The SEO risks & rewards of buying multi-location companies
Sports Authority, the US sporting goods retailer with 450+ locations, recently announced it was seeking a buyer after filing for bankruptcy.
When it comes to acquisition deals like this, the buyer looks at a number of factors to help determine the value of the asset; however, they often do not consider the SEO benefits and risks as part of the equation. Perhaps it’s too small a factor when talking about billion-dollar transactions.
But once the deal is closed and the SEO goes south, it often becomes a huge distraction as teams scramble to undo the damage they have done while simultaneously trying to address the usually more high-profile non-SEO business priorities. As I like to say…
So first off, let’s make the SEO case for buying Sports Authority.
It’s a strong brand
According to SEMRush, there are a few million “sports authority” branded queries per month
We often see a strong correlation between brand queries and overall rankings. So you’ve got some great SEO material to work with here.
It’s a strong local brand
Searches for high value category keywords are going to be pulling up Local Pack results like this one:
The trend, particularly on mobile, is that these kinds of queries are going to prioritize local results more and more:
“Local” also means local links. Multiply 450 stores times hundreds of local directories and local media sites that link to it, and you’ve got a heavy-duty citation profile.
According to Majestic.com, Sports Authority’s store URLs have 90,000+ more links from 7x more domains than Big 5 Sporting Goods, a similar-sized sporting goods retailer.
While these local citation links should have considerable value for an acquirer that wanted to continue Sports Authority’s local retail strategy, they also would have value for a pure e-commerce acquirer that had no interest in its locations.
And while we’re discussing backlinks…
Sports Authority’s sponsorship deals have some great followed backlinks:
And there are local links from sites big and small throughout the country, like this one from the City of Milwaukee.
According to Ahrefs, their weekly ad URLs have more than 2,000 links from 200+ domains.
Sports Authority also has an affiliate network that likely provides, if not a ton of followed links, then perhaps a fair amount of traffic and (hopefully) revenue.
And if the SEMrush data is accurate, the site gets about 2.5 million organic visits/month (I’m guessing that’s on the low side given the amount of brand queries):
Overall, we’ve got a site with some decent local and non-local SEO value. So how does an acquirer factor this into a potential deal?
1. Branded vs. non-branded organic revenue
The simple answer, of course, is to merely assign a value to current organic revenue, perhaps from the past six months to a year. The challenge is that a Google algorithm or SERP display update could cut this number in half overnight. Revenue coming from branded organic queries would probably be much more reliable than non-branded, so you could attempt to separate the two values and assign a risk discount to the non-branded revenue.
2. What will happen to the backlinks?
One thing I have seen a number of dealmakers fail to consider is what will happen to a site’s backlinks once it is acquired. If you shut down or sell any locations, eventually the local citation links will disappear — not to mention the rankings for those locations.
The good news is that due to the complexity of local business data floating around the web, it could take a long time before many of these local links go away. But every time a location’s citations go away, the entire site’s SEO is chipped away at bit by bit.
And don’t forget about some of those juicy sponsorships, like the $36 million it owes the Denver Broncos for naming rights to Mile High Stadium. Not only does this come with tons of brand mentions all over the web, but also some pretty juicy links from high-authority sites like http://ift.tt/1x6txWk and http://ift.tt/WZtqBi. (Okay, maybe $36 million for a couple of links is a bit over the top.)
On the plus side, a buyout would likely generate a lot of links from the media, which could counteract the potential downturn from lost links over time. So there’s no simple answer here except that you should expect volatility in your backlink profile and adjust your risk premium accordingly.
3. SEO execution risk
Your team’s ability to not screw up the acquired site’s SEO is perhaps the biggest SEO risk in the deal. Often, an acquired brand’s site/SEO is not a big factor in the post-acquisition strategy.
Perhaps the most risk-free action is to keep the site as is and continue with ongoing promotion, sponsorships and so on, which could leave the SEO intact and perhaps even better off as a result of the acquisition publicity and links. But I have rarely seen this path taken.
If the acquirer already has its own locations, it will likely start closing the Sports Authority stores with geographic overlap — which, over time, could be a negative SEO factor. Undoubtedly, the website will be redesigned, which will come with its own huge SEO risk factors.
And if the acquirer decides to kill the Sports Authority brand altogether and merge SportsAuthority.com with its own site, there are more ways to change the SEO equation to 1+1=1.5 than to 1+1=3 — redirects that don’t map well to the new site, screwing up the redirects, eliminating huge chunks of the old site that had SEO value and so on. It’s far easier to screw up the SEO of an acquired site that is already doing well than it is to improve it.
Of course, if the existing site is underoptimized, there may be a big upside SEO opportunity that could affect the price you are willing to pay for the business, too.
So unless your business plan includes six months to a year of huge distractions because of SEO issues, before you sign on the dotted line to acquire a big multi-location company, or even a small one, you may want to think through the SEO issues. Factoring them into the deal before you buy means it will be less likely you will need to factor them into your “How We Screwed Up This Acquisition” presentation at the next shareholder meeting.
The post The SEO risks & rewards of buying multi-location companies appeared first on Search Engine Land.