4 Legal Considerations when buying an Online Business

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If you are looking to buy an online business, this article will provide you a good understanding as to the various legal aspects of buying and acquiring a business.

E-commerce and online businesses are growing in Australia and all over the world. An increasing number of companies are understanding the benefits of transitioning to an online business model in our contemporary society. These benefits range from lower start-up and operational costs to more creative content, more efficient business operations and other countless advantages to obtaining an online business.

Whilst from an operational perspective, online businesses may be easier to function than traditional businesses, it is critical to be aware of your legal obligations and risks prior to purchasing one.

However, if we look from a business perspective, the foremost question that you need to consider, is what value the online business actually has. Getting assistance from business brokers and accountants in assessing the value of a company is an important step of this consideration. This will help you evaluate whether the business is worth the investment and the asking price.

Assuming you have found the right online business and are happy with the purchase price, here are the most important legal considerations you need to be aware of and discuss with your lawyer:

1. Trade marks & Intellectual Property

Regardless of what type of business it is, intellectual property contributes significantly to any business’s value. When it comes to online businesses, intellectual property relates to its trade marks, registered designs, video content, blogs, brochures and other creative work.

Another form of intellectual property is trade secrets, including recipes for certain foods and beverages, patents, proprietary software, images, processes, and even forms of marketing strategies.

It is important that you are aware of all the possible intellectual property assets that thebusiness owns and find out from the vendor if these assets will be included in the sale and if so how they will be assigned to you.

Typically, the list of assets and intellectual property that are going to be transferred should be outlined in the Sale of Business Agreement or through a separate IP Assignment Deed that specifically deals with the transfer or Intellectual Property

2. Software & Technology

If there is unique software or online tools and technologies used to run the online business, you need to ensure the vendor will transfer the ownership or license over to you. Otherwise, you may need to reach out to the third-party solution provider to ensure you can use the software without infringing on other parties’ intellectual property.

3. Domain Names

Another important legal consideration is in relation to domain names. In Australia, the .au Domain Registration Ltd oversees the domain name registration and changes of ownership. In most cases, changing domain ownership is a relatively simple process. However, it is always recommended to include the transfer of the business domain names during the business sale process and to have the domains outlined in the business sale agreement.

4. Marketing & Advertising

Marketing and advertising are key aspects in any business, especially online businesses. In Australia, several laws and regulations exist to oversee and ensure the fairness and transparency of the businesses conduct, and commercial activities.

The conduct of digital advertisements in Australia is governed by federal legislation, state agencies, and self-regulation. The Australian Competition and Consumer Commission (“ACCC”) regulates the content of digital advertisements and disclosures at the national level and enforces the Australian Consumer Law (“ACL”). The ACL requires businesses to ensure that their customers are appropriately and accurately informed about the products and services they buy. It also prohibits misleading or deceptive advertisements, inaccurate or misleading statements, and the imposition of unfair contract terms.

When taking over an online business, it is essential to have discussions with your your commercial lawyer as to which advertising plans and strategies you have in place to ensure you do not violate any existing laws and regulations.

Conclusion

As you are aware, there are a large variety of online businesses today, including eCommerce stores, SAAS platforms, YouTube channels, online courses, news/blog websites, and many more. Due to the variety of business types out there, there is no ‘one-size-fits-all’ approach when it comes to the legal measures and precautions you have to take, especially when buying a business. At Lazarus Legal, our business lawyers can help you throughout the entire process of buying an online business to ensure that you are legally protected. Speak to a solicitor from our team, and we will be happy to help you and answer any question you might have.­­­

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Mark Lazarus

Mark Lazarus

Mark Lazarus, the visionary behind the business and the fresh blood of the Lazarus Legal team, Mark (or Laz as he is often known) owes much of his success to his past experiences. And he’s made it his personal goal to bring that wisdom and formula to the firm.

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