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December 20, 2017

Part 2: Closing the deal

“The deal is not closed until the money is in your account,” someone told me when I was talking about this sale. Damn were they right.

The closing was painful and stressful and just very time consuming. Most of it came from difficulties in transferring a Canadian company to US owners. Here are some:

P.s. If you haven’t read the first post, here it is. Trust me, it will give you better context for this one.

Transfer of Ownership

This happened in stages. At first, I used LastPass and I shared with them the login info to all my accounts. I wanted them to take a look and get familiarized and ask questions.

At the same time, I was either calling up or going on chat with Stripe, Google and a whole bunch of other accounts I used. So by the time we were ready, I had all the information ready to actually do the transfers.

Here are some of the most notable transfers that took the most time. It’s relevant to anyone selling, but there is lots of gold for cross country sales

Stripe

My site was using Stripe to process the subscriptions payments. Shopify alone doesn’t handle subscriptions payments, so I was using Recharge Apps to process my subscription plans.

If you sell one-off products, this part would have been easy. The new buyer just plugs in their own stripe account or just change their banking info in Shopify and everything is great. Money starts flowing right into their account.

Subscriptions are different, the customer payments details need to be transferred from one stripe to another stripe account. Also, I wanted to keep my Stripe account and just transfer my subscriber’s data over to the new owners.

Stripe didn’t really have a clearly defined way of doing a transfer of subscribers. In the beginning, they suggested I add the new owners as a user to my account and switch them to an admin. This didn’t solve the problem because first, I lose my stripe account and second, the Stripe account would stay Canadian, which wouldn’t work out for the American buyers.

Once a stripe account is created, you can’t change the deposit bank account to be in another country. This was a problem for us. Eventually, after talking to multiple people I found out that they can copy subscribers over into a new account. I decided to go this route because it was fast and I still kept my Stripe account.

This taught me that there are a lot of limitations put on so that you can’t change the country associated with your account, which I soon found out was also true with Google.

Google Accounts

My company had a G Suite account for email and drive (primarily). You should be able to switch ownership easily, right? Apparently, no. Once a G Suite account is created, the account is also locked to the country.

Google said that only one of their partners can do this, but you have to sign up your G Suite account through them. Forget that, I decided to do it myself and just export the data.

I used Google’s tool for doing a bulk export of all your data, Google Takeout. Here is some things to look out for:

  • This works perfectly for emails, but not really for Google Drive
  • Google takeout only downloads the google drive files you own
  • The thing is I’ve been working with freelancers and sometimes out of my own Gmail account for uploading files, and ownership can’t be transferred if the gmail accounts aren’t in the same domain.
  • There was only one solution, manually downloading all the files

The buyer then recreated the same email in G Suite, but in the US. I transferred all the downloads and extracts and that was it!  

Other transfers

  • GoDaddy is pretty smooth when transferring ownership, especially to another GoDaddy user
  • DO NOT change the contact details when transferring the domain. This will put a lock of 60 days for the change of contact details to happen.
      • GoDaddy didn’t really do a good job of explaining this in their guide, but I found out because I was paranoid and ended up calling a rep to walk through the process
  • Dodged a bullet there
  • Subscription platform (Recharge Apps)
    • This was related to the Stripe transfer, after that you put in your new key and you’re good to go
  • Suppliers
    • I kept my suppliers in the loop when I decided to sell, when I listed and when I sold
    • Then it was just a simple email introduction because operationally, everything was already set
    • Make sure everyone is on the same board

And that was it for the administrative part, but this was only one part of the deal.

Boring Legal Stuff & Why You Should Pay Attention

The deal went very smoothly until the final closing stage. Then all of a sudden the buyers tried to negotiate some terms of the sale. Basically, they said they had an issue with one aspect of the deal, but it was clearly mentioned in the listing. Well, that made things inconvenient and put a pause on the closing. Funny thing is this happened after the money and every single one of my business assets were already transferred to them.

In hindsight, this could have all been easily avoided, but damn was it a good lesson. The following is what I learned from it.

