- Verify Ownership and Authenticity
- List Assets in Your Asset Purchase Agreement (APA)
- Transfer Your Assets
- How to Create an Asset Transfer Plan
- Always Use Escrow
- Swiftly Transfer Your Assets
- What’s the Best Way to Transfer Ownership of a Website?
- What’s the Best Way to Transfer Ownership of Code?
- How Are Online Advertising Accounts Transferred?
- How Do You Transfer Customer Data and Email Lists?
- What Are the Risks Associated With Transferring Online Assets?
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:
- 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.
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.
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
- 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:
- Your buyer deposits acquisition funds on Escrow.com.
- Once you’ve received notification that your buyer has transferred their funds, send your assets as described in the APA.
- The buyer reviews the assets and approves the release of funds on Escrow.com.
- 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.
What’s the Best Way to Transfer Ownership of a Website?
We suggest you follow these steps after agreeing with your buyer to use an escrow service:
- Unlock your domain via your hosting provider (GoDaddy, Bluehost, and so on).
- Request an authorization code for transferring the domain or find it on your host’s website.
- Send your domain to your escrow service like Escrow.com.
- Authorize the domain transfer after it is complete.
- Let Escrow.com take care of the rest.
What’s the Best Way to Transfer Ownership of Code?
Most people transfer code through file hosting services like Dropbox, Google Drive, or GitHub. You can share code files with others, and you can control access to the files by setting permissions.
We suggest you password-lock an online code repository like Google Drive and send the code over once your buyer has confirmed they have sent funds to escrow.
You might also want to consider:
- Using a package manager like Advance Packaging Tool if your code relies on external libraries or packages. This makes it easier to transfer your code to different machines without manually installing dependencies (components that require other components to work properly).
- Using a container tool like Docker to package your code so it runs on any machine that supports the program. This will make it much easier to transfer your code to different environments without worrying about compatibility issues.
How Are Online Advertising Accounts Transferred?
Online advertising account transfers vary somewhat depending on the platform, but generally, you’ll want to:
- Notify the advertising platform: This may involve filling out a form, submitting a request, or contacting customer support.
- Verify ownership of your account: This may involve providing documentation or answering security questions.
- Transfer account ownership: This will involve assigning a new login, updating billing information, or changing account permissions.
- Confirm the transfer: After you’ve transferred your account, both parties need to confirm that the transfer was successful. Ensure all account settings, campaigns, and billing information have been transferred correctly.
How Do You Transfer Customer Data and Email Lists?
Customer data is sensitive and a breach could tarnish your name and expose you to legal action. Most businesses transfer this type of data using a secure file transfer protocol (SFTP) or an encrypted email attachment.
Here are some general steps to follow when transferring customer data:
- Obtain consent: Send out a notification to your customers or subscribers explaining the transfer and allow them to opt out.
- Determine which data you’re transferring: Is it contact information, purchase history, or email preferences?
- Export the data: Most email marketing platforms allow you to export your email list as a CSV or Excel file. Make sure this file type is compatible with your buyer’s system.
- Securely transfer the data using a secure file transfer protocol (SFTP) or an encrypted email attachment.
- Notify customers: Once you’ve transferred the data, your buyer should notify customers that the transfer is complete and provide them with any additional information.
What Are the Risks Associated With Transferring Online Assets?
These are some of the most common risks you’ll see when transferring your assets:
- Data breaches: Transferring online assets can expose sensitive data, such as customer information and financial data. Breaches can damage your reputation and result in legal liabilities and financial losses.
- Unauthorized access: Transferring online assets can also expose sensitive assets to unintended parties including employees who fall victim to phishing scams.
- Compliance issues: These transfers can encroach on data privacy regulations, intellectual property laws, and licensing agreements, potentially opening you up to legal action.
- Technical issues like data corruption and system failure: This can lead to delays, additional costs, and data loss.
That’s why we recommend you take extra care to transfer your assets securely and understand the legal implications of transferring assets like customer data. Consult legal counsel if you are concerned about any sensitive data leaking during your transaction.