Advice on selling a website

[adejones]

Last year I developed a website which is an online community for people who work in primary care, I made a couple of grand from listing vacancies and got over 1100 registered members on the forum.

These days I just dont have the time to maintain or upgrade the site to keep it fresh and it is starting to suffer i.e. the forum is quiet. I posted on PeoplePerHour.com for someone to find me an investor, buyer or advertiser and I got a message off someone who states he knows a few interested parties.

In short, the message swapping has gone as follows:

Him: How much are you looking for
Me: I am open to offers
Him: Do you have financials, I want to value the business
Me: It cost nothing to make, £30 a year for data protection, £60 a year for hosting which I pay for anyone and income has been around £2k this year on vacancies
Him: I know a company who would be perfect for this and may be interested in moving the members over to their site, If there is a way of restructuring and you take equity in their new site, though it may not be much, would you be interested?
Me: What is the company and website?
Him: Telling you would make my job redundant
Me: True, but I wouldn't pay you without guaranteed interest, catch 22
Him: My daily rate is £500 per day, but I invest in companies myself, so wanted to know what you were looking for in terms of value, If I can put a deal together I would take either a lump sum payment or equity
Me: I havent put a value on my site, i'm a young lad with a wedding to pay for, I work in primary care, I made this site, I made a bit of money, but now I dont have time and want to off load this, Ideally I just wanted someone to say I'll have your site, here's a few grand
Him: Whats your website
Me: *gives URL*
Him: Looks interesting, difficult to value, where are your members based
Me: All over England, mainly London, have a look at the members map made from postcodes in a database
Him: Subject to due diligence, I can get you £1500 for that, that's what a client has said I can go to providing everything is in order, I have 3 clients in mind but one has said I can pay £1500 but to try and get the price down although you're getting married so any less would not be fair to you, My job is to do the due diligence then assuming I am happy there will be a contract to sign and you get your your money. Probably take about 2 weeks.
Me: £1500 for a website I created and brought up for 12 months would be an acheivement so would be happy to let it go for that, and obviously if it were to sell for £1500 then we can come to an agreement for payment for you too as the middle man.

Now in full, these were further replies:

Him: Yea it's not a bad investment you did you did well.

2 ways of doing this, with or without lawyers! I can do the agreements so not worried about that side and can handle the money side. The tricky bit is when we all sign the sales/purchase agreement, the website needs transferring over and the money needs to be sent. Obviously no one is going to send over money without having the website, and you won't want to hand over the website without the money. Lol. So it's either down to trust or meet in London, you count the cash, transfer the site over and it's all done! Lol, a little crude unit works. Otherwise need lawyers which will probably cost £500 for me and £500 for you.

As part of the due diligence, I will need to see that a) you own the domain and the IP. b) the database c) will need my tech guy to look over how the system has been built etc.

What I would like to do start the process quickly so draw up the sales agreement, I am on holiday at the moment (always working though lol) and back on the 5th September. We should be in a position to complete by then.

I hope you are genuine, and your word is your bond so to speak, I was buying a company for a client and my client walked away after spending £10k on legal fees because the seller was holding off for another buyer even though he agreed to sell to my client. In the end, no one bought it, the seller went bust, and my client and I bought the assets incredibly cheaply! Lol. I am sure there are many lessons in there somewhere!!

I should be able to get over to you the sales agreement this weekend/ very early next week. What is your email?

Me: Well seeing as I live in the North West, meeting in London may not be an option lol so I guess it's down to trust.
I can assure you I am genuine and as said, am keen to save for my wedding so not likely to back out, I also hope you are genuine lol

Him: 100% genuine. I went to Manchester Uni occasionally go back up there, from North Yorkshire originally, then to the big smoke

Okay, what I will do is ask my web guy to check over everything, then ask you to move it to his server, then can get the money transferred over to you. I can then get it off my web guy after that. He is a freelancer so independent to both you and I other than I use him quite a bit!

Sound like a plan?

