Selling Your Online Business: What a Lawyer Does and When to Call

By Paul S. Rafelson, Founder, Rafelson Law PLLC

What kinds of online businesses do we help sell?

We represent owners of online businesses of many kinds. The deal documents look similar across them. What a buyer tests in diligence, and what you will be asked to promise, depends on how the business makes money.

Many businesses mix these models, such as a brand that sells on Amazon and Shopify at once. We scope the work to the business you actually own.

When should I hire a lawyer to sell my online business?

Start with a lawyer, ideally before you sign a broker agreement or a letter of intent. Those documents are where exclusivity, commissions and key deal terms are set, and terms can be harder to change once they are signed.

Many sellers also call at later stages, such as after receiving a buyer’s draft purchase agreement. Counsel can still help, but some terms are harder to change once an LOI is signed.

Why start with a lawyer, and how is a lawyer’s role different from a broker’s?

A broker and a lawyer do different jobs and are paid differently. A broker is typically paid a commission when a deal closes, so a broker’s interests include closing the deal and closing it quickly. Those are legitimate interests, but they are not identical to yours. You also care about what happens after closing: how much of the price you keep, what you can be asked to pay back and what you have promised.

A broker’s job is to close the deal. Your lawyer’s job is to protect what you keep after it closes. Both matter. You want someone on the team whose only client is you.

Your broker does not act as your lawyer, even when the broker holds a law license. A broker’s template is the broker’s form, not advice to you.

Why the broker’s lawyer may not be your best choice

A law firm that relies on one broker for referrals can worry that raising issues that should be raised will cost it future business. That pressure does not have to be stated to be real.

Many brokers are paid at closing, so their incentive is getting the deal closed. They are not the ones exposed if you are sued after closing for more than you were paid, or if the earnout never pays out. Earnouts frequently do not pay out as sellers expect. Some brokers prefer lawyers who will not slow the deal down.

Your lawyer’s job is to tell you the risks, even when someone wants you to feel comfortable signing. Choose counsel whose only interest in the deal is you. See also the buyer’s side of this issue.

What does a seller’s lawyer negotiate?

A seller’s lawyer reviews and negotiates the contract terms that determine how much of the purchase price you keep and how much exposure you carry after closing.

Why is intellectual property ownership a major issue when selling a brand?

For many online businesses, most of the value rests on the brand, the content or the code. In our experience brand value is often tied to a single registered trademark. A buyer will test that ownership in diligence, and what the buyer finds can change the price or the terms.

Hypothetical, invented for illustration. This is not a client matter and not a result. A seller markets a brand that has one registered mark. In diligence the buyer’s lawyer finds three things: some products are sold under names the seller never tried to register; some listings use artwork and photographs the seller found online and never obtained rights to; and a key design was created by a freelancer who never signed an assignment. Each one means the seller may not be able to hand the buyer clean ownership.

When ownership or assignment is missing, the buyer has to price the risk and will usually ask for assurances: specific representations, a larger holdback or escrow, a special indemnity or a fix before closing. That makes it a problem for both sides. The seller loses leverage and may carry more exposure after closing, and the buyer may be paying for assets it does not fully own.

Most of these gaps are fixable before a buyer finds them, and a fix before diligence costs less than a special indemnity after it. We review the chain of title early, before the buyer’s lawyer does.

Whether a particular registration or assignment is enough depends on the facts. See also the buyer’s view of IP ownership.

What is a purchase agreement really like?

Think of a purchase agreement as the overhead panel of a jet. Every switch is set by wording: knowledge qualifiers, fundamental representations, the scope of each side’s responsibility, indemnity and how each one is positioned.

The same deal can favor the buyer, favor the seller or favor each side in different sections, depending on how those switches are set. Two simple examples show why the wording matters.

Broker, aggregator or direct sale: how do the paths differ?

You sell through a broker. You sell directly to an aggregator or strategic buyer. Or you sell to an individual or fund you find yourself. Each changes who negotiates, who is paid and who protects your confidential information.

Whether commission applies to earnouts and notes is open to negotiation in many broker agreements.

Your NDA should stop use, not just disclosure

Most sellers think of an NDA as a promise not to tell anyone. That is only half of what you need. The NDA should also restrict use: the buyer may use your information only to evaluate and negotiate this deal, and for nothing else.

Without a non-use clause, a buyer who walks away may be free to use what it learned to compete with you, even if it never tells anyone. That can include your supplier list, landed costs, ad and keyword data, conversion metrics and customer data. A competitor or an aggregator with a similar brand gets your playbook for the price of a few calls.

Points we look for in a seller’s NDA:

• Non-use. Use is limited to evaluating the transaction, and the limit covers the buyer’s affiliates, lenders and advisors who receive the information.
• Non-solicit. The buyer may not hire or solicit your employees and contractors, or approach your suppliers and manufacturers, for a stated period.
• Return or destruction. When talks end, the buyer returns or destroys your information and confirms it in writing, with limited exceptions for backups and legal holds.
• No residuals clause. Some buyer forms let the buyer use whatever its people retain in memory. That clause can quietly undo the non-use promise, so we strike or narrow it.
• Term and survival. The obligations should last long enough to matter, and protection for trade secrets should survive for as long as the information remains a trade secret.

Even a strong NDA is not a substitute for staged disclosure. Hold back the most sensitive data, such as supplier identities, landed costs and customer files, until the LOI is signed or late in diligence, and keep a record of what went to whom. Enforcing an NDA after a breach is possible, but it is slower and less certain than not handing over the information too early. See NDAs and confidentiality agreements.

