Selling an E-Commerce Business? What should I do to help maximise my value and what are my legal requirements?
If you are selling your e-commerce business, there are steps you can take to help maximise the value. The process can be daunting as there is a lot to know in terms of what legal requirements you need to meet! Small business consulting and know-how can help you on your journey to sell.
Having a good team around you can make all the difference to your experience, and can keep the stress levels low. Small business consulting with the experts, and good solid legal advice early on makes good sense when selling your e-commerce business.
My number one rule is: when you start thinking about selling your e-commerce business get some small business consulting advice by talking to your business lawyer and accountant.
Your accountant will help ensure your financials are in order, and together, your accountant and your business lawyer will help you obtain clarity about what you are offering for sale, and they’ll help you work out a fair and reasonable asking price for your e-commerce business.
Your business lawyer will dive in and get all your contracts in order (this includes your draft contract of sale ready for enquiries from prospective buyers), and will make sure any other necessary legal documents and requirements are up to date and in place.
Getting your financials in order
Your accountant will help you get your financials in order so that you can make an informed assessment of what your e-commerce business is worth, and then when you’re starting to talk to prospective buyers, your financials are prepared and ready to share within the due diligence period (subject to confidentiality of course!).
Clarity around what you are selling and maximising value
Talking to your accountant and your business lawyer will help you get clarity around what you are offering for sale.
What’s included in your business? What are you selling?
Where does goodwill sit?
What plant & equipment do you have?
What leases are in place?
Do you have ownership of your domain? (you should, but it is not uncommon for business owners to find ownership of their domain is still with their web designer!)
Knowing these things early on in the process will help you arrive at and maximise a price for the sale.
Knowing what you are prepared to accept both in terms of price and conditions of the sale, will help you to be clear when negotiating with prospective buyers.
At this planning stage it helps to have small business consulting legal and financial advice. It also helps to bring your legal and accounting team together. I will often jump on to a call with the client’s accountant to drill down on the issues, ventilate our respective concerns, and see what we can do to get on the same page. More often than not, we are able to understand each other’s concerns so that we can come up with a game plan that is in your best interests.
Ensuring your contracts, agreements and legal requirements are in place
Your business lawyer will make sure that all your contracts, agreements and legal requirements are up to date and current.
You need to make sure that your employment contracts are in place for your team; supplier agreements should be reviewed; any arrangements you have with contractors need to be recorded properly in contractor agreements. Don't leave these things until the last minute because having to deal with loose ends can cause delays and increase costs.
If your e-commerce business needs compliance procedures and operating policies in place, you will need to make sure these are up to date.
Preparing the contract of sale
Once you are clear on all the above, and once you have negotiated terms (and price!) your business lawyer can finalise your sale contract.
Getting your business lawyer on board early means they know what you’re planning to do, and they can start the process of preparing your sale contract. These things can take time, so you want to be sure you give your lawyer enough time to have the contract ready to go when you, and your new purchaser are ready to go.
Once the contract of sale is finalised the remainder of the steps to close the sale are procedural and your business lawyer can take it from there.
You have worked hard to build your e-commerce business, and you deserve to achieve the best sale price possible when it’s time to sell. Seeking small business consulting legal advice from your business lawyer early on when you are preparing to sell your business will help you to do this, and really makes sound financial sense.
Our online guide ‘Building Your Small Business The Beginners Handbook’ is another great resource for small business owners to help you ensure your small business is legally compliant and protected.
You can read more about the important steps to take when selling your e-commerce business here and here.
If we can help you with this process in any way, please don’t hesitate to reach out to us.