Avoid Problems when You Buy or Sell Websites

Avoid Problems when You Buy or Sell Websites

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Avoid Problems when You Buy or Sell Websites

Reprinted with permission of VotanWeb.com

The biggest thing a seller can do to make certain that a transaction proceeds smoothly is to adequately prepare the website’s financial statements. The owner should prepare a complete set of financial documents, going back two years at least, that accurately and fully represents the website’s current business condition.

Website owners have a choice here: those financial statements can be audited or simply reviewed by an accounting firm; or they can be compiled by the website owner. But audited statements offer sellers the best hope of speeding a deal along. With audited numbers, the buyer knows that your financials are accurate and doesn't have to waste time recalculating them.

Closings can also grind to a halt when a website seller doesn't prepare interim financial reports. These reports don't have to be audited, but they do have to give the buyer a sense of the website’s financial condition. If the website has warts, there's no point trying to hide them. A buyer will discover them during due diligence, which could send you back to square one.

Another cause for concern is when the website seller enters negotiations without having worked out the bottom line, the actual after-tax compensation he or she wants. That's a problem because different deals - and deal structures - can have different tax implications. Deals can fall apart when the payment to Uncle Sam is calculated too close to closing and the selling price no longer looks adequate to the website seller.

Of course, buyers can also create problems for themselves.

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Inflexibility on the part of the buyer is the biggest problem encountered. When a buyer starts dictating payment terms, the website seller may fell that his back is up against the wall. If the buyer adopts a heavy-handed attitude then the website seller may fell unappreciated, as though the buyer doesn't respect everything the seller's achieved with his website.
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