The FAQ on Buying an Online Business

The FAQ on Buying an Online Business

The post-sale process is a meticulously designed pathway ensuring both buyers and sellers experience a seamless transition. From drafting the Asset Purchase Agreement to the finalization of the transaction, each step is crafted to offer clarity and security. 

See this FAQ guide to understand each phase and how Investors Club ensures your journey is smooth and efficient.

What are the next steps?

After your offer is accepted, the post-sale transaction process begins, ensuring a seamless transition for both buyer and seller. 

Let’s break it down:

  • Asset Purchase Agreement (APA) Preparation: This document outlines the sale’s terms, ensuring clarity for both parties. Both you and the seller will provide essential details like full legal names, addresses, etc., to assist in its creation.
  • Escrow Funding: This is where you deposit the funds, securely held until the post-sale process concludes.
  • Migration: Our Technical and Migration Teams will manage the transfer of all site assets, ensuring everything is migrated smoothly and securely.
  • Inspection Period: Once all assets, excluding the domain, are migrated, a 14-day inspection period starts. During this time, the business performance and revenue are monitored to ensure they match the agreed-upon thresholds in the APA.
  • Domain Transfer: After the inspection period is successfully completed, with the help of the seller, the domain transfer process will begin.
  • Finalization: If the inspection period ends without any issues, or if you choose to end it early, the escrow is released to the seller, officially concluding the transaction.

Throughout these steps, our dedicated Customer Success Managers will be by your side, providing guidance and addressing any questions or concerns you might have.

Who will guide me through the post-sale process?

Upon completing a sale with us at Investors Club, you’ll be directly assisted by one of our Customer Success Managers. Our Customer Success team is experienced in navigating the complexities of the post-sale process and will help guide you through the APA, Escrow, Migration, and Inspection stages from beginning to end to ensure both parties come to a mutually beneficial agreement and the transaction is carried out in a smooth and timely manner.

How long does the transition period usually last?

The transition period, which encompasses the APA, the migration of assets, and the inspection period, is structured to be thorough yet efficient. On average, this entire process usually lasts approximately 24 days. However, it’s essential to note that the exact duration can vary based on specific transaction details and the responsiveness of both parties involved. Our aim at Investors Club is to make this process as smooth and swift as possible while ensuring that every necessary step is diligently followed. To optimize the transition speed, we encourage all parties to stay responsive and engaged throughout the period.

Who takes care of the site migration?

The site migration process is handled by our expert Technical and Migration Teams. Our team ensures that the entire process is carried out smoothly and securely, mitigating risks and minimizing downtime. The domain will be migrated with the help of the seller after the inspection period is complete. However, you may be asked for assistance if needed for the migration and domain transfer.

Why is the domain migration handled after the inspection period?

This approach ensures the process can be easily reversed if the deal doesn’t pass the inspection period.

How does the inspection period work?

After all, assets are migrated, the inspection period begins. It consists of a 14-day period where we monitor that the business performs as advertised and the revenue meets a threshold agreed to in the APA.

The goal of the inspection period is to confirm everything is in order and as expected. If you find any discrepancies, you can report them to us for resolution. If you are happy with the new acquisition, you can end the inspection earlier, or wait for the inspection period to finish. Once the inspection period ends, escrow is released to the seller, and the deal is finalized.

How quick am I expected to respond?

When it comes to big investments like online businesses, clear and prompt communication is essential. While we don’t set a strict timeframe for responses, we do encourage you to respond within 24 hours to any inquiries or correspondence related to the transaction. This helps keep the process running smoothly and efficiently, ensuring that all parties stay well-informed and any potential issues can be addressed swiftly.

When do I own the Assets and the Revenue?

You officially own the assets and the revenue from the business once two crucial steps are completed: the signing of the Asset Purchase Agreement (APA) and the funding of the Escrow.

What is the Asset Purchase Agreement (APA)?

The APA is a document that outlines the terms of the sale. Both you and the seller need to provide certain information for its preparation, such as full legal names, addresses, and more. Once the information is provided, we will draft the document for review. The Asset Purchase Agreement (APA) is a key document that defines the terms of the sale for an online business. 

This document serves as a safety net for everyone involved, delineating what’s included in the transaction, what’s expected from each participant, and how the process should unfold. It’s a critical step in making sure everyone is on the same page. You and the seller will need to provide us with certain information for its preparation, such as full legal name, address, and more. Here at Investors Club, we’ll draft the APA for you, detailing all the essential elements. It’s part of our commitment to making your buying experience as seamless and straightforward as possible.

Can I start working on the site and making changes right away?

You should refrain from making any changes to the site during the migration or inspection period.

Do I need to have my own hosting?

Yes, unless you and the seller have an agreement in place to transfer the existing hosting account the website currently sits on.

Is there anything I should prepare to help your team with a smooth transaction? 

Make sure you have your account login details on standby for your Hosting account and your Amazon Associates affiliate ID (if applicable). If there is an Ad network involved with the site, be prepared to apply to the Ad network once the site is fully in your possession. We will guide you through this course of action when the time comes. 

How does the transfer of display ad and affiliate accounts work? 

Once the site is ready to be migrated, the display ad network will be transferred by first having the seller reach out to the network to notify them that the site has been sold. The network will begin detaching their ads from the site and disable the seller’s account. Once it is disabled and the site has been migrated to you, you may now apply to the ad network with the site.

For affiliate accounts, if the affiliate account is Amazon Associates, you will need to generate your own Amazon Associates affiliate ID to give to Investors Club to exchange out. If the affiliate account is anything other than Amazon Associates, the seller may choose to hand over their account to you or you will need to sign up for your own account and give the login credentials to Investors Club to migrate the links.

Will the seller hand over their Amazon Affiliate account? 

No, it is against Amazon’s TOS to transfer their affiliate account. Therefore, you will need to create your own Amazon Associates affiliate ID for the migrations team to replace the seller’s existing links.

What is the post-purchase support from the seller like?

Our standard agreement outlines 30 days of email support and a 1-hour time of video conferencing. This standard agreement can be negotiated if the seller is willing to lend more of a helping hand. 

How does the Escrow process work?

We will provide banking details for you to send the funds. Once you send the funds in full to our escrow and sign the APA, we can proceed with the migration. Once everything is complete, including the migration and inspection period, we will deduct the success fee from the escrow and release the funds to the seller.

Who can I contact at the marketplace if I need assistance or have issues?

You can contact your Customer Success Manager or email [email protected] for any questions or curiosities.

Can the marketplace help with any tax, accounting, or legal questions that might come up after purchase?

You can always ask questions and we can do the best we can to guide you in the right direction, but we are not tax advisors, accountants, or lawyers. It is always best to consult with your trusted and licensed advisors.

Are there any hidden costs I should be aware of after purchasing the business?

There are no hidden costs for you as the buyer. We collect our revenue from the seller as a success fee for completing the sale of their business.

If there’s a decline in business performance shortly after the purchase, is there a policy or support system in place to address this issue?

Yes, it’s called the Inspection period. It’s a 14-day period after the migration is complete where we monitor the revenue together to make sure the business is earning the revenue as advertised. Once the inspection ends, the transaction comes to a close and you’re free to build the site as you wish.

How can I ensure a smooth transition after the purchase?

We encourage you to be responsive within a 24-hour period, ask questions if you are unsure about our transition process, and be attentive to any incoming messages from either the seller or your Customer Success Manager to ensure a swift and smooth transition.

Liked this article? Give it a share.

0 comments

Leave a reply

Your email address will not be published. Required fields are marked *