Written by Blair Quane
If you’re looking to buy and existing online business, no matter what, seeking some legal advice is critical to ensure that you don’t buy a dud or get yourself into a sticky situation without knowing it.
Lawyers know the important elements and checks that need to be done to ensure that the business you’re looking at buying, is a valid proposition and worth the price its being sold for.
When choosing a lawyer, we suggest choosing a specialist online or business lawyer as they know the specifics of this legal niche of which general lawyers may not. A good area to start is Avvo.com who provide a good search feature to find a lawyer in your area.
When meeting with a lawyer, ensure to ask them for a fee proposal for the work they are going to do for you and have this formatted to show a breakdown of hourly rates and time they estimate will be required. Never simply let them ‘do and charge’ simply because you may end up with a bill at the end which is way different to what you expected.
If you have a proposed Sale and Purchase Agreement, then have them review this. If you don’t have one, then have them provide one or you can get one from LawDepot. These are extremely important documents because they set out all of the legal conditions that both parties need to abide by in the buying and selling process. Ensure to include a clause which states that the seller doesn't know of any existing conditions in the business which may affect its performance going forward. A lot of online businesses and websites are sold because the current owner knows something that is affecting or will affect the businesses performance in the future. You need to ensure they disclose this or at least have a come back in the agreement.
Have the lawyer review any Licenses, Regulations and Industry Specific Issues with the business so you are aware of your responsibilities.
Ensure they check for any legal actions actual or pending against the business or the current owner.
Have the lawyer review and discuss the structure of the company or organisation you intend to run the website under. Many businesses operate under a trading name and have a company sitting in behind this which is the legal entity and through which the end financial, legislation, tax etc processes go through. For example ACME.com is the name customers see but in behind this trading name may be a LLC called ACME Trading Limited.
The actual purchase of the website can even be facilitated by the lawyer with the funds for the purchase being handled by them as a 3rd party to ensure that the process between buyer and seller goes smoothly.
The above suggestions are just a start to what help a lawyer can provide. I strongly suggest you engage one if you are looking to purchase an online website business. This will ensure that you are aware of all of the legal responsibilities and elements in the transaction as well as protecting yourself as much as possible from problems occurring.
If you found the above information useful, then visit our free resource website at www.emilyandblair.com (launching April 2021) for a vast library of likeminded guides, checklists and content devoted to online businesses.
See you in the next article…