If you’re interested in buying an e-commerce business successfully you need a lawyer that is experienced in M&A both in the deal size and the e-commerce space. You should then look to follow some best practices from other successful deals. My advice first and foremost would be to identify lawyers with relevant experience. Firstly, find attorneys that operate in the same size range as the business in question (e.g. $1M-$5M). The market dynamics and associated legal norms are different at each size range, so its important to get one that is appropriate to the business you are buying or they will frustrate negotiations enormously. The second piece of this is to find one with relevant industry experience. A lot of online business transactions can get into trouble by offline lawyers failing to understand the asset class properly. Make sure your lawyer understands the fundamentals of online businesses and has successful transaction precedents in the space. 2 years of industry specific and 5 years of general transaction history is ideal. Once you have a lawyer you’re happy with, there a couple of practices to follow. Firstly, don’t look to reinvent the wheel. Do not have your lawyer draft legal documents from scratch (and be weary if they suggest this), templates that are customized to the deal terms are absolutely fine and standard. Secondly, you want to ensure your lawyer has a problem-solving mindset from the outset. Rigidity on all deal terms can create major issues towards the closing stages of a deal (legal is usually done after DD is signed off) and quite often deals are killed by lawyers that refuse to negotiate any terms. Its important you and your lawyer adopts a problem solving approach during this key stage of the deal. Happy to answer any other questions you might have in relation to his deal.

Thanks Bryan. If you are still looking for help, do get in touch (ismael@feinternational.com). We have offices in London and the US, so know both sides of the pond very well. We have advised on more online business sales than any other specialised broker, so should be well placed to point you in the right direction.

In order to accurately determine an earnings multiple you either need to find relevant precedents (recent, similar size, niche etc.) or speak to a broker who does this on a daily basis and has access to real sales data assuming you are looking to sell outright. Here’s a useful article on the topic: http://feinternational.com/blog/how-do-you-value-an-online-business/