FAQ
❓ Due Diligence FAQ: Common Investor Questions (Quick Answers)
Your Digital Investment Safety Net
Below are 20 quick answers to the most common questions investors ask about Due Diligence when buying websites on platforms like Flippa.
| # | Question (Doubt) | Short Answer |
| General DD | ||
| 1. | What is Due Diligence (DD)? | Systematic audit of a website’s finances, traffic, and operations to confirm seller claims and mitigate risk before purchase. |
| 2. | Is DD really necessary for small sites ($5k–$10k)? | Yes. Even small sites can hide penalties, liabilities, or manipulated traffic that destroy ROI. |
| 3. | How long does a full DD take? | Typically 7 to 14 days, depending on the complexity and the seller’s transparency/responsiveness. |
| 4. | What is the biggest risk DD uncovers? | Revenue manipulation (inflating earnings) and unstable traffic (SEO penalties or paid dependency). |
| 5. | What tools are essential for DD? | Google Analytics, Google Search Console, Ahrefs/SEMrush (for backlinks/SEO), and Payment Processor dashboards. |
| Financial & Valuation | ||
| 6. | What is «Net Profit» vs. «Revenue»? | Net Profit is revenue minus ALL operating expenses (OpEx). Valuation is based on Net Profit. |
| 7. | What is «Quality of Earnings» (QoE)? | Verifying the sustainability and authenticity of the reported Net Profit using raw financial data. |
| 8. | Should I trust the seller’s screenshots? | No. Always demand direct, view-only access to third-party dashboards (Google Analytics, Stripe, etc.). |
| 9. | What OpEx is often hidden by sellers? | Outsourced content creation, high hosting costs for high traffic, and software subscriptions (SaaS tools). |
| 10. | How does DD affect the final price? | DD provides leverage to negotiate a lower price if hidden risks or costs are uncovered, preventing overpayment. |
| Traffic & SEO Risk | ||
| 11. | What is «Black-Hat SEO»? | Unethical tactics (e.g., buying spammy links) that risk a Google penalty and sudden traffic loss. |
| 12. | Is Paid Traffic sustainable? | Only if highly profitable. It requires continuous budget and poses a risk if ad costs (CPC) rise, eroding margins. |
| 13. | What Bounce Rate is a red flag? | Generally, anything consistently above 70% indicates low-quality or irrelevant traffic that does not engage. |
| 14. | How do I check for Google Penalties? | Review traffic history in Google Analytics (sudden drops) and check the Manual Actions report in Search Console. |
| 15. | Why is Organic Traffic preferred? | It is free, sustainable, and indicates long-term asset value, yielding the highest long-term ROI. |
| Legal & Technical | ||
| 16. | Are affiliate accounts (e.g., Amazon) transferable? | Often no. You must confirm transfer procedures or be prepared to set up new accounts and update links. |
| 17. | What is the risk of bad hosting? | Slow site speed, frequent downtime, and unexpected scaling costs can severely impact SEO and user experience. |
| 18. | What is FTC Compliance? | Required disclosure of affiliate relationships to the audience. Non-compliance risks account suspension or fines. |
| 19. | How do I ensure I own the content? | Confirm the seller owns the original copyright and check for plagiarism (using tools like Copyscape). |
| 20. | What is the ultimate goal of DD? | To ensure the ROI projection is accurate and the asset is transferable, stable, and scalable. |
