Due Diligence When Buying WebsitesReprinted with permission from VotanWeb.comDue Diligence is when you will be able to access the company's books and records to verify that all information that what has been said so far is true and accurate. Very often, people unwisely believe that Due Diligence is simply a time to check the company's financial position. While this is true to some extent, adequate and effective due diligence goes far beyond financial aspects. Of course, you want to be sure that what you've been told is true but, realistically, even if the numbers are exactly as they were presented to you, so what? All you would have is confirmation from the past but absolutely no inclination as to what the future might hold for the company or industry. The right approach to due diligence Is this the time to look for things that are wrong with the business? Is this the time to rigorously verify the numbers? Is it time to disprove what the seller told you? While each of these approaches is valid in some way, none are absolute. Sure, you'll want to employ a portion of each of these strategies, but effective Due Diligence happens when you can truly "control things." Without a doubt, your approach is to use this period to determine whether or not the future looks bright for the company and the industry. To do this, you need to investigate much more than the financial aspect. Sure, the various financial statements will give you a picture of the past and perhaps a glimpse of the future, but the past is over. You should carefully review your company's sales, marketing, employees, contracts, customers, competition, systems, suppliers, legal and business matters. You want to go through the due diligence period knowing exactly what you're getting into, what needs fixing, what the costs are to fix it, and whether you're the right person to be at the helm to put the plans in place to realize a great future for the business. In other words, learn everything before you buy! How much time do you REALLY need? Every seller and every broker working for the seller will try to negotiate the shortest due diligence period possible. I have heard situations where this was limited to a week or so.