How to Safely Transfer Your Assets in an Online Business Acquisition

You’d be forgiven for thinking changing owners of an online business would be easy. After all, you needn’t worry about hauling equipment to another location or transferring paper deeds or business licenses like you would with a physical store.

But most founders of online businesses are surprised by how many steps are involved in transferring their assets to a buyer. After just one year of business, you’ve likely accumulated an impressive number of assets like domain names, online content, code, contracts, and more. To sell them, you need to be able to securely transfer each asset and prove you’re the real owner – or risk tanking the deal.

As an online M&A marketplace (run by a CEO who has successfully sold many online businesses), we want to give you all the information you need to do this safely. Before and during your sale, we always suggest you:

• Verify that you own your assets.
• Create a clear APA and asset transfer plan.
• Transfer your assets securely through escrow.

Here’s exactly how you should take care of these steps and why they are important.

Verify Ownership and Authenticity 

Before transferring any assets, verify that they exist and you own them. Anyone can say they own a web domain or the right to use software, but only one person can produce the documents to prove it. Keep track of the following documents when selling.

Registration Certificates/Vendor Licenses

A business registration certificate is usually an official document recognizing your company as a separate legal entity in a specific location such as a city or state.

Vendor licenses are agreements between you and a buyer, usually for software products. They grant you the right to use the product or service in exchange for payment. They also specify the conditions under which they can use it. Listing your app on the iOS store, for example, requires a vendor license. 

You may also need vendor licenses to use:

• Hardware
• Music or video content
• Consulting or professional services

Proof of domain ownership is probably one of the most important registrations you’ll transfer when selling your online business. But it’s a little tricky to legally prove you’re the domain owner. The best way is to update your WhoIs information with yourself as the registrant and administrative contact. Then set your information to “public” with your hosting provider.

To ensure you aren’t scrambling through folders, save a copy of all your registration documents and vendor licenses in a folder. Include it in your data room when preparing to sell your business.

Contracts

If the buyer wants your employees to stay on, they must enter into new employment agreements with them. The buyer will include this condition in your asset purchase agreement (APA). But they’ll also want to see your current employment contracts to avoid losing a key employee over a mistake or discrepancy in their new contract.

Also, consider your contractors. Did they sign agreements relinquishing intellectual property (IP) created on the job? If not, they might expect something from your acquisition. Such handshake agreements get tricky if a contractor decides they deserve a partial payment for assets they’ve created or refuses to relinquish parts of it.

If you haven’t protected your IP in your employment and contractor agreements, you should review or reissue them pre-sale.

Invoices

When your services are digital, you need documents proving your sales. Invoices are evidence of your business’s operations and financial transactions between customers and vendors. By maintaining a record of them, you can demonstrate you’re the rightful owner of your business and have conducted legitimate transactions.

Collect and save invoices from everyone you’ve worked with from that marketing agency you hired once to your domain hosting provider. All of these cement proof of your ownership of your assets.

List Assets in Your Asset Purchase Agreement (APA)

When you transfer an online business, seldom is it only a domain and some code. Often you’ll transfer a whole host of other assets like:

• Customer data
• Email accounts
• Social media accounts
• Productivity tool subscriptions
• And much more

You and your buyer should know exactly what to expect in this transfer to avoid misunderstandings. Before your deal can go through, clearly itemize the assets in your APA. 

When selling your business on Acquire.com, you and the buyer will use our APA builder so you can easily draft the agreement with guidance on what to include.

Transfer Your Assets

You’re ready to transfer your assets once you’ve completed the following steps:

• Isolated and verified your assets.
• Compiled and shared all proofs of ownership, certificates, licenses, and invoices.
• Jointly signed an APA with your buyer.
• And completed due diligence.

But you can’t begin the transfer without an asset transfer plan. Otherwise, you risk leaving assets behind, transferring them to the wrong person or place, or exposing yourself to fraud. 

How to Create an Asset Transfer Plan

Your asset transfer plan should include:

• The assets to transfer.
• Who’s transferring the assets.
• The destination of the assets.
• The date of the transfer.
• Specific steps for transferring each asset.

Generally, these are the type of assets you’ll transfer:

• Various pieces of intellectual property (IP)
• Websites and domain names
• Internal processes and manuals
• Customer email lists and data
• Social media and advertising accounts
• Employment contracts
• Invoices
• Product stock
• Vendor contracts

Each transfer can involve different actions. While some assets like email accounts simply require a password transfer, a domain transfer requires multiple manual email confirmations and may include calling your hosting provider.

Always Use Escrow

The biggest issue in online asset transfers is security. Fortunately, there are ways to transfer your assets safely, such as with an escrow service.

We partner with Escrow.com to provide a secure transfer process for important items like your website domains and buyer funds. Escrow.com holds onto these items until certain actions are completed by both you and your buyer:

1. Your buyer deposits acquisition funds on Escrow.com. 
2. Once you’ve received notification that your buyer has transferred their funds, send your assets as described in the APA.
3. The buyer reviews the assets and approves the release of funds on Escrow.com.
4. You receive your funds from Escrow.com.

Using Escrow.com prevents buyers from running away with your assets without paying, and likewise, it protects them from unscrupulous sellers who take their money and run without transferring any assets.

On our APA Builder, you choose whether or not to use an escrow service and who’ll pay the fees. You or your buyer can pay the full amount or split it 50-50.

It’s possible to transfer your business and money without an escrow service, but we do not recommend it unless you and your buyer are close friends. Even then, we still recommend it.

Swiftly Transfer Your Assets

Swiftly executing your transfer is just as important as planning it. Dragging out a deal is a sure way to sour relations between you and your buyer and creates complications if you fail to send your assets. It will also throw a wrench in the escrow process.

Rather than transferring all the assets at once, it can be helpful to transfer them in stages. Start with the most important assets like the web domain and codebase and then move into peripheral assets like email accounts. Ensure you transfer each asset completely before starting the next. 

You’ll have much less stress throughout the process if your buyer has agreed to use Escrow.com.