I recently received an email asking us to value an online business and I developed a list of information that you should get to ascertain whether it is worth continuing in your investigations of the business.
When we are examining a business for business valuations or commercial litigation, we look at the financial statements, tax returns etc for the story that they tell about the business and comparing that to the story of the owners of the business.
Ideally those stories should agree, but it is not always the case.
Online businesses can be difficult to evaluate and appraise because often there is no physical presence. The site is hosted on a shared server, the software upon which the site is based is either free or used under licence. Is some cases there is no stock to count, no customers to see walking through the doors.
In fact, all the important measurement tasks rely upon others to collect the information. So how can you be sure that the information is correct, that you are being scammed, conned or not told the whole story.