Buying a Website in Installments

Advice needed on international purchase.

[TimmyMagic]

I need some advice on purchasing a website for a rather large amount.

I recently got in touch with a website in my industry about a possible advertising deal. In transpired that the person behind this site was interested in selling their site. We have since been talking about this via email.

It is a large site in my industry and would be a very good purchase. The cost is going to be for a large amount (for me anyway). I wanted to pay over 3 years, but the seller wants a much larger fee upfront, as he is concerned he won't get the further payments once I own the site.

I would be able to pay a larger upfront fee of around 65%, and then the rest over the next couple of years. I think they would be happy with this provided they were satisfied they would get the remaining amount.

The other problem is that I'm from the UK and the seller is in the USA. So it makes things a bit more complex, legally.

I have purchased a domain before using an escrow service. This went smoothly but the transaction was only $500, and it was just a one off payment. This is much bigger and I don't know of any escrow service that would resolve the problem of payments 2, 3, and possible 4.

Does anyone have any experience with this? What sort of legal stuff should be done to ensure both parties are happy with this? Any advice would be very much appreciated.

[Essex_boy]

How about turning teh company into a Limited company with 100 shares? You just transfer the shares then to effect the purchase, however get it all in writing before you do anything.

Oh yes and state under which country's laws the agreement is signed under.

[trillianjedi]

What sort of legal stuff should be done to ensure both parties are happy with this?

Instruct a lawyer. If it's a large sum, it's the only advice that we can give and that should be taken seriously.

TJ

[vincevincevince]

There are products which provide you with what is effectively a loan for the purchase, giving the seller the money instantly and leaving you to settle the debt with a third party. Your seller may accept a smaller total amount in return for it being paid entirely in one installment (giving him quick payment and much-reduced risk), which offets the cost of the product. Enquire at your local bank. You will probably need collateral - whether corporate or personal.

[LifeinAsia]

Besides the legal issues, there are also the tax issues. Make sure you get everything squared away with your tax advisor. I'm not familiar with U.K. tax law, but there may be some sort of reporting required for purchasing the assets of a foreign business. And I'm sure they have similar rules to the U.S. for reporting/treating installment purchases.

[TimmyMagic]

Thanks for the replies.

Speaking to a lawyer is probably a wise idea.

I'm not too keen on a third party holding the money, because I may as well just get a bank loan for the whole amount, as I'm sure the interest rates would be about the same if not higher. The question is whether I can raise the funds in one go.

I didn't even consider the tax issues, so thanks for that particular tip. I will investigate that.

It may be that I just have to take out a bigger bank loan to cover the majority of the purchase, and try to get the price lower because of this. Then we could probably use an escrow service - which would reduce the need for a lawyer. I think the seller just wants to ensure that they at least get a sizeable payment incase I don't pay up the remainder. Which is fair enough, as I can't really think or how to guarantee payment, other than giving my word. I'm an honest person and would pay up, but business is business - they don't know me.

I'm still waiting to hear back on my latest offer, so I shall see what the seller says and take it from there. Once again, thanks for your replies. If anyone has anything to add then i'd be happy to hear more views.

[igorberger]

What happens if after 3 months the site drops out of Google?

Will you still pay the money owed to the seller?

Do you know your SEO, or you going to blame the seller?

If I were the seller I would want all the money up front.
If I am the buyer I would be coserned with the site having hidden problems with SERP's...

Risk on both sides...

Good luck.