Wednesday, July 6, 2022

Getting into E-com Business? Why Should You Find a Lawyer First?

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Considering buying an online apparel store? Need guidance how to go about the purchase? Just like buying any other business, purchasing an online store with a monetized website can involve a lot of money and a lot of risks. Nevertheless, an e-commerce business has an incredible potential of being immensely profitable, and you can earn even when you’re fast asleep! In order to ensure that the entire purchase process is smooth and hassle-free, it is advisable to hire an experienced business lawyer to assist you.

Understanding the business you’re buying

As a buyer, you will be curious to know why the seller is giving up on his business, even though it’s giving them handsome returns. You need to understand the entire business and try to find if there are any loopholes associated with it. While some sellers decide to sell their business due to financial constraints, declining profits and changes in the industry trends, others sell due to disputes with the partners, or maybe because they have lost interest in devoting time to it. No matter what their reasons are, you need to do your homework well. You must analyze the financial aspects of the business – check how profitable the business is if there are any hidden costs etc. From the SEO point of view, check how well the site is performing using Google Analytics and similar tools. Most importantly, see if you’ll be able to manage the whole business without any difficulty. You need to communicate your findings to the lawyer you have hired. Your lawyer could also assist you with this.

How to hire a good business law firm to help you with the purchase process
Technology’s evolving day by day. With the change in technology, you can expect some amends to the existing law as well. Hiring a lawyer who has a good understanding of technology and business law will ensure that there are no hiccups once you take over the reins from the previous owner. Your lawyer should be able to draft a carefully documented contract which has all important terms and conditions of the sale. They must also help you with copyrights, trademarks, disclaimers etc. They should have a good understanding of privacy policies, as there is a lot of sensitive data involved. In short, find a lawyer who will be able to explain law jargon in simple terms, and who will work closely with you. Choosing a reputable law firm that exclusively works with businesses that thrive online will be helpful.

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The business purchase agreement   

The purchase agreement is a contract stating that the business has been transferred from a seller to a buyer. When you’re buying or selling an online business, you need to be very clear about what goes into the agreement. The business might have liabilities; for instance, the seller would’ve hired an SEO agency, and wouldn’t have paid them. Your lawyer should be able to draft a very detailed purchase agreement using his exceptional knowledge of business law. Experienced lawyers will have purchase agreement templates ready with them, which will be personalized to suit your requirements. The agreements will differ if you’re buying only the monetized website or the assets, or both. Your contract should include all the assets you will own after the sale.

Intellectual property portfolio

In the past, many buyers and sellers have landed in legal trouble due to copyright infringement issues. Even the business you’re planning to acquire will have many intellectual property assets associated with it. This could be anything from the business logo to the domains and content used on the website.

As a part of the deal, you should ensure that you’ll gain ownership for all the relevant elements of the business, including intellectual property assets. Your lawyer is responsible to assist you with auditing the complete intellectual property portfolio for the business.

  • Content
    Ensure that the seller has the copyrights of all the content on the website, including audio files, videos, testimonials, user manuals, and product reviews. If the seller had outsourced an agency to write the content for their company, you should ensure that the intellectual property belongs only to the seller.
  • Domains and hosting
    If the online business has a monetized website, you will be buying the domains as well. Ensure that all the domains are owned by the seller (check the registration). Also, there should be enough time for the concerned domains to be renewed. The seller would have signed a hosting agreement. Check how it can be transferred to your name.
  • Licenses and third-party associations
    If the seller has any third-party associations, paid-for subscriptions or licenses, your lawyer should check the agreements with these parties and ensure that the agreement has no breach of contract whatsoever.
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Negotiation of the contract

After analyzing what has to go into the purchase agreement, the most important part is to negotiate the contract. This can be quite stressful if you do not have the assistance of a good business lawyer. A reputable lawyer with many years of experience in handling online businesses should know the right strategies to negotiate the contract for you. Let your lawyer know what your priorities are, and what demands they should be putting forward to the seller. Convince the seller by putting forward a reasonable proposal. Illogical demands and unwillingness to cooperate will make the seller look out for other buyers. As a buyer, you will need an assurance from the seller that they will not start a business to compete with them once the deal is finalized.

You could include this as a clause in your purchase agreement. The seller could possibly be having financial trouble and will be looking for buyers who will be able to pay immediately. Both the parties should be able to finalize the deposit you’ll be paying before the takeover is complete. In the end, both the buyer and the seller should be satisfied with the outcome of the sale.

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Sara Revonia
Sara Revonia
Entrepreneur, Speaker, Author, and Mom. Sara Revonia’s articles are about business, life, and Entrepreneurship.
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