The Process of Buying/Selling a Website

 

At Quiet Light Brokerage, our goal for every transaction is simple: we want to provide both our buyer and seller with a safe, secure, and transparent transaction.  To this end, we have developed, modified, adjusted, and tested a process which enables both our sellers and our buyers as much protection as possible without compromising either party’s security.  The result of this process is that you can focus on what is important: planning to acquire a new adventure in your life.

Our process can be broken up into 6 steps:

Our Process

processThis standard process is certainly not the only secure way to manage a transaction, but we have found, and our clients have agreed, that this process works extremely well.  Each of these steps is listed in more detail below:

Step 1 – General Discovery

What Is It

General discovery is your opportunity to learn more about a business Quiet Light Brokerage is listing for sale.

The Goal

To allow you to make an informed decision as to whether or not you want to pursue the acquisition of a particular listing.

What’s Involved

  • Our client will represent several key facts about the business for sale which we will pass on to you, including:
    • Financial Records
    • Traffic Stats
    • Industry data that is known
    • Key benefits of the business
    • Nature of vendor relationships
    • Any information necessary to give you an understanding of how the business works.
  • You work directly with the broker to ask questions and understand more about the business.
  • In some cases, a conference call can be setup with the owner of the business to learn more.

What to Expect

The overall goal of this first step is to answer a simple question: do or do you not want to buy this business.  To that end, you will be furnished with a business summary which presents key information about the business. The information at this point is expected to be taken at face value for the purposes of allowing you to make an informed decision as to whether you want to take the next steps in acquiring that business.  Many buyers are able to make that decision based on the information we provide.  Many buyers also send additional questions to us to help them make that decision.

Our goal is to provide you with whatever information you need in order to make an informed decision about that business (as long as it is being done in the spirit of general discovery).

Step 2 – Letter of Intent

What Is It

A general framework declaring your desire and intent to acquire the business in question.

The Goal

To establish between yourself and the seller an agreed upon price, an exclusive timeframe to perform due diligence and verification of information, and any requested terms for a final agreement.

What’s Involved

  • Quiet Light Brokerage is able to provide a standard letter of intent or you may provide one of your own
  • An offered purchase price should be listed as well as a target closing date.
  • Any special terms that you need should be included with the letter of intent.
  • A refundable earnest deposit is normally required.  The amount will vary from transaction to transaction.
  • If the seller agrees to your letter of intent, you would enter into an exclusive time period in which Quiet Light Brokerage and the seller would work only with you.

What to Expect

A Letter of Intent (LOI) is an important step towards acquiring a business.  To your benefit, an LOI opens up a period of time in which you and only you have access to the business in order to verify the financials and verify that the business was accurately and fully represented.  In addition, the LOI acts as a general framework for a final purchase agreement by laying out the terms that the seller can expect to see should they agree to enter into a due diligence period.

Submitting a letter of intent is an important step to let the owner know what they can expect from you should everything verify during due diligence.  Buyer’s should be certain that they are interested in acquiring the business for sale when they submit an LOI.  Quiet Light Brokerage will not work with buyers who cancel an LOI or attempt to change the terms of an LOI for reasons other than misrepresentation or underrepresentation.

Step 3 – Due Diligence and Final Discovery

What Is It

Due diligence and final discovery is your opportunity to verify that everything was represented accurately as well as the opportunity to ensure that significant information or details were not omitted in the representation of the business for sale.

The Goal

To verify that the business is as it was represented in the general discovery step and to establish a good working relationship with the seller.

What’s Involved

  • Reviewing of 3rd party financial documents that verify revenue and expenses
  • Receiving proof of incorporation and other corporate documents (if applicable)
  • Making contact with key company contacts
  • Exclusive access to any information necessary to verify the business health
  • In most cases, you now have direct contact information for the selling party in order to exchange information more efficiently

What to Expect

Due diligence is arguably the most difficult and most important step of acquiring any online business.  By the time you have reached due diligence, you should already be convinced that you want to acquire it based on what you have been shown.  Due diligence gives you the opportunity to verify that what you have been shown is accurate and to verify that there have not been any significant omissions, intentional or unintentional, that would affect your decision to buy the business.  Most buyers develop a due diligence checklist which allows both them and the seller to keep track of what information has been provided.

