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Thread: How to buy cpanel & whm clients?
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11-07-2006, 03:20 PM #1Aspiring Evangelist
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How to buy cpanel & whm clients?
Hello Fellow WHT posters! Well it's that time of the year again. and my company is looking to expand our client base once again, however we would like to test the waters with buying other companies, or their clients. Something that strikes me as weird is how easy it would be for someone to rip you off while in the midst doing this transaction. It would be so easy for some scammer to sell you "fake" clients with all domains owned by them under diffrent registrant Info for each, and then 1 month or so later, switch the dns back to another server, even one by one.
I guess my real question here is what kind of legal things can be done to help you retain the clients, or atleast some sort of agreement to get your money back if something like this happens? I understand contracts and all, but what if this person changes dns server or webservers totally to avoid leaving a trace of thier orginal company? Does anyone have any experience with this?
Thanks in advance for all of your shared thoughts!
-Shaun
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11-07-2006, 04:03 PM #2Web Hosting Guru
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There are escrow companies that can help you out. The buyer pays the escrow company, the seller gives all the information for the client transfers to the escrow company as well. After everything is moved over properly the seller gets the funds.
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11-07-2006, 04:39 PM #3Aspiring Evangelist
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Originally Posted by DoMeric
Thank You very much! Do you happen to have any links or names of escrow companies here in the USA ?
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11-07-2006, 05:43 PM #4Junior Guru Wannabe
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Yes, escrow companies are a good idea for b2b transfers/buyouts. I don't think they can check for "fake" clients though. They would just make sure the money changes hands in a legit manner.
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11-07-2006, 05:54 PM #5Web Hosting Guru
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I'm not 100% sure and I imagine it'd depend on the escrow company, but they could possibly veryify the accounts. On big sales though that'd be pretty insane.
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11-07-2006, 07:12 PM #6Everything in life is swelly
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You also may want to check out www.danielsonline.com they do alot of client buyouts and company acquisitions. Example: if you wanted to purchase another hosting company or clients of a said company, they will even help finance the acquisitions or merger.
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11-07-2006, 10:11 PM #7Invented the Internet
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You get contracts and hammer out the details face-to-face or via phone with your attorney and their attorney in constant contact.
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11-07-2006, 10:14 PM #8Web Hosting Master
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Do your due diligence and insist that the seller hand you an NDA before you put down anything. Escrows work but you don't want to be battling on the knitty-gritties of wordings if the value of the sale is small.
RojWeb Hosting? Been there. Done that.
I am niyogi.
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11-07-2006, 10:48 PM #9Web Hosting Master
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Research the company thoroughly. If they have fake clients, it'd be very hard for them to answer basic questions, like how they acquire their clients, the amount of time each one has been with them (you can cross-check this with domain info), amount of tickets per client etc., etc.,
Second, upon signing an NDA, they may be more willing to share information regarding specific clients to demonstrate that they are indeed legit. Using archive.org and some exhaustive checking, you should be able to see whether a good number of their clients have active websites that've been around--and will stay around for more than a month.
An escrow is a start but it definately isn't fool-proof. Often, as an incentive for them to help with a smooth transition, the first year or two could be designed on a profit structure or incentivized transition. Its all incumbant upon the magnitude of the deal and the reason for the sale; make sure you find this out. It may be that they've been overselling and its come back to haunt them. Or maybe their packages are too cheap and support costs are killer. If they have nothing to hide, they'll be able to give you a sound answer to that question.
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11-08-2006, 12:50 PM #10Aspiring Evangelist
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Thanks for all the great replies guys! I assume my first step may be to talk to my lawyer, and get the NDA and other agreements ironed out first. Thanks again!
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11-08-2006, 12:54 PM #11Web Hosting Guru
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Originally Posted by JVS_Hosting
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11-10-2006, 07:37 PM #12Mr. Awesome
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This exact situation just happened to me about a month ago.
I entered into negotiation for a "company" that was selling about 200 customers. I signed an NDA, had my lawyer contact their lawyer, etc.. and all was good. I put the money into escrow and they passed us the final customer list. Everything looked good, until we randomly called a few customers to poll their opinion on the purchase.
None of the phone numbers were valid.
This set off a warning flag, and so we started calling other customers. None of them worked. Well, a few did, but we ended up speaking with grandma's who didn't know what web hosting was...
Then we started checking the credit card numbers by calling visa/mc/amex to confirm the numbers were not stolen, etc. Turns out many of them were stolen last year.
Needless to say, we promptly contacted the escrow service and cancelled the transaction.
The seller was VERY smart, and he knew what he was doing. I'm confident we were not the first sucker who (almost) got scammed.
His servers were hosted with legit companies, hit customer list LOOKED good, the domains were all hosted properly and went to valid websites... I even chatted with his "lawyer" a few times.
It wasn't until we actually started digging that we found any problem.
We could very easily have approved the escrow transaction once we had the list and lost our money. We wouldn't have known about the problem until we started getting chargebacks...
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