Selling Your Online Business, Part 2 – Who is this broker?

So, you have decided to sell this thing you’ve built from a hobby in your garage or a side-business to a multi-million-dollar online business. What happens now?

Many online business sellers engage a business broker. You could engage a general business broker or a broker that specializes in the brokerage of online businesses. We’ve found that the brokers that specialize in online businesses are more familiar with the nuances of online businesses and the different challenges that online business sellers face when selling their businesses. Obviously, there is a cost to engaging the services of a business broker. And any good business broker will require you to execute a contract that at the very least addresses their commission. It might be called a broker agreement or an engagement agreement, but it is generally a one-sided agreement in favor of the broker. We highly recommend you engage legal counsel to have this agreement reviewed before signing.

Don’t be fooled. The broker is a salesman and hopefully, for your sake, a good one, but keep in mind that he is selling you too. He is in this for the commission. Generally, the broker’s commission is based on a percentage of the overall purchase and sale price, or some percentage scale formulae (e.g., Lehman Formula, Double Lehman, Reverse Lehman, or some alternative or progressive fee schedule, which each warrant a separate blog article unto themselves). It may or may not have floor – i.e., it includes a proviso that the commission will not be less than a certain amount. A lot of online business sales include seller promissory notes, consulting agreements, earn-outs, and other methods putting value on the purchase and sale of the business. Many brokers will insist that their commissions be based on the entire purchase price, including any amount due under a seller note, consulting fee, earn out payment, etc. Keep in mind, the brokers agreement is a negotiable document, and you can structure it in such a way that it makes sense for you and your business.

We can help. The attorneys at Walk Law Firm, PA are experienced in assisting clients with the review and negotiation of brokers agreement when clients are seller their businesses. We understand what brokers expectations are regarding these agreements and we will balance these expectations with our client’s best interest in the sale process. Please feel free to call one of our attorneys at (813) 999-0199, or contact us via our website at www.WalkLawFirm.com.

© 2017 Matt Welker – This article is for general information purposes only. Nothing contained in this article should be construed as legal advice or the formation of an attorney-client relationship.


Selling Your Online Business, Part 1 – Selling Your Baby

You’ve birthed this awesome online business. For whatever reason (hopefully because you’re going to make a boatload of cash), you’ve deemed it to be in the best interest of the company (and in your best interest) to sell. It is important to have a general understanding of the sales process in order to: (i) simplify the overall selling process; (ii) make yourself, your company, and your advisors more efficient during the process; and (iii) to ensure a successful business closing.

This blog series on the legal considerations for selling your online business will provide an overview of the business sales process. Further, the series will touch on various phases (in relatively sequential order) of the selling process, including: engaging a broker; engaging a financial advisor or valuation expert (or both); negotiating the letter of intent; the due diligence process; negotiating a definitive sales agreement (and ancillary transaction documents); the closing process; and post-closing matters, including restrictive covenant arrangements.

The attorneys at Walk Law Firm, PA are experienced in assisting clients sell their online businesses. Please feel free to call one of our attorneys at (813) 999-0199, or contact us via our website at www.WalkLawFirm.com.

© 2017 Matt Welker – This article is for general information purposes only. Nothing contained in this article should be construed as legal advice or the formation of an attorney-client relationship.


What is Venue? Why Does Venue Matter? The Essentials of Venue Selection Clauses

Construction contracts, design services contracts, and for that matter most contracts typically contain a provision governing the location (venue) for litigation/arbitration/mediation of disputes arising out of or related to the contract. The terms relating to venue is often hidden in governing law provisions under the “Miscellaneous” terms.

What is Venue? 

Venue is the geographical place and court where the lawsuit will be handled.  Without a contract clause that establishes venue, the venue law allows an action to be brought in various locations: 1) the place of the defendant’s residence, or principal place of business; 2) the place where the cause of action accrued; or 3) where the property in litigation is located [§47.01 et seq., Fla. Stat. is the general venue law]. The party bringing the action gets to initially select the location because they are the party filing the action. However, if they file the action in an improper venue, a change of venue may be sought.  Avoid waiving the right to enforce the venue selection provision in your contract.

Why Could Venue Matter?

If you do business with a subcontractor or supplier to whom you make payments, the suit may be filed at the place where payment is due, thus a subcontractor with its principal office in Atlanta, could file suit against you in Atlanta. This would be inconvenient to say the least, and could be quite costly. There are various reasons to assign the venue for litigation within your contract; included among them are expenses and costs for litigation.

A venue far from your or your attorneys would increase the time and expense related to the action. The party with whom you contract, or the property being improved may be quite far from your office or your attorney’s office. Also, preferences for venue may be based upon factors related to the court system, judges or the jury pool. Some courts are back-logged and litigation may take a longer time in that jurisdiction.

Venue Selection Clauses are Not Bullet-Proof

Although a well drafted mandatory venue selection provision is ordinarily enforced, in limited circumstances the courts may not enforce the venue provisions contained in your contact. The rule in Florida recognizes a free and voluntary choice of forum that may be enforced. A Florida court is not required to enforce a venue selection clause if compelling reasons exist to not do so. One such compelling reason would be to avoid multiplicity of lawsuits. Another reason could be a conflicting clause in a related agreement under consideration in the same lawsuit, or a statute requiring venue in a particular location such as a lien transfer bond per F.S. §713.24. A venue selection clause may not be enforced when the clause or underlying contract was induced by fraud.

Bear in mind, that other states have their own rules and may not enforce the venue selection clause.

Conclusion.

In your contracts, if you have the ability to negotiate, it is good to have a favorable venue provision protecting your interests.  When presented with someone else’s form of contract, pay careful attention to this simple provisoin, as it may hae profound effects on your rights.  If you have any questions, please contact us.

May all your projects be successful.