Why Buyers and Sellers Get Cold Feet Before Signing Off on a Deal
By: Vinnie Wong
Tags: Negotiation, Entrepreneurship, Online Business, Digital Investor, Investing

The moment of dread before you press “Accept” can feel overwhelming.

You’re one click away from signing over your business to someone you only met a few weeks ago.

“What if I don’t get paid?”

“What if the site goes bust after I sell?”

“Am I cashing out too early?”

Worrying thoughts can flood the mind just before you commit to such a big decision.

It’s no surprise that buyers and sellers get cold feet when it’s time to transfer ownership and money in opposite directions. Despite all the work put in to get to that stage, the final stretch of the deal often feels like the hardest.

Trust us, we would know.

Empire Flippers is the only leading online business broker to have a migrations service. We’ve helped over 1,000 deals get across the line, addressing these types of doubts and creating a win-win-win situation for all parties.

In this post, I’ll share what we’ve learned along the way and how to avoid getting cold feet before finally putting pen to paper.

Migrations: The Final Frontier

After due diligence has been done by both parties and an offer has been accepted by the seller, all that’s left is transferring ownership of the business.

Getting to this stage can take anywhere between a few hours from the listing going live and a few weeks.

We’ve found that migrations can take at least four to eight weeks if there are any extra considerations that crop up during the transfer process.

Migrating an online business is definitely easier than it sounds. On the face of it, you just need to pass all your credentials to the other party, and they wire the money to your bank account when after the inspection period is done. Then shake hands and part ways amicably, right?

As you can imagine, there are many steps in between initiation and the final stage to make sure migration goes smoothly.

There are also a myriad of things that can go wrong in that time.

Here are some of the most common concerns that crop up during the migration period.

“What if the buyer runs off without paying?”

From the seller’s point of view, this is the most common fear and is often amplified if they went through a private deal. Without an intermediary, a buyer and seller are completely dependent on how trustworthy the opposite party is.

However, previous experiences of having been taken advantage of by cowboy traders who scammed you out of your money or took ownership of your online business without paying for it could start sowing doubts.

When working out a deal, we advise that you use an escrow service. Escrow services will hold the buyer’s funds while the buyer inspects the business to see whether it has all the assets advertised and performs as expected.

Even if the buyer takes ownership of the site and doesn’t pay, the funds are “locked up” and held until both parties agree to release the funds or the money is returned to the buyer while the business’s credentials are handed back to the seller.

You can choose to use either PayPal or a licensed escrow service. In our case, we act as an escrow service during migrations.

The bottom line is that having an escrow agent mitigates this risk of foul play during migrations.

“What if the online business isn’t legit?”

I often skip paid ads because the salesperson seems like they’re selling something that’s good to be true. Even when I find something that I want and I’m about to buy it, a small doubt always creeps in.

What will I do if these wireless earbuds are rubbish?

I’ve seen these same kinds of worries bleed over and affect business relationships, nearly taking a deal off the table entirely.

Buyers with concerns regarding a business’s financial returns or performance have sometimes accused sellers of misrepresentation or called off negotiations. Understandably, a buyer needs time to make sure their asset is in great condition, much like you would inspect an expensive item before you purchase it.

Agreeing to an inspection period alleviates many of these concerns by giving the buyer a chance to walk through the business and monitor traffic and revenue numbers over the course of two weeks to a month.

Use the P&L statement or whatever financial records were used to advertise the business as a base of comparison. At the very least, a buyer can see whether the business satisfies their expectations.

If it doesn’t meet the required standards, the money can be returned as per the terms of agreement.

While this isn’t the ending we want, at least all parties work off of the same understanding, which makes negotiations much simpler.

“Why are You Taking so Long??”

One of the issues we’ve found when acting as a third party in a deal is that there are extra steps in the communication flow. We do our best to manage expectations because we know it’s a potentially stressful time for everyone.

Issues arise when buyers and sellers don’t trust us and feel that we’re dragging our heels in getting the deal done.

One way a buyer tries to accelerate the process is by skipping the inspection period so that they can acquire the site quicker. While they’re within their rights to do so, this is strongly not recommended because you forgo your chance to verify that the business operates as expected.

Rushing the migration process can delay the deal by weeks or even months since we need to communicate with partnered services and agents responsible for financing the business models (e.g. Amazon, Google) to inform them that a change of ownership is happening.

Missing details can set the deal back further than anticipated.

And we get it — the finishing line is so near. As frustrating as it can seem, taking extra care to make sure all your Ts are crossed makes the transaction more seamless.

How to Make Sure Migrations Go Smoothly

The best things come to those who wait.

Yet, this is the time when both buyers and sellers can let their restlessness get the better of them.

While it’s easy for us to say, “Just monitor the business as it is,” there are many good reasons why you shouldn’t make adjustments at this stage if you want the transfer of ownership to complete without a hitch.

Keep the Same Hosting

Buyers often request to change the hosting company as early as possible to save costs and to optimize the site’s performance.

While this might save on some expenses and streamline your operations, especially if you host multiple sites on that server, making the change this early will affect the site’s performance.

It takes time for propagation to complete — that is, for the server’s DNS to be updated across the web.

Spend the time during the inspection period to do a content audit or monitor the finances instead. If these areas look solid, you can always request to change hosting companies at a later date with minimal effort.

Use the Inspection Period

You’d be surprised by how many buyers decide to skip this stage.

Some buyers are so eager to get started working on their new asset that they don’t go through possibly the most important bit of due diligence they can.

We highly recommend that all buyers take the opportunity to review the business. In the best case, the business works like a charm.

At worst, you’ll discover some issues and get your money back. While you’ll have lost time on the deal, at least you can reinvest the capital into another business.

Hold Off on Major Changes!

If you’re happy with the online business, then you’re more or less good to go.

During your research and discussions with the seller, you’ll probably have devised some strategies to expand the business and can’t wait to implement them.

However, I’d advise against making these changes during the migration for similar reasons to those described above. If you update content dramatically, this could cause a decline in traffic.

Furthermore, if you add many more products to your ecommerce product range, your suppliers might lose faith in you out of concerns about your ability to sell these new items.

It’s a great approach to prepare these strategies beforehand, but it’s best to gradually implement them after you’ve taken full ownership of the business.

Keep Your Cool by Remembering the Initial Agreement

During the migration period, a lot of details will be shared.

Tempers can flare and people might lose patience with the other party or even accuse them of foul play. To make sure everyone’s on the same page, it’s important to have contracts that everyone has signed and agreed to prior to the beginning of the migration process.

Buyers and sellers can use these contracts as a base of reference for any disputes, and they protect all parties involved.

An Outside Perspective Is Usually the Clearest

Changing ownership of an online business sounds easy in practice. As you can see, there are plenty of factors that can undo all your hard work prior to entering migration.

If you’re selling or buying an online business for the first time, I recommend that you use a broker. There are many services in place to help you start your buying or selling journey and ultimately close the deal as well.

Empire Flippers is the only broker in the industry to include a migrations service, and so we’re best positioned to help you with a deal the entire way. Register on our marketplace to start your journey today.