Top reasons that cause deals to fall apart
The process to sell a website usually takes a minimum of 15-30 days and there are many reasons that can cause a deal to fall apart. Working with an experienced ecommerce business broker can help you identify potential problems that might eventually cause deals to fall part before these potential issues become deal breakers. The number 1 reason that internet business transactions fall apart is lawyers. While lawyers are often necessary for internet business transactions, they do get paid by the hour and they get paid regardless of if the deal closes or not. Lawyers can often suggest overbearing one sided language that is solely in the best interest of their client instead of proposing a fair contract that ensures both parties get most of what they want. Since the majority of internet business transactions are structured as asset sales, these deals are usually fairly straightforward, but a disagreement between two lawyers representing the buyer and seller can quickly escalate into deal breaking situation. A website broker can help keep the focus on the buyer and seller working out any sticking points directly as the buyer and seller are ultimately the only two people that can agree and approve the deal terms.
Another common reason for deals falling apart is inaccurate financial information that is discovered during the due diligence phase. An ecommerce business broker should explain what the due diligence process thoroughly to the seller to ensure the seller is well prepared for the due diligence phase of the transaction. The financials presented by the website broker absolutely must line up with the company bank statements, merchant account statements, supplier invoices, company tax returns and any other supporting documentation that will allow the buyer to verify the financials during the due diligence phase. While it may sound simple, inaccurate financial information that arises during the due diligence phase can quickly kill a deal since the buyer formulates their offer based on the financials presented in the company prospectus. Depending on the severity of the inaccurate information, an ecommerce business broker can save the deal to sell your website by negotiating a new offer that properly reflects the difference in the correct trailing twelve months net profit figure. Another factor that can cause a deal to fall apart is an unexpected decline in revenues or net income. From the buyer's perspective, it can be very concerning if the website's financial performance declines during the due diligence phase because this can be a serious red flag in their opinion. Our ecommerce business brokers always remind our clients to continue operating this business at maximum capacity until the deal is 100% finalized. While some sudden declines are entirely avoidable, there can often be external factors that are outside the seller's immediate control such as an unannounced changed in Google's search algorithm that can negatively impact a website's rankings. Ultimately, there are many potential problems that can arise during the process to sell a website, but our ecommerce business brokers can help you identify these issues before they become deal breakers ensuring you maximize the value when selling your website.