Me: Yes that sounds fine with me, but can we do that after this agreement has been signed etc so its all official?
Dont want to transfer my site without a signature of some sort

Him: Yea will sign the agreement first then transfer over he confirms to me he has it etc then you will get your money

Question is, what is your opinion on this? Do I see what this sales agreement is and then decide? Or do I just say this sounds dodgy, no thanks. Is it too good to be true etc..

 

[Big Pete]

make sure he pays prior to moving a single thing ... or well blah blah etc etc ..

 

[ethical PR]

If you decide to go ahead, I would suggest using something like https://www.escrow.com/solutions/escrow/process.asp

This way you would both be protected.

If I was in your position I wouldn't feel confident about letting his 'tech guy' have access to the back end of your site, based on his 'sales agreement'.

If he is genuine, he will have no problem, using an Escrow type facility. Offering to meet up and pay cash in exchange for you signing over a £1500 business sounds strange for someone who purports to be a investor/broker on £500 a day.

 

[Suzuki]

Offering to meet up and pay cash in exchange for you signing over a £1500 business sounds strange for someone who purports to be a investor/broker on £500 a day.

Exactly... this deal stinks to me. It just doesn't look like how a normal transaction would take place. And I do this for a living (building my own sites, buying websites, but almost never selling them).

I would tell him to bank transfer you the money and you will then transfer everything to him. Don't get involved in showing him the database etc - if he wants to transfer the members then giving him access to the DB might be all he wants - he can get their contact infos from them (or even transfer them without their permission) and you will never hear from him again, or see any money.

Its really bizarre to talk about due diligence etc and meeting in person for a £1500 website... my honest opinion is that he's probably not a scammer... just a kid playing at being a real business man. Maybe I'll be wrong but I bet there are no clients or money, and you'll get the run around for weeks if you try and deal with him.

 

[Deleted member 27344]

I would never trust anyone that says 'lol' in a business transaction.

 

[Blue Steel]

Don't give database access in this situation until you have the money cleared in your bank account.

Apprieciate you have a need for wedding funds but don't be in such a rush,
(to sell, not marry - well ok both!) possibly look at getting someone you work with involved in the site, £2k in first year from job postings sounds very promising.

 

[Chunkford]

Never ever give anyone full access to any of the back office especially the database. You are opening yourself up to being scammed.

Have you spoken to this guy on the phone or has it been all over email?

TBH if it was me I wouldn't be happy. Use a escrow service and see the colour of his money before you do anything more. Failing that take a look at flippa, as its making money you should find buyers.

 

[Websitehandyman]

As Chuck says.

Sold and bought loads of sites, never given access before payment in full and never done any paperwork or met the buyers. Some I still have contact with now via email.

 

[SuffolkDesigns]

I have sold sites for a lot more and have never used escrow or had a problem.
A good sales agreement stating exactly what is included and that you will give them full access to everything mentioned in the sales agreement within 48 hours of the funds arriving in your bank account.

There are plenty of sales agreement templates around for this type of sale.

If they have a sales agreement signed by you, and the bank transfer states what the £'s are for, whilst they still have a possibility of getting screwed by you they would have enough for a court case should you not hand over the site & data.

Whatever you do, don't give away your data without receiving the funds first.

 

[The Resolver]

Is he still fronting for a third party , as he initially indicated, or buying to run it himself? Its not clear from the messages. Once the intermediary has facilitated a deal you should always complete direct with the buyer.

Also no mention from what I can see of transferring the domain registration. If he has not asked for that on completion then clearly he is only wanting the database and not the traffic.

You need to ensure any contract excludes any warranties as to the quality of the database and the vacancy information.

As you both 'met' on PPH then why not simply set up a deal on the PPH platform? You pay a small % but it includes an escrow (require 100% not the usual 50%) and protection under their native terms. These include (at least the ones I helped draft a few months back for PPH) a dispute resolution system to protect the buyer. But make clear all you are doing is handing over a database and web coding and domain so no area for complaint that you have failed to complete. It also makes him or his 'client' contractually committed to you.

 

[adejones]

Thanks for your replies so far, some great suggestions i.e. use escrow.com which I was not aware of and also a great sugegstion from The Resolver about setting up a deal on PPH.

He has now sent me a "sales agreement" so see what you make of this as I no very little about the legal side of things.