Asset sale or equity sale, and am I personally liable?

Most online business sales are asset sales, but not all. Structure varies with the business and the parties. A SaaS company or agency with many customer contracts may be easier to sell as an equity sale if those contracts cannot be assigned without consent.

The two sides often want different structures. A buyer often prefers an asset sale because it can limit the liabilities the buyer takes on, but that protection is only partial, especially for taxes. A seller based outside the U.S., for example in the UK or the Netherlands, often prefers to sell shares or membership interests because its home-country tax treatment applies to a share sale and not to an asset sale. Which structure is better depends on each party’s facts and tax rules, so raise it early.

In an asset sale your company is generally the seller, so the indemnification obligations sit with the company. You can still face personal exposure if you sign a personal guarantee, are joined as a party to the purchase agreement or sell equity directly. These are points to read in the draft agreement.

Structure also affects taxes. How the price is allocated among asset classes, such as inventory, trademarks and goodwill, can change your tax result. Paul S. Rafelson holds an LL.M. in Taxation from NYU (2017), and the firm advises on the tax side of deals, including cross-border deals. Your CPA or accountant may also review the allocation before closing.

What is an indemnification cap, basket and survival period?

An indemnification cap is the ceiling on what you can owe the buyer after closing. A basket is a threshold that losses must exceed before claims count. A survival period is how long a claim can be brought.

These three numbers together define your risk after closing. A buyer’s first draft may set the cap high or make certain claims uncapped. Those three numbers set your exposure after closing. A buyer’s first draft sets them in the buyer’s favor. We negotiate them together, because a good cap with a long survival period still leaves you exposed.

What are earnouts and escrow, and what can go wrong?

An earnout is delayed, conditional money. You may not receive it if the business does not meet its targets, and the buyer usually runs the business after closing. Escrow is money that is held back, and what happens to it depends on release terms.

Points a seller’s lawyer examines include:

• Metrics. Revenue, gross profit or EBITDA and exactly how each is calculated.
• Operating covenants. Whether the buyer agrees to keep running the business in a way that does not undermine the earnout.
• Information rights. Whether you receive reports and can audit the numbers.
• Escrow amount, length and release conditions, including what happens if a claim is pending on the release date.
• Working capital definitions. The accounting treatment of inventory, receivables, payables and platform reserves can move the final payment.

What about buyer credit and aggregator risk?

A buyer’s ability to pay later installments matters as much as the headline price. The 2024 Thrasio bankruptcy showed sellers what deferred payments are worth when a buyer runs out of money. Buyer credit matters as much as the headline price.

Protections a seller’s lawyer may seek include a larger share of the price at closing, security for deferred payments, guarantees from a creditworthy parent and acceleration if the buyer defaults. These are negotiated terms, not automatic.

How do the accounts and the brand move to the buyer?

An asset sale usually transfers the brand, listings, inventory, domains, code, content and intellectual property. Each platform account has its own terms. Shopify stores, payment processors, ad accounts, affiliate programs and app marketplaces each handle a change of owner differently, and some accounts cannot be transferred at all, so the buyer opens new ones. We map every account before closing.

Amazon is the strictest case. Amazon’s Business Solutions Agreement bars you from assigning the agreement without Amazon’s prior written consent (General Terms, Section 18). The agreement is not what moves. The account moves. We plan the handover with you before closing and complete it in one session at closing.

That matters for sellers. Purchase agreements carry broad “fundamental” representations, and Amazon, not you, controls whether the account stays active after closing. We write Amazon-specific representations and carve-outs so you do not promise something Amazon decides. No seller should give an unqualified representation about the account when an account or ASIN suspension would damage or end the business.

Unresolved account issues, such as a pending suspension, can also affect value and the representations you give. See buying or selling an Amazon business, Amazon account suspension and Section 3 deactivation.

How do I get started?

Contact us. Sellers planning an exit can request a free M&A consultation. Tell us about the business and where you are in the deal, and we will tell you whether we can help. Please send nothing confidential yet.

How long does a sale take?

Preparing for a sale should begin at least 18 months ahead. From signed letter of intent to closing, a deal can take a few weeks or many months, depending on a number of factors.

What is the process for working with Rafelson Law?

1. Free M&A consultation. Sellers planning an exit can request a free M&A consultation. It is a chance to tell us where you are in the deal and to ask about the process and how the firm works.
2. Broker agreement and LOI review. We review and, where needed, propose changes before you sign.
3. Diligence support. We advise on buyer requests, how to stage disclosures and how to protect sensitive information.
4. Purchase agreement negotiation. We negotiate indemnification, representations, escrow, working capital, earnout and covenants.
5. Closing and after. We coordinate closing documents and advise if a post-closing claim or earnout dispute arises.

Frequently asked questions

Related pages

Sources and notes

• Amazon Services Business Solutions Agreement (U.S.), the agreement Amazon provides to sellers in Seller Central. Assignment clause: General Terms, Section 18 (Miscellaneous).
• Thrasio Holdings, Inc., Chapter 11 case no. 3:24-bk-11840 (Bankr. D.N.J.), filed Feb. 28, 2024: Reuters, Feb. 28, 2024; emergence reported Reuters, June 18, 2024.
• Rafelson Law, Negotiating the Broker Agreement (Sept. 16, 2024), on this site.