Need Help - Finalising a Deal to Purchase an Ecommerce Business

Lpa33w0rd on 10/04/2018 - 12:20

Hello ozbargainers,

I'm a long time lurker but first time poster in the forums and I'm looking to pick a brain or two with my below query. I do love the sense of humour of people on this site and I'm sure their hands would be scratching to provide their 2 cents, please do so as well :-)

I'm in the process of purchasing an already setup and running ecommerce business. I was wondering if any fellow ozbargainers have experience doing this and would like to share some of their experience? Especially, what things I should be making sure with the transfer of the business to my name. I have reached out to an accountant to help with that but would be good to get an understanding on it from your experience.

Is there a checklist of things that you could share?

Fashion & Apparel

Comments

  • Seraphin7 on 10/04/2018 - 13:09
    +6

    I can't stress this enough … engage an appropriately qualified lawyer.

    You need to understand exactly what you are and aren't buying, is there any IP in the business that you will/won't have access to, what warranties are being provided on the sale and what are the remedies available where such warranties are breached, what level of support (if any) is to be provided by the seller during any handover period, what contracts are you taking over, are there any existing legal issues with the business, etc., etc., etc.

    Even apparently relatively straight forward transactions can cause problems where one party assumes what will happen without having material scenarios discussed and considered as part of the contract of sale.

    • Randxyz123 on 10/04/2018 - 13:39

      This. I know this is OzBargain but you need to get professional help to make sure it all goes smoothly. Maybe get them to do some background digging and make sure you aren't purchasing something dodgy.

    • pa33w0rd on 10/04/2018 - 15:58
      +1

      Thanks a lot for the info provided by you, Seraphin7. Much appreciated. This is very helpful.

  • stirlo on 10/04/2018 - 14:12

    You should make sure you know why they are selling. eCommerce moves quickly, a business that sold $50,000 worth of fidget spinners last year is definitely not worth $50,000 this year.

    If dealing with affiliate relationships make sure the partners haven't changed any terms. Ensure you know the source of the traffic your site is getting. Approach suppliers to the business independently and ensure there's nothing about to change drastically.

    What competitive advantage does this business have that justifies their value, could you just copy the business without buying it? If you can you can be sure someone else in the future will do it to you when you're the owner.

    Be extremely cautious and don't take anything the seller says at face value. Hopefully you have experience running a business in a similar area already, if not try to find a mentor who does have that experience.

    • pa33w0rd on 10/04/2018 - 16:04

      Thanks stirlo. The business is not unique in any way. It deals with general clothing and some fitness wear. I'm basically buying it to see what it takes to run an online business. I'm not spending too much money to buy it but I take the point that Seaphin7 raised above about warranties.
      I unfortunately don't know anyone who has experience running online business so I guess I'll learn it as I go and I'm prepared to fail as there is no better way to learn :-)

      • Ughhh on 10/04/2018 - 19:01

        Sounds like you're better off practicing on eBay first

  • grabngo on 10/04/2018 - 14:46
    +1

    u are asking a bunch of people who wouldn't pay 5c for a torch battery about buying a business?

    • pa33w0rd on 10/04/2018 - 16:05

      LOL, I already have two wonderful suggestions above so I kind of disagree with you here ;-)

  • Third_Gear on 10/04/2018 - 18:55

    I've been involved in ecommerce since the late 90's. A lot of people keep rattling on how about how this has changed and that has changed but really the fundamentals of retail are still the same.

    Feel free to pm if you need a little help here and there. I've assisted many folks over the years get a grasp on the basics etc.

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