You can view the document: HERE

 

[The Resolver]

Can't seem to open this.

 

[adejones]

Can you right click and "save target as" on the link?
I was looking for an option to upload the document in to the post but I don't see it as a feature.

 

[The Resolver]

It saves but it tells me there is an error. Paste as text although may be better to keep it off the open Board and PM or email ([email protected] ) and to any others who wants to comment on it

 

[adejones]

Ok, have e-mailed it to you.
If anyone else is having difficulty in opening the file please let me know and I can e-mail this to you.
Adrian

 

[adejones]

While you are reading up on my sales agreement, let me just update you with the latest message:

Him: I emailed over, as promised, the draft contract. Did you get it? If you can complete your details I will complete the rest and then can get the website moved over so it can be checked, and then can transfer the money to your account.
Me: I have received the agreement, thanks very much, just reading it over and checking all is OK with this before I send back.
I would feel more comfortable if you would be able to ask your buyer to put the funds in escrow for this deal so that the funds are held by an independant while this goes through?
We can either do this by using escrow.com or if you list a job on PeoplePerHour.com for £1.5k and then I can propose a bid which you can then accept and the funds will be held in escrow on here.

 

[businessfunding]

Excuse me if I've mised this information in previous posts, but have you established who it is you are dealing with? As they are apparently acting as a business this informtion should be apparent to you.

 

[adejones]

Excuse me if I've mised this information in previous posts, but have you established who it is you are dealing with? As they are apparently acting as a business this informtion should be apparent to you.

He is a "freelance business advisor" who says he is working whilst on holiday, which is why is sounds fishy to me, he is not acting as a business.

 

[businessfunding]

He is a "freelance business advisor" who says he is working whilst on holiday, which is why is sounds fishy to me, he is not acting as a business.

As a 'freelance business asdvisor' he is acting as a business and as such is legally obliged to display his business information: assuming he is a sole trader this would be full name and a trading address at which documents can be served.

 

[adejones]

I have just had confirmation that he would prefer to use PeoplePerHour.com to hold the funds in escrow rather than escrow.com so I have asked him to list a job to the value that he was going to "send me" and then I would propose a bid for said amount which he would accept for the funds to be held in escrow.

Once the funds are in escrow with PPH, i'm not sure of much that can go wrong so would be more at ease then but until I see some money, I am still very wary of this.

I have glanced through the sales agreement but being young and unknowledgeable about all of this, it is a foreign language to me, just hoping one of you guys has read it and can advise me further.

 

[Suzuki]

While you are reading up on my sales agreement, let me just update you with the latest message:

Him: I emailed over, as promised, the draft contract. Did you get it? If you can complete your details I will complete the rest and then can get the website moved over so it can be checked, and then can transfer the money to your account.
Me: I have received the agreement, thanks very much, just reading it over and checking all is OK with this before I send back.
I would feel more comfortable if you would be able to ask your buyer to put the funds in escrow for this deal so that the funds are held by an independant while this goes through?
We can either do this by using escrow.com or if you list a job on PeoplePerHour.com for £1.5k and then I can propose a bid which you can then accept and the funds will be held in escrow on here.

I've put one part in Bold and another part in Underlined - you need to make sure the order of those is switched around. Otherwise you just gave away your members database for nothing, and he will then likely back out of the deal leaving you with a destroyed website, no money, and probably a breach of a bunch of data protection laws into the bargain (by handing over customer email addresses to a random 3rd party).

You say yourself this all sounds fishy - he doesn't speak like a business advisor, and he's either at worst scam you, and at best treat you like an idiot. There are too many alarm bells... time to walk away if this were my website.

 

[adejones]

Hi Suzuki
Thanks for the reply. The latest is that I had asked the guy to ask his buyer to put the funds in escrow and he agreed to list a PeoplePerHour job for the amount mentioned, for me to propose a bid and for him to accept and pay.

However, he listed this job and told me it was in moderation, which in experience I know only takes up to half an hour, and i'm still waiting for this to appear.

Has anyone had a look at his sales agreement yet?

Thanks

 

[ethical PR]

Useful point raised around data protection and you handing over your database. Have you taken this into consideration as part of any sale?