First thing is first, know how a deal is supposed to go down and this goes for both buyers and sellers. Familiarize yourself with the process beforehand.

This part isn’t very clear in Flippa, at least not until you get to the closing stage, but there is normally some sort of agreement that needs to be confirmed when you decide to move on with the deal. This can be a document you both sign and in Flippa’s case it can be the template sales agreement that’s in the Terms and Conditions, which every user agrees to.

The purpose of this agreement is to protect both the buyer and seller. Read it carefully and know what it includes. The one from Flippa can be found in their terms. It’s easy to read and written in plain english so you shouldn’t have a problem understanding it. Which is  a big props to Flippa for making it easy to understand.

Now with that in mind, I’ve summarized everything I would do when starting out. If I was to sell my business again, I would follow this.

Daniel’s Do’s & Don’ts for Sellers & Buyers

Sellers

  • Dos
    • Read the terms and understand what you’re getting into
    • Be transparent and mention every single detail in your listing, the comments section is also a good place to add further clarifications in Flippa
    • Be available to answer every question, the more these are answered before the deal closes, the better
    • Be honest and provide proof, have it available before your listing goes live
    • Have everything lined up and suppliers alert of the selling of the business
    • Get legal advice, seriously
    • Use escrow, this doesn’t just protect the buyer, it protects you too
    • Keep all communication through Flippa in case there is a dispute
  • Don’t
    • Skip out on confirming the sales agreement before the closing has started
      • Better yet, add this to your listing
      • Get both parties to sign it
    • Let buyers make changes to your site before the deal has closed (this actually happened to me)

Buyers

  • Do’s
    • Read the terms and understand what you’re getting into
    • Flippa requires a due diligence before bidding, do this
    • Communicate with sellers and ask every question you can ask
    • Please, please, please read the listing thoroughly
      • I came across many bidders that asked questions that were answered all over the listing
    • Keep all communication through Flippa, this is for your protection too
  • Don’t
    • Negotiate the terms of the deal after money and assets have been transferred
    • Rush into a bid
    • Bid more than you can afford, I’ve heard of cases where when the deal closes and the bidder didn’t have the money

The Closing Of The Closing

The closing stage was probably the best business experience I’ve ever been through. I went from the high of the selling process to a two month process of closing the deal. Luckily for me, my account manager was there to answer questions throughout the closing. If that’s not the case with you, I hope these two posts help you out.

Be present during the deal and let everyone know that you’re committed to the sale as much as you are to business. I think that was an important part about my listing. I put everything into the business and the listing and it showed. It was sincere, because I did want the company to continue growing even without me.

Anyways, after everything that happened the buyers and I agreed on the terms and it was done!

The money got released from escrow, but, nope, this was still not the end.

There was a mistake in the wire transfer and the money didn’t hit my account for another two weeks. I spent hours of back and forth trying to figure out what was going on and to get it resent.

Sheesh, I couldn’t catch a break.

I lost hours chasing down the people responsible and to be honest, my other business suffered because of it. Oh well, I signed up for this.

Anyways, at the end of it all, my bank came through with the good news. And on Oct 6th, the deal was finally closed. The money FINALLY came in.

Ahh, I was done.

I thought about this moment in my head so many times, but it was different. I wasn’t excited per se, but I felt accomplished. Like “wow, Daniel, you really did this.” I would take that feeling over excitement, anyday.

That weekend, I decided to do something new, celebrate. Seriously though, I’m so bad at this, but I celebrated with all the people that supported me through the sale. 💗 you guys!

As for the money, I used it to pay off my student loans in full. 🙂


 

If you read this far, thank you. Everyone that I talked to during those months told me to write this because it will help others. I hope you take this information and do something with it.

Make a solid listing, be aggressive and never show weakness.

Good luck!

If you got any questions, just say hi@danieladonai.com.

P.S. I’ll be writing about how I got my business automated and more soon. Subscriber to my list and I’ll let you know when it’s up.

P.P.S. And no, I hate spam and I hate writing, so expect an email once a month, but trust me it will be worth it. Here you go:

P.P.P.S. Flippa also wrote a case study on my sale and you can read it here.