Three Legal Issues When Selling Your eCommerce Business

As the owner of an eCommerce business, you may find potential buyers approaching you to purchase your business. Often, they choose this path to avoid some issues they could encounter if they alternatively create their own eCommerce business. For example, this may include creating an eCommerce website, gaining customers and services such as social media and marketing a new product. However, if you do have an eCommerce business for sale, there are key legal issues to be aware of. Selling an eCommerce business can be a lengthy process, so understanding these issues is integral to having a smooth and problem-free sale. This article will explain three key legal issues to be aware of with an eCommerce business for sale.

1. Preparation

If you prepare your eCommerce business for sale well, it will appear a robust and attractive eCommerce business to buy. Part of the legal preparation for selling your eCommerce business includes organising paperwork and operational documents. For example, this includes ensuring:

• your agreements with employees, freelancers and suppliers are up to date;
• you update your profit and loss statements; 
• your bookkeeping as as a  whole is up to date, such as expenses, so your buyers can prepare themselves for the financial commitment they will take on; and 
• checking tax returns are complete.

You will also need to prepare documents you do not already have in your business. This includes the standing operating procedure (SOP) instructions to assist the buyer of your eCommerce business once they take over. SOPs are likely to cover many areas rather than just the primary operations of your eCommerce business. For example, they can include smaller daily functions such as:

• managing email flows;
• running customer support and
• operation for virtual assistants. 

2. Intellectual Property 

When you have an eCommerce business for sale, you must consider the key legal issues regarding intellectual property (IP) rights. The buyer of your eCommerce business will want to satisfy themselves as part of their due diligence that you own these rights they wish to buy from you through the eCommerce business sale. 

If you are the copyright owner of, for example, the pictures and graphics of your eCommerce business website, you have the right to sell these to your buyer. However, if you are only the licensee for these, you must ensure your licence is transferable so you can pass this to the buyer as part of the business sale. Further IP legal issues you must be aware of in your business sale include:

• trademarks;
• patents; and
• trade secrets.

Due Diligence Guide for Buying a UK Business

This guide will walk you through the due diligence process when purchasing a UK business.

Download Now

3. Letter of Intent 

A key legal issue to be aware of when you have an eCommerce business for sale is that once you receive a verbal or written offer to buy your business, you must create a letter of intent. This is a legal agreement between you and your potential buyer detailing their intention to buy your eCommerce business. There are some fundamental terms to include in this, including:

• the price you both agree on and any finance terms;
• a robust confidentiality clause;
• a tight non-compete clause;
• due diligence terms; and
• exclusivity for your buyer to complete a due diligence period and the timeline for this.

4. Employees

In addition to these three key legal issues, you should also be aware of how the business sale will affect employees of your eCommerce business. The buyer has no obligation to take on existing employees, so you should learn their intentions as soon as possible. Furthermore, ensure you have all employment records and employment agreements in place. 

Key Takeaways

If you are selling your eCommerce business, you must be aware of key legal issues before and during the sales process. This includes preparing for the sale by updating financial records and checking any legal agreements. Additionally, understand the intellectual property issues your eCommerce deals with. Finally, ensure you create a letter of intent once you have a potential buyer for your eCommerce.

If you need help understanding the key legal issues to be aware of with when selling an eCommerce business in the UK, contact our experienced eCommerce lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.