 

[adejones]

Useful point raised around data protection and you handing over your database. Have you taken this into consideration as part of any sale?

Well i'm registered with ICO under Data Protection Act so would I just need to ensure the "buyer" is also registered?

 

[ethical PR]

You would need to look at the terms under which people registered on your website for you to access information about them.

I am not an expert on this area, but if they have only agreed to you holding information on them for the purposes of them being on your site, you may not be able to transfer the database to another company who may want to use their data for other purposes.

Probably best to check with the ICO.

 

[Suzuki]

Has anyone had a look at his sales agreement yet?

Its clearly just a copy and paste of something he found on the internet - it talks about not competing within 3 miles of the premises for 2 years... how exactly does that work with a website?

It also mentions assignment of a lease set at £0, and fixture and fittings at £0 - further proof he's just grabbed a document from elsewhere. It also goes on about employees etc.... none of these things are relevant to you and overcomplicate what should be a simple process. None of these things should have been included at all. It doesn't look like something a real business advisor would do... I am still thinking he is either a scammer and/or a dreamer just messing you around.

So the document has a load of unrelated garbage in it... but doesn't even bother documenting how you are going to transfer the funds and website. That point was obviously an important one as someone has to assume the risk of going first.

If he really has added the job to peopleperhour, you need to look very carefully at that agreement - don't go for it if it gives him the chance to examine the site then turn it down and receive his money back and walk from the deal.

Anyway this is my last post on this thread... you might not realise you've wasted enough of your own time on a sucker deal... but I do realise I've wasted enough of mine on it. I'm not convinced there is a real deal here so I'm out

 

[The Resolver]

Apart from most of the Agreement being irrelevant it seems to overlook the main item being the database. I did a database sale last year and the document of sale had to be specific on the database and cover issues like privacy ( he needs to honour your duties to members with an indemnity. At the price you are receiving you want to refuse to take on the warranties.

Although I suggested PPH you still have to be careful since unlike with a true escrow PPH reserve the right to deal with the monies as they determine. The 'job' that you define , which can vary from that he advertises,needs to be for exactly what you deliver so the chances of him complaining are limited.

Finally either he has to be the buyer or the real buyer buys under his own account.

 

[The Resolver]

Apart from most of the Agreement being irrelevant it seems to overlook the main item being the database. I did a database sale last year and the document of sale had to be specific on the database and cover issues like privacy ( he needs to honour your duties to members with an indemnity. At the price you are receiving you want to refuse to take on the warranties.

Although I suggested PPH you still have to be careful since unlike with a true escrow PPH reserve the right to deal with the monies as they determine. The 'job' that you define , which can vary from that he advertises,needs to be for exactly what you deliver so the chances of him complaining are limited.

Finally either he has to be the buyer or the real buyer buys under his own account.

 

[adejones]

Finally either he has to be the buyer or the real buyer buys under his own account.

I was sort of under the impression that he has a "buyer" who has told him how much he can spend, this guy is going to pay and then claim the money back from the "buyer".

He said he had listed his job yesterday which was under moderation and gave me the job number, this is still yet to appear so probably didn't get accepted (depending on what he actually wrote as his job) and haven't heard from him again today yet.

When he next messages, I will tell him I am not happy with the sales agreement, it has lots of irrelevant stuff and nothing really about the sale of the database etc etc and see what he comes back with, but now I am starting to see this is isn't really going anywhere.

Thanks for your advice so far.

 

[adejones]

Update today, the job was listed, I sent my proposal and then received a message asking for a signed sales agreement to be sent before he accepts my bid on PPH.com.
I have informed him I am unhappy with the agreement and it is all irrelevant, asking him to draw up another in more detail and asking for the mention of PPH holding the full amount in escrow until the site is dealt with.

Is there anything I can include in the agreement as a get-out clause in case anything goes wrong to make the signed agreement void in the event of him making excuses or some how taking the funds back out of escrow etc..

 

[adejones]

This guy has finally sent me a redrafted sales agreement with the buyers name and address on.
The buy is "Darren Scott" - entrapeneur
On googling his address, it comes up with Darren Scotts Unisex Salon!

