Summary: If you buy the domain of a competitor who has gone out of business, you’re unlikely to see a boost in page rank or a keyword benefit for your site. You may acquire additional traffic but doing it for many domains could look spammy.
If one of your competitors goes out of business, you may find that their domain names become available for sale. There is an obvious attraction to acquiring these names – they may already have a position in the search engines and have link juice associated with them. So should you buy them?
Although Google is unlikely to penalise you for purchasing a competitor’s domain name and using a 301 redirect to send it back to your site, it could be a waste of time, effort and money. Google sees the links that point to a domain as being earned by that domain. When a domain changes hands, Google attempts to ‘reset’ the website’s strength. It can do this by virtue of the fact that it is a registrar (and can therefore see when there is a change in registrant information).
SEO experts have commented that redirects aren’t very effective in passing on link juice, i.e. when pointed at another domain, they don’t seem to boost the domain ranking or help with keyword targeting.
In terms of acquiring new traffic, there is unlikely to be a negative effect from a small number of sites pointed to your site in this way, but SEO experts believe no more than 3 or 4, before the practice starts to look spammy.
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