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Thread: Do you enjoy doing due diligence?

  1. #1
    Moderator Kay is a Premium Member
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    Do you enjoy doing due diligence?

    I think it's fun and enjoy sniffing out the tricks and scams. However, as someone pointed out to me recently, it's not something that most people enjoy. I reached the conclusion that it excites me because I'm the type of person who finds accountancy fascinating and exciting. (I used to be an accountant.)

    Just curious, do you think of DD as a chore or do you enjoy the challenge?

    Would you like to learn how to do it or would you prefer to pay someone to do it for you?

    At what price point (sale price of site) would you want to bring in external help rather than doing it yourself?

    This is just a little bit of market research so please feel free to say what you think about going through the due diligence process prior to buying a website.
    British Expat - helping people to live and work abroad since the year 2000.

    The joy of Internet delivery - the cartoon illustrating this will make you laugh!



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    Top Contributor grynge is a Premium Member
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    I am probably different to most people, I go into each deal wondering how they are trying to screw me, not sure if it is a hindrance or a helpful trait. It probably means I have missed out on some deals but also means I have never been scammed. My mind just seems to be able to find the worse case scenario for just about anything. I like it when I find a well organised scam but they are few and far between. Most are quickly thought of and even more shoddily put together. So yeah I think it is a bit of a challenge. I always seem to be able to ask the question they weren't prepared for.

    I am not sure I would personally pay for someone to do the DD and even if I did I think I would have to go over it with a fine tooth comb but that is the kind of guy I am. But then as you know I am not your average Joe. If on the other hand I was making a major purchase for a company, then definitely a second opinion I would be willing to get. I would guess a starting figure for getting some DD would probably start around 50k but more than likely 250k and above for a proper DD effort.
    And they thought me broken, that my tongue was coated lead, but I just couldn't make my words make sense to them, if you only listen with your ears ... I can't get in
    Non ducor, duco

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    Administrator Clinton is a Premium Member
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    I hate it with a vengence. It's one of the things you've got to do and I suppose my cynical bent has helped me spots some duds in the past, but it's become a nasty business. There was a time DD involved trying to look behind the owner's rosy eyed view of his business and assessing the true state of affairs. Now it's a case of trying to spot the numerous and sometimes very sophisticated scams/flaws/deceptions/exaggerations/tricks which have evolved partly as the web game became more complicated and partly because of vested interests and their cheerleading of the "building websites for resale" cess pit.
    Find the right business brokers to maximise the value you extract from your business and improve the chances of selling your business.

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    Moderator Kay is a Premium Member
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    It would be nice if you didn't have to do it, but unearthing the gotchas can be quite fun. It's not fun if someone gets cheated, but sometimes it needs to be hammered home that buying and selling websites can be a very dirty business.

    In ye olden days, it didn't seem to be necessary to do the same kind of checks. The first time I bought a website (rather than building my own), I'd met a guy on a forum and bought a site off him for $1200/600 (at that time). I just took it all at face value. Considering my accountancy background, it's quite appalling that I didn't ask more questions or do any checks to verify the info he gave me. As it turned out, I got a good deal - made my money back within a few months and I still have the site. It was an odd one though, because it had several owners before. I think people just kept trading up and selling that one on.

    I paid for a new professionally designed logo and kept changing the site and adding content. It's probably time to sell that one again, as I've had it for many years and I don't have the time to devote to it now.

    These days I wouldn't consider spending money in that way. I'd be asking a lot of questions about what I'd be getting for my money. There again, there's a limit to how careful one should be. If a site is at the very low end of the market, then tyre kickers can be a real pain. It costs you more in terms of time to answer their questions than the site itself is worth. That's why I like the idea of "getting your ducks in a row" before you try to sell. Unfortunately with me it's a Catch 22. I don't have the time to spruce it up prior to sale, and I won't sell while it's under-performing.

    Clinton, I agree that it just used to be a case of analysing some figures, and now it's a snake pit of scams. That's why I think it's essential to develop a nose to sniff them out. Some people suggest how to do some checks - but they're not enough! For example, I've read some books which recommend using CopyScape to check for duplicate content. That's OK as far as it goes but it doesn't go anywhere near uncovering the tricks that some sellers use to disguise dupe content. And that's only the start of it. During the course of writing the EP Guide to Due Diligence, much of which was based on what I'd learned here on EP, I was quite shocked to discover the tricks that some site sellers use. If someone is buying a site, dupe content is probably the least of their worries.

    It is a nasty business, but if you like doing some detective work, then I think it's something which some people enjoy.
    British Expat - helping people to live and work abroad since the year 2000.

    The joy of Internet delivery - the cartoon illustrating this will make you laugh!



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    According to my opinion due diligence must be a part of life and it must be used in purchasing anything. As for me i am bound to due diligence even while purchasing items from food items to purchasing a house or taking a loan.Thanks to the power of internet which makes the due diligence process much easier.Some points considered by me for quick diligence.1) Reviews of the product/service/provider by users who used their service/product. (This process will let you know how the service/product worked for previous buyers and is used by 95% of new buyers according to research)2) Price comparison. (make sure you don't overpay due to shill bidding :-( incase you are buying a site)3) Verification of authenticity. (verifying the proof provided by the seller incase you are buying a website :-) or brand authenticity incase you buying a product)

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    I get bored digging through the same old cons, scams, and bits sellers have left out but, like Grynge, it's interesting to find something "new" being pulled. Most scammers just aren't that creative, though, which is why we tend to see the same thing over and over.

    I've been really wanting to do a long blog post on all the tricks/scams we've seen, but it makes me nervous. I don't want to be responsible for leveling-up the sophistication of the con artists. :-( I suppose it would be more helpful than hurtful over all though, eh?

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    Quote Originally Posted by grynge View Post
    I am probably different to most people, I go into each deal wondering how they are trying to screw me, not sure if it is a hindrance or a helpful trait. It probably means I have missed out on some deals but also means I have never been scammed. My mind just seems to be able to find the worse case scenario for just about anything. I like it when I find a well organised scam but they are few and far between. Most are quickly thought of and even more shoddily put together. So yeah I think it is a bit of a challenge. I always seem to be able to ask the question they weren't prepared for.

    I am not sure I would personally pay for someone to do the DD and even if I did I think I would have to go over it with a fine tooth comb but that is the kind of guy I am. But then as you know I am not your average Joe. If on the other hand I was making a major purchase for a company, then definitely a second opinion I would be willing to get. I would guess a starting figure for getting some DD would probably start around 50k but more than likely 250k and above for a proper DD effort.
    I'm the "grynge" type, probably heritage of many years working in network security.
    I consider DD a fundamental skill for someone buying websites, too important to be outsourced.
    I would consider asking someone else in two cases:
    1. it's a 50K+ website
    2. the website is a beast I'm not familiar with (in terms for business model, revenue sources, operations)

    The problem I see is that inspecting websites takes an awful amount of time. Any tool to help in that is appreciated!

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