Selling £six figure website

[nomis5]

I'm in the final stages of agreeing to sell one of my websites for a six figure £ amount. I need any advice you can give me about the sales procedure. I don't need advice as to if I should sell it - the price is right and I want to sell.

I'm in the UK, the buyer is an Israeli and his company already owns several popular sites.

We are going to use a well-established escrow company to transfer money and ownership. But aside from that I have no idea what pitfalls await me in the final stages. Could anyone use a purchase like this to damage me? I have two other popular websites and several smaller ones.

I haven't seen any contract yet, I am meeting the guy on Thursday in London. He most certainly has experience of buying / selling websites in the past. I have no experience.

Any ideas or warnings will be most gratefully received.

Worried from Warwick.

[exmoorbeast]

Good luck and I hope it all goes well.

[edited by: phranque at 4:00 pm (utc) on Mar 11, 2010]
[edit reason] see StickyMail [/edit]

[Whitey]

Buckworks has given you some top advice.

I beleive the key is in getting the right brains in place to act as insurance. Speak to either a good lawyer or accountant , but both professions must be involved. Consider a decent fee as the price of security of mind and pocket. Make sure you understand the technical implications as well in the transfer - a " change document " is vital.

You have to consider warranty , idemnity , intellectual property , funds , title , recourse if things break down , jurisdiction of law , taxation , securing the contract etc etc . For a small amount no such consideration is needed - but this is a good amount and $10 to $20k would be good security. Make sure the skills are from a specialised commercial lawyer / accountant. A middle tier firm is what you should consider as their fees will not be as high.

Good luck and congrats on achieving this level.

[jecasc]

If you are about to sell your website for a six figure £ amount it would be absolutely reckless not to spend a few £ for a professionl lawyer and/or accountant. Don't let greed get the better of you, you could end with the website gone and zero £ on your account.

[oddsod]

I'm in the UK, the buyer is an Israeli ...We are going to use a well-established escrow company

As long as it's not escrow dot com. If he's an experienced buyer (like me) he could get your site for free and without you having any case against him ;) It's as easy as pie. I've done it in the past - by accident (though I always made restitution to the seller as soon as I discovered the problem). If it can be done by accident you bet that a canny enough buyer can do it intentionally.

He could copy off the code, decide he doesn't want to buy and that's it? Is there any way round that problem? Any thoughts?

There is no way around that if you're using a Californian based escrow company rather than a UK legal firm. Or any escrow company anywhere in the world that happens to have registered for US business in the state of California.

Possibly I might get completely conned

You don't need to. I've written extensively about the sale of sites, safe transactions and smooth transfers and have been involved in the sale/purchase of millions of dollars worth of sites. Drop me a sticky for links to my material on the subject or ask in the thread for answers.

But this whole thing now appears quite complicated. If the domain is they key, what about the hosting, after all that's where the code resides? Is it normal to give the buyer the password to the hosting account and let them keep the account / copy the code to their own account?

There is no "normal". Each case is individual and it's up to you to decide the conditions you want to impose, the route you want the transaction to take. Decide that with your lawyer prior to drawing up the contract. Bear in mind that if you use an escrow company (particularly the one I think you're planning on using), their terms and conditions and grievance procedure complete replace the carefully drawn up contract between buyer and seller and your rights under UK law.

[edited by: oddsod at 11:28 am (utc) on Mar 11, 2010]

[edited by: phranque at 4:01 pm (utc) on Mar 11, 2010]
[edit reason] see StickyMail [/edit]

[WebWalla]

The term "6 figures" is being bandied about here as if it were gold, but £100,000 is not THAT much money when it's your livelihood. Maybe 2 years salary to a lot of poeple?

Admittedly it could also be £999,999 which is very different but a low 6-figure for a money-making website wouldn't warrant a sale in my opinion, and much less after you've paid escrow, lawyer and accountant fees.

I was recently offered 12 months revenue plus $10,000 for a site, which would have taken it very close to 6-figures and it was a no-brainer - I much prefer to keep it and the revenue for the next year and beyond.

I know this is not the type of reply the OP was looking for, for which I apologise, but wanted to express my opinion anyway in case it gives food for thought.

[TinkyWinky]

I give the buyer access to my code etc. for a set time

Personally as someone who has used escrow/com previously, set the time to view to 1 day - otherwise they can reverse the deal once having changed DNS and trialled your traffic....and taken your code.

We got stung by that one on a 3 day view - luckily all turned out ok in the end.

We didn't lie about traffic, we didn't lie about anything to do with this website - but the buyer was convinced traffic was higher and wanted to play with the code etc.

He cancelled - although he picked up the cost for the cancellation fee.

Just a small warning - and as previous poster has said - it's not a UK company so legal recourse would be a nightmare. Protect yourself first - personally for a large transaction - I would use a solictor and their bonded account.

TW

[wheel]

Just as a counterpoint (you probably shouldn't do this) I've sold six figure websites twice. Both times were to people I knew, and both times there was no escrow. In fact, both times there was little more than a handshake. And in both cases, everything went great for both buyer and seller.

And I'm currrently looking at selling a block of website business to someone on a different continent. I'd imagine we'll do this without a contract as well, though it's only going to be a 5 figure deal, not a 6 figure one.

[nomis5]

Thanks for all that advice.

Yes the price is in the very low six figures. And that's the problem. The site for sale represents about 35% of my website portfolio so I simply can't afford to risk loosing it for no money. I have a current partner, two ex-wives and several children to support after all!

But at the price, it's not worth spending £10k or the like on lawyers and accountants. It would make the deal unrealistic.

Also, it's clear from the advice given that I am totally unprepared for this deal. I had no idea of the complications. I imagined use of an escrow company followed by a quick transfer of money / site with no complications.

I need to call off the deal and consider if I really am up to ever selling a site of that value. Here's a few thoughts on your valuable comments.

Wheel - good point, though you did your deals with people you knew. You also are clearly more streetwise than me.

Webwalla - your point is the key. It's a lot of money but using lawyers and accountants kills it immediately. The price is not enough for that.

Oddsod - thanks for the warning. If you can do that by accident, that's me out of the deal.

Whitey - " warranty , idemnity , intellectual property , funds , title , recourse if things break down , jurisdiction of law , taxation , securing the contract etc etc". You're right, and I'm a web site manager and not much good at anything else. I couldn't manage thinking about two of those things at the same time let alone all.

Thanks to all of the other contributors, all good stuff.

The deal's off, I'll stick to what I know. And thanks to the mods for putting this as a featured post which attracted attention. I hope it helps others in the same situation at some time.

[TinkyWinky]

using lawyers and accountants

This can be done for < 2% of the transaction... for £2k a heads of agreement can be set up, 2 page letter outlining what's being sold etc etc and then using a solicitor that allows you use their bank account as the 'escrow' account. The money is held 'in trust' for the seller and once all transfer made, then you get the cash. I've done it and it doesn't need to be anywhere need £10k+. Just don't use central London legal or accounting professionals ;).

Good luck.
TW

[oddsod]

You're right, and I'm a web site manager and not much good at anything else.

That's not necessarily a deal breaker. A good broker - I don't do broking and don't have a recommendation for brokers, sorry - may be able to assist you with all that. But professional advisers shouldn't cost £10K. You'd need just a lawyer, not an accountant. As TinkyWinky says, it could be done in £2K.

But if you've decided to call it off, then it's your decision. Hope I didn't scare you unnecessarily. The buyer may well have been an honest, well-intentioned one. They do exist :) And this type are always willing to sit and discuss options and accept reasonable terms that increase your comfort level.