Wordpress (WP) is a very popular content management system (CMS) that many websites are developed with. It’s not just “blogging” sites but all kinds of websites. There are other popular CMSs such as Joomla but I seem to find more and more sites are WP based on the market today. They don’t necessarily have have to be a blog, although many are. In many cases you would not even know the site you are visiting is based on a blog-type platform.
Lately I’ve been thinking about how often I come across the same reasons for a lack of historical data. The first is that the site changed servers, the next is that the website was under a different owner, and today I came across someone who moved a forum out from one domain, put it on it’s own domain and then put it up for sale.
It goes without saying that you should have a concern if a website seller seems reluctant to provide any information required for due diligence. Some website buyers may not take this seriously.
A very important lesson in due diligence around buying websites lies beneath.
When a creditor or investor is analyzing a company, one metric that is commonly looked at is the concentration of revenues - typically via customers. This information can tell the investor, lender, or buyer of the firm some very important risk related information. For example, if the firm derives 75% of it’s business from a single customer - the risks associated with losing that one single customer come into play when evaluating the business. All else constant, if the firm’s income were spread evenly over more customers, the firm would have less risk and therefore more value.
One of my undergrad finance professors was discussing methods of analyzing corporate financial statements when he summarized one technique as spotting “the funny looking kid” in the crowd. Sometimes when looking at data, you may not know exactly what may be wrong, if anything, but you have to dig somewhere.
Last month’s purchases results are in and there are some surprises, both pleasant and not-so-pleasant. The Portal video game website that was purchased at $700 had claims of 40,000 uniques per month and about $40 in income. Among many others, one reason for this purchase was it’s revenue increase potential through improving the CTR or $/click. At 40,000 uniques per month, you should be able to squeeze a bit more than $40. After buying the website, I finished it’s transfer about March 4th so I don’t have a full month to assess, but close enough. I had a variety of transfer related issues which I’ll discuss in future posts.