| Part Six of Sale Of A Business – Gotchas! |
Read Part One – Analytics |
Buyers Of A Business – Although this article series is advice for the sale of a business consider the inverse as the questions you should be asking the Seller.
So, you are wondering what is a “gotcha”? A gotcha’ is the leprechaun (hey, it’s St. Pats Day today) that can tank the sale of a business and prevent you from reaching your pot-o-gold.
E-Bay is an example. Should your online business include an eBay store you will experience a gotcha’. The terms and conditions of your e-Bay store state that you may not transfer the ownership of your store without the express written permission of e-Bay. E-Bay has never issued a written permission. Their dilemma is the “Power Seller” ranking. They don’t know if the Buyer will continue on with the Power Seller criteria. With the new default ranking of products showing power sellers over closing soon of an auction this could have a huge negative affect on a new owner.
Another common gotcha! in the sale of a business are your site images. Are you in compliance with copyright and permissions to use all of the images on your site? If you are in flagrant violation of image copyrights you can expect the sale of your business to be suspect. Even in the most mundane of situations. Back in 2004 I represented the seller of a geo-targeted resort site. On this site were images of the resorts provided by the resort owners. After Closing a professional photographer sued the new owner over use of a photo from one of the resorts. Claiming the site and resort owner were never given rights to use the photo online. It was meant to be used only in a brochure. Cost to the buyer? $3,000 in settlement.
Another gotcha! are vendor relationships. You have a great relationship with suppliers. This may include advertisers and advertising intermediaries (Google). Will these relationships transfer? Not necessarily. For example, manufacturers are still based on the brick and mortar economy. To support the brick and mortar stores are company sales representatives or manufacturers reps. If you are in San Diego County you have a different sales representative than if you are in Orange County.
This is a real case of an online business buying from a lighter manufacturer (Zippo). The buyer lived in Orange County; the seller in San Diego County. The Orange County sales representative did not want to let go of this lucrative account (+$80k in sales) and the Orange County sales representative did not want “channel conflict” (online is a channel – brick and mortar another channel of sales) and was reluctant to approve the new owner of the online store. It was resolved, but it took months of intervention to accomplish the transfer of the supplier account from the seller to the buyer.
These types of situations are the reason to plan now for the sale of a business.
This is Part Six of a multi-part article that will provide the knowledge you need to maximize the sale of a business.
Three years of data on SOLD Internet Business Opportunities. Use this information to strengthen your position when making creating an asking price. Read the details on dozens of Sold Internet Business Opportunities.
Read Part One of This Multi Article Series – Analytics
Read Part Two of This Multi Article Series – Recast
Read Part Three of This Multi Article Series – IP
Part Four of Sale Of A Business – - The List
Part Five of Sale Of A Business – Financing
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