Due diligence when buying website

how do you do it?

[reprint]

The "how much is my website worth" thread inspired the question: how do you check on income, assets, expenses i.e. due diligence? And how does the seller protect themselves from a competitor posing as a buyer and getting their financial information?

What do you have to see before you buy a site?
How do you verify the accuracy of the financial records?
What if its a one man operation who barely keeps any accounts at all?

I am talking about developed websites, not domains just to be clear.

[legallink]

The due diligence depends often on the type of site and how much revenue or clicks they are talking about.

Generally speaking, they have to keep books. If they don't, they are looking at problems with the IRS and are definitely not looking to sell a legitimate business.

You should easily be able to see invoices, deposit slips, and make sure you sign an NDA before seeing or letting them see anything. If they are a competitor posing as a buyer, that is technically illegal, put it in the contract, and sue for damages.