Main differences between selling an Online Business and selling a Physical Business
1. Online business does not have shopfront or physical office space but website or online platform
2. Most transferable assets are made up of the IP (intellectual property) of the online business, e.g. trademark, copyright, social media and software, domain names
3. There are fewer physical assets to be transferred as compared to sale of physical business (not transfer of shares of business)
Main Legal Process of Sale of Online Business
1. Drafting and preparing sale of business contract;
2. Negotiate, finalise and signing the sale of business contract; and
3. Due diligence exercise on the business, e.g.
(a) financial records, books and accounts, audit or tax compliance
(b) legal compliance, any legal claim or labour claim against the online business
(c) ownership and conditions of the assets included in the sale
(d) any contracts which are vital to the business’ operations and whether consent of any third parties that you have engaged, such as suppliers or software developers for the assignment of these contracts to the buyer of the business is required
4. Completion: settling the purchase and the deliverables of the business to the buyer
Some of the keys things to consider for selling an online business
1. What to sell? What assets are included in the sale?
3. Ownership of IP of the business and the transfer of the same
4. Privacy and consent consideration: any consent from customers or 3rd parties is required for the transfer of their information to the buyer
For E-commerce or online business legal services, please contact Chow & Cheung, Hong Kong Solicitors & Notary Public (E-mail: firstname.lastname@example.org).
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