A good due diligence process will be exhaustive and allow you to enter into the closing with the knowledge and comfort that you know exactly what you are acquiring. To that end, due diligence should ask as many questions as needed to ensure that the business has been represented accurately and to ensure that significant details have not been omitted.  At the same time, however, it is important to make sure that your due diligence does not ask questions that obviously do not apply to the business you are acquiring.  For example, requesting manufacturing contracts for an Adsense site would be a question that is obviously inapplicable.

Often times due diligence can be very stressful for both the buyer and the seller, and you should enter into due diligence with the understanding that this process involves the handling of sensitive information.  At the beginning of due diligence, there is usually little to no familiarity with the person you are working with, and both you and the seller are being asked to eventually part with a significant asset. Showing sensitivity to this makes a big difference in getting the information needed to verify any business.

Finally, while due diligence does grant you significant access to a business to verify its key components, there may be some items which the seller is not able to give direct access to given their sensitivity.  Should this occur, the goal of Quiet Light Brokerage is always to find a way to satisfy your verification and discovery needs while protecting the interests of our clients.  Our experience in selling hundreds of online businesses over the years has shown us that there are many ways to satisfy proper due diligence questions.

Step 4 – Transition Planning

What is It:

Negotiation of any final agreements as well as making plans for taking over the operations of the business.

The Goal:

To allow you to be operating the business as quickly as possible after the acquisition has been closed.

What’s Involved:

  • Negotiating a final purchase agreement
  • Negotiating any other final agreements (ex. promissory notes, bill of sale, consulting agreements, etc.)
  • Planning transition with any vendors
  • Setting up merchant accounts and bank accounts
  • Arranging for the delivery of inventory (if applicable)
  • Development of an asset list that needs to be transferred at the closing

What to Expect

Transition planning has two key components: 1) planning and putting in place necessary components to take over the business and 2) negotiating final agreements.  In planning for the owner transition, you will work directly with the seller to make sure that all key components are covered.  If you do not have a bank account or merchant accounts setup, this should be done as early as possible to avoid any delays in taking over the business.

Assuming that the letter of intent is closely followed, negotiating the final purchase agreement and additional agreements should be relatively easy.  Quiet Light Brokerage does have boilerplate purchase agreements which we strongly recommend you use as they cover the key areas for most acquisitions.  Absent of any significant misrepresentations or under-representations of the business, the LOI should be closely followed.

Step 5 – Closing

What is It

The moment in which you take over ownership of the business and the seller receives payment for their business

The Goal

To transfer ownership of the business to you, and to provide the seller with payment for their business.

What’s Involved

  • Executing the agreed upon purchase agreements
  • Transferring funds to the appropriate party
  • Working with the seller to change ownership of key assets

What to Expect

In light of general discovery and due diligence, getting to the closing table is a fun and exhilarating moment.  The work at this stage is mostly formalities and busy work as final agreements are executed and exchange, funds are transferred, and the process of transitioning ownership into your name is worked through.  Once funds have been transferred and the final purchase agreement has been executed, you have completed the acquisition of the company!

Step 6 – Training

What is It

Post closing training is the time in which the seller works directly with you to ‘show you the ropes’ of the day to day business.

The Goal

To get full working knowledge of how to run the business in the manner that the previous owner ran it.

What’s Involved

  • Phone calls with the seller
  • Email exchanges with the seller

What to Expect

Although you will have a good working knowledge at this point of how the business is run, there are always nuances and peculiarities that you will need to learn about.  Training allows you to tap into the vast knowledge of the previous owner who will bring you through the unavoidable learning curve that comes with owning a new business.  Most new owners find that they have full working knowledge of a business within 2 weeks of acquiring the business.  At this stage, Quiet Light Brokerage is no longer an active participant, although we are always available to assist in any way needed.

This standard process is certainly not the only secure way to manage a transaction, but we have found, and our clients have agreed, that this process works extremely well.  Each of these steps is listed in more detail below:

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