 

[ethical PR]

I think there is only so much advice you can get from a forum and the legal people here especially have been incredibly helpful. There are two main issues you would probably benefit for getting some paid advice on1) making sure your sales agreement is legally tight and 2) making sure you don't break data protection laws when you transfer over the database.

Perhaps talk to someone on here to see how much this sort of support. IMO a small price to pay for protecting your interests.

 

[Clinton]

adejones, I'm the owner of the world's only professional forum for discussing matters related to buying and selling websites. I have done or helped with hundreds of transactions over the last decade - from small $100 ones to transactions in excess of $1M. You'll have to trust me when I say I know what I'm talking about (or you can research me).

First, walk away from this deal. No, change that. Run. It has all the hallmarks of a scam. I won't go into the whys - it would take too long. Just trust me on this.

A PPH transaction doesn't provide you much protection. Heck, there are flaws even with escrow.com and it's not 100& safe ...especially if you're UK based. (The details are beyond the scope of this post, but here's one article I wrote about escrow.com risks if you want to get some background knowledge).

- Don't deal with an intermediary

- Don't transfer anything - anything - till you have full, cleared payment in your account or the escrow's

- Always use a proper escrow company (despite what I said about escrow.com, it is relatively safer than PPH or some of the fake escrows around) or ask your lawyer to provide the escrow service

- Don't deal with this guy, he comes across as someone looking to take advantage of you.

If you do want a sales contract, I've got a free one on my site. I've also got an NDA you can use.

Stay safe!

 

[cleaningstuff]

Ade, I think I found the forum online, looks really good, obviously a lot of work went into it. I have an idea for another forum, may I pm you?

 

[ethical PR]

Hi Ade

It would be good to have an update on how things went with your sale?

 

[The Resolver]

Good clear advice from Clinton.

I also very much like your site Clinton and will try to visit and contribute. But I have to ask where you got your contract of sale from? There are a number of problems with it. I appreciate you are trying to help out members. PM me and I am happy to suggest improvements (gratis). For now, problems include: no court jurisdiction clause (as opposed to just a law jurisdiction) so sellers could be sued in a foreign land, property description inadequate to identify and cover various contractual rights linked to the site - eg affiliation accounts, advertising accounts, survey or other functionality delivered through third party SaaS accounts etc, inadequate provisions to protect seller from sale breaching privacy rights of others in the database, no terms to regulate payment out from escrow to seller, no cover for ICO Notification, post -sale exposure of seller to warranty claims left too high (i.e no reasonable limitations of liability) -, too vague as to 'business' element of sale as opposed to the IPR elements (in reality many websites are an effective business - so needs to include provisions/protections for a business asset sale). There is also a lack of any form of dispute resolution clause. I imagine the incidence of potential breach by a seller is not insignificant ,eg not informing of a UDRP/domain challenge, or software licensing issue, or an image copyright breach claim etc etc.

I have long argued about the dangers of using templates as opposed to informed amendment of templates. The sales of websites these days are becoming increasingly complex from a legal perspective. I would suggest a section of your website to inform and help members create their own, explaining the importance of the elements, rather than just presenting a 'one size fits all' free product. How many people have used it and not realised the 3 year post sale con-compete?

PM me or invite me to PM you.

 

[Clinton]

@The Resolver - thank you. And I agree with what you say.

My recommendation is that the safest option is to use a lawyer in your own country to draft a contract specific to the circumstances and the site you're buying. That's what I do. There is no substitute for that. However, for most transactions this is not a cost effective option. In the Flippa marketplace, for example, the average sale is circa $500 and of the sub-$500 sales, 75% are for $200 or less (see my chart). Players at this end of the market are highly unlikely to go to court for a resolution. In fact, most of these transactions are cross-jurisdiction, but the buyers/sellers still feel they need to have a formal contract in place.

Your offer is very much appreciated. I will take you up on that and PM you for any suggestions you may have for improving the free template I provide.

 

[The Resolver]

Yes I appreciate the problem when values are so low. Thanks for the PM.

 

[rockingdeals]

I think it's great . Go ahead with process.