Should You Buy The Equity Or Assets Of An Online Business?

By | Business Contracts, Business Lawyer, Internet Lawyer, Website Lawyer | No Comments
how to buy an online business course

When you’re considering an online business acquisition one of the key issues to decide is whether to buy its assets or the equity of the entity (e.g. corporate shares) that owns it.

It’s been my experience that 90%+ of the time an asset purchase makes more sense than buying equity.

Why?

With an asset purchase you can limit liability exposure better for the seller’s acts and omissions prior to closing on the deal. For example, you can reduce the risk you’re getting hit with a lawsuit or back taxes owed from pre-closing activities while the seller ran the business.

However, there are important exceptions to the general rule that an asset purchase is the better way to proceed.

For instance, there may be nonassignable contracts in place with the seller’s entity (e.g., ad network agreements) that are essential to running the venture profitably.

Another common reason for an equity purchase is where the primary source of revenue from the online business is marketing to its email lists. Where there’s an inability to sell those lists as assets because of spam and privacy laws, an equity purchase may be the only legal option available.

If you haven’t bought an ecommerce venture before, you might want to pick up a copy of my course “How To Buy A Successful Online Business.

And if you need legal help with buying an online business (e.g., purchase agreement and related documents), let’s talk by phone.

How To Protect Your Membership Website

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments
website membership agreement

When you own a membership website, a written membership site contract is essential to protecting what you own. And reducing the chance you’ll get sued by an unhappy member.

This is true whether membership is free, paid for up front, or on a subscription basis.

One of the biggest risks is a member mistakenly believing that access to member content gives the member unlimited rights to download and redistribute the content to friends or the public in general. And if you haven’t address this issue, it can create a legal nightmare.

In short, you’ll want your website membership agreement’s licensing provisions to make it clear what can and can’t be down with your content (e.g. videos, audios, text, etc.).

And there’s the problem that arises from members who don’t know what their rights and responsibilities after membership terminates (by you or the member). For example, will the terminated member get a partial refund? If so, how is that calculated?

How do you integrate a membership site agreement into the process? Typically, it’s handled as part of signup/checkout.

Like other website legal documents (e.g., privacy policy), an experienced website lawyer can help you get the right language in place to protect your online membership business.

If you need help with your membership agreement, set up a phone consultation with Internet Business Lawyer Mike Young today.

Website Design Agreement 101: IP Fundamentals

By | Business Contracts, Website Lawyer, Website Legal Documents | No Comments
website designe agreement

When you’re a website designer, there are some important intellectual property (IP) ownership details you need to make sure are included in your contract with the client.

Most designers focus on big picture issues like payment terms, milestones, etc. And that’s certainly essential for site design and other business contracts.

However, IP ownership is often skipped. And that can lead to lawsuits because the client mistakenly believes they own something they don’t.

For example, let’s say you’ve created templates from which you start site design projects. And you recycle them on multiple projects for different clients.

Now most clients won’t know this is happening and will think they own everything you’ve created.

That’s why it’s important to clearly state in the website design agreement who owns what. This includes licensing provisions for the IP you intend to retain for yourself but will let the client use as part of the site.

There’s also the issue of third-party IP that you use for site design. For example, WordPress themes, plugins, stock photos and icons, etc.

Because you don’t own this IP to begin with, you obviously can’t transfer ownership of it to the client. So it’s important that your site design contract identify this third-party IP and tell the client exactly what rights the client has to use this IP owned by third parties. For instance, some of the IP may be subject to a open source license.

Although less common, there may be situations where you use public domain code, images, etc. on a site. The website design agreement should cover this issue too so the client doesn’t mistakenly believe they own something that’s in the public domain.

If you need a new website design agreement to use with clients or have an existing contract revised, it’s probably time to schedule a phone consultation with Business Website Lawyer Mike Young.

Does Your Business Website Break The Law?

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

If you haven’t had your business website reviewed by an experienced e-commerce attorney, chances are there are legal minefields waiting to explode. That is, real danger of lawsuits and government investigations because of what your site includes and what it is missing too.

A website legal compliance review is an easy way to discover these hidden dangers so that they can be quickly fixed before your business lands in hot water by breaking the law.

What should a review include?

(1) Identify what you’re doing right so that you can repeat these good practices.

(2) Point out the legal risks that must be fixed in order to avoid costly and time-consuming lawsuits and investigations.

(3) Reveal legal dangers that you may choose to assume or fix depending upon your risk tolerance levels.

(4) Practical recommendations for fixing identified legal risks so that you know what needs to be done for your own peace of mind.

If you want Internet Business Lawyer Mike Young to perform a website legal compliance review, the first step is to book a phone consultation with him today.

Are You Overpaying To Buy An Online Business?

By | Business Contracts, Business Lawyer, Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

couple buying an online businessDid you know that it’s common to pay too much for an online business?

Sometimes it’s because of a failure to perform due diligence. Only to discover after purchasing the company that it’s not that profitable or even losing money.

The Phantom Online Business

But the most common mistake buyers make is to purchase something that doesn’t exist yet.

Here’s what happens…

Absurd Multiples

Sellers often have an inflated view of what their ecommerce companies are currently worth based upon the potential these businesses have in the future. So, they’ll set their asking price 5, 10, or 20+ times the business’ actual value.

However, that potential hasn’t been realized yet. And it may never happen.

The Work Hasn’t Been Done Yet

The current owners haven’t invested the time, money, and energy to make it a reality.

So, why should a seller be paid as if the phantom future business already exists?

Now it’s theoretically possible that a seller has put into place everything that’s necessary for his company to become that success over time.

But as a prospective buyer, understand it’s not at that point now…and you shouldn’t pay more than the company is actually worth.

Avoid Paying Twice

Because overpaying the seller for something that hasn’t been built yet means you’ll probably pay a second time to build that reality yourself post-purchase.

If you need help buying an online business, schedule a phone consultation with Internet Business Lawyer Mike Young.