TL;DR: Why SEO Due Diligence Matters
Organic search drives 53% of all website traffic according to BrightEdge research. For many digital businesses, it's the primary customer acquisition channel.
Yet most PE due diligence treats SEO as an afterthought — a quick screenshot from Google Analytics and a "traffic looks stable" comment. This approach has led to material misvaluations in acquisitions.
This guide provides the framework we use for SEO due diligence at ParadoxSEO, refined over dozens of deals.
What Is SEO Due Diligence?
Definition: SEO due diligence is the systematic assessment of a target company's organic search performance, risks, and opportunities as part of an acquisition or investment process.
It answers three critical questions:
Why Traditional DD Fails
The typical approach to assessing organic traffic:
This tells you almost nothing about:
The Framework: 301 Aspects, Gate-Based Scoring
At ParadoxSEO, we evaluate 301 distinct SEO aspects across three categories:
1. Health Check (102 aspects)
Technical fundamentals that must work. We use gate-based scoring — critical issues must pass before anything else matters.
The Critical Gate (11 aspects that must ALL pass):
| # | Aspect | Why Critical | How to Check | |---|--------|--------------|--------------| | 1 | SSL Certificate Valid | Trust signal, ranking factor | Check certificate expiry | | 2 | Robots.txt Not Blocking | Basic accessibility | Review robots.txt file | | 3 | Sitemap Exists & Valid | Discovery mechanism | Validate XML sitemap | | 4 | Index Coverage >50% | Pages must be indexable | Google Search Console | | 5 | Mobile-Friendly | Mobile-first indexing | Google Mobile Test | | 6 | No Manual Actions | Google penalties | Search Console > Security | | 7 | Core Web Vitals Baseline | User experience | PageSpeed Insights | | 8 | Canonical Tags Present | Duplicate content control | Crawl audit | | 9 | No Critical Crawl Errors | Site accessibility | Search Console | | 10 | Basic Schema Markup | Entity understanding | Schema validator | | 11 | No Severe Index Bloat | Crawl budget | Index coverage report |
If ANY of these fail, the rest of the audit findings are secondary. You have a fundamental problem that must be addressed before considering the deal.
2. Competitive Analysis (157 aspects)
Position relative to market. Not just "how are rankings" but "are these rankings defensible."
Key areas:
3. Governance (42 aspects)
Operational capability to maintain and grow organic traffic. This is where most targets fail.
Key areas:
Traffic Value Methodology
We calculate traffic value using a risk-adjusted approach.
Step 1: Baseline Value
Start with equivalent advertising cost methodology — what would it cost to acquire the same traffic through Google Ads?
Tools like Ahrefs and Semrush calculate this by:
Step 2: Apply Risk Adjustments
The baseline assumes traffic continues at current levels. Reality is more complex.
Technical Risk Adjustments:
| Risk Factor | Adjustment | |-------------|------------| | Critical gate failures | -30% to -50% | | Essential issues (multiple) | -15% to -25% | | Core Web Vitals failing | -10% to -15% | | Mobile experience issues | -10% to -20% |
Competitive Risk Adjustments:
| Competitive Factor | Adjustment | |-------------------|------------| | Dominant market leader, gaining share | +10% to +15% | | Strong position, stable | No adjustment | | Losing share to competitors | -15% to -25% | | New well-funded competitors | -10% to -20% |
AI Disruption Adjustments (based on Seer Interactive data):
| Query Type Mix | Adjustment | |----------------|------------| | >60% informational queries | -30% to -40% | | 40-60% informational | -15% to -25% | | <40% informational | -5% to -15% | | Strong brand query base | No adjustment |
Governance Adjustments:
| Governance Factor | Adjustment | |------------------|------------| | Mature SEO function (Level 3-4) | +5% to +10% | | No SEO capability (Level 0-1) | -20% to -30% | | Key person dependency | -10% to -15% | | No measurement framework | -15% to -20% |
Step 3: Calculate Adjusted Value
Adjusted Traffic Value = Baseline × Technical Factor × Competitive Factor × AI Factor × Governance Factor
Example Calculation:
Target company:
Adjusted Value: $200,000 × 0.85 × 1.0 × 0.75 × 0.80 = $102,000/month
The baseline suggested $2.4M annual value. The adjusted figure is ~$1.2M — a 50% reduction that materially changes deal economics.
Red Flags Checklist
Use this during preliminary assessment:
Immediate Red Flags (Walk Away or Significant Repricing)
Yellow Flags (Investigate Further)
Governance Red Flags
The Due Diligence Process
Phase 1: Desktop Review (1-2 days)
Tools needed:
Deliverables:
Phase 2: Deep Dive (3-5 days)
Activities:
Deliverables:
Phase 3: Recommendations (1-2 days)
Deliverables:
Converting to Asset Value
Traffic value per month is useful, but deals are structured on asset value.
Approach 1: Multiple of Annual Value
Apply a multiple based on quality and stability:
| Quality Assessment | Multiple Range | |-------------------|----------------| | High quality, stable, growing | 3-5x annual | | Medium quality, stable | 2-3x annual | | Lower quality, some issues | 1-2x annual | | High risk, significant issues | 0.5-1x annual |
Approach 2: DCF on Traffic Revenue
If traffic converts to revenue at known rates:
This is more complex but more defensible for material assets.
What to Include in the CIM
If you're selling a business with significant organic traffic:
The Bottom Line
SEO due diligence isn't optional when organic traffic is material to the deal. The cost of proper DD ($5K-$25K depending on complexity) is trivial compared to the risk of:
The framework:
Get this right, and you'll make better investment decisions. Get it wrong, and you'll overpay for declining assets while missing the best opportunities.
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*Need SEO due diligence for your next deal? Contact us for a ParadoxSEO DD engagement. 48-hour turnaround available for time-sensitive transactions.*