic, then if the interest in those wanes, overall traffic may decrease. Its better to have diverse content bringing in traffic.
- If possible, get a non-compete from the site owner which would prohibit them from creating, running, owning, participating in or consulting with a site with a similar topic as the one you are buying for a certain time period. This provision will have to be specially drafted by an attorney.
- Be especially careful if the seller is out of the country. This should make your scam-alert radar go off. The important thing is to make sure you have control of the site prior to making any payments, or with the money only in an escrow account to be released after you have full control of the site. If they won’t give it to you, even with a signed contract and want you to send any money first, talk to your attorney. Its possible to set up an escrow agent who can test the access to the site and ability to control all the accounts, who will also keep control of teh funds and not release them to the seller until they’ve tested the site.
- As far as transfer of domain names and content on server, this is all somewhat technical, but the host usually does the transfer (easy if both parties use GoDaddy.com or something similar). A web guy may be needed for the actual content. Again, make sure you have all the content and domain names before releasing any payments.
- In any event, in the purchase agreement itself you want to ensure that the seller represents and warrants that all the information they have provided you is accurate, not misleading and they have not failed to provide any material item or document that they have (or which would make what they did provide you look worse). I suggest having the Seller represent that the website traffic and revenue numbers are historically accurate. If possible get a purchase price refund or reduction (if paying through a note or delayed payments – another thing I recommend instead of paying a lump sum) based on any drop in traffic or revenues. Again this provision will have to be specially drafted by your attorney.
- Make sure all intellectual property is transferred to you (or preferably your entity – LLC or corporation), including the domain name, any logos, any trademark or copyright registrations, all content created for it or currently used, etc. If the seller has filed for trademark or copyright protection for anything used on the site, it will likely require filing of documents with the USPTO and/or United States Copyright Office to assign them to you.