Selling Customers/Companies

Volt.Networks · #1 03-06-2007, 08:26 PM

How does this process work? I noticed that a lot of people buy/sell customers/companies all the time.

I kind of get the idea how to transfer ownership of a company, but how do you transfer customers/clients? How do you transfer their files and payments without really disrupting the client? And how are the clients notified? Are they flat out told they've been sold off or what?

Also, how do the payments work? Is there a third-party involved or what?

These are just some things that I've been wondering about lately.

Cheers

hanber · #2 03-06-2007, 09:42 PM

good hoster always notifies customers that the company is being sold and this is honest and I respect those who do this

azuretek · #3 03-07-2007, 04:55 AM

I've been involved in a few buy outs and sells, normally in a professional environment the prior companies ownership will inform their clients what's going on and give them a chance to leave or stay, refunds and transfers are handled.

The buying company then takes over the previous companies assets. Transferring users to another server would be a hassle and it's best to sell off the entire servers with clients intact. What side of the buy out are you on, or is this just a general question?

Volt.Networks · #4 03-07-2007, 05:08 AM

Right now its just a general question. I'm just interested in how the process works for future references

It seems that buying/selling a company is much easier than buying/selling several clients.

However, do you know how the transaction involving just clients would take place?

Also, how does the financial aspect of either company/client buying/sellout work? Is there a third party or does the buyer pay straight to the seller?

azuretek · #5 03-07-2007, 05:41 AM

I don't see how a third party would be involved. But selling clients is a huge hassle and I'd suggest against it unless you're buying the whole company.

Each buy out/client transfer is unique and really it's up to whoever is involved and the reasons behind the sell that dictate how easy or hard it is. Personally if I were buying a set of clients I'd go the same route and let people know, transfer them over and just in general don't change anything that doesn't have to be changed (eg. pricing and product offerings)

**bqinternet** · #6 03-07-2007, 02:23 PM

Quote:

Originally Posted by azuretek

I don't see how a third party would be involved. But selling clients is a huge hassle and I'd suggest against it unless you're buying the whole company.

A 3rd party would be involved if the buyer and seller agree to use a neutral middleman to handle the transaction. The middleman makes sure that the assets have been transferred as agreed before turning the money over to the seller. It is very common to use an escrow service in hosting asset transfers.

Volt.Networks · #7 03-07-2007, 06:51 PM

I think I understand how the transfer of a company would take place. That seems pretty simple (in theory). But I still don't understand how you would handle the transfer of a client. How do you transfer their hosting account and payments?

Also, which escrow service could you use (what website)?

citywidehost · #8 03-09-2007, 11:40 AM

Having been involved in several acquisitions, it's best to take over the merchant accounts as well. Things you would want to take over:

- Merchant Accounts (For example: PayPal accounts if they have their customers paying via subsciptions.)
- Servers (Ff they are leased, take over the lease until you move it to your servers.)
- Billing System (Ff it's leased, continue it until you can at least move those records to your billing system. If the records are in poor shape, consider that when you make an offer.)
- Nameservers/Domains (Having the domains used for the nameservers will make a server transfer easier, as well as insure that you don't lose any customers due to them having to update their nameservers to yours.)

The list goes on and on, but these are great things to consider when you are looking to purchase.

Just my two cents

Curious Jane · #9 03-09-2007, 12:33 PM

Quote:

Originally Posted by bahjons

it's best to take over the merchant accounts as well

I am curious

How does one transfer a merchant account? For example, even though my merchant account is under my company name, it is also set up under my personal credit and name.

I thought a buyer would have to apply for his own merchant account ... because of course I wouldn't want anyone riding on my credit.

Doesn't Paypal work that way?

citywidehost · #10 03-09-2007, 06:07 PM

Depends on the merchant and their rules.

PayPal will allow you to transfer ownership of an account IF it's attached to a business. A Paypal business account normally puts you in that group. 2CO has the same rules. These are the major merchant accounts that you would want to take ownership of, as they allow subscriptions.

Authorize.net accounts aren't a huge deal, as you can just plug in your merchant details and start processing (if the billing system allows this.)

Anyway, just my two cents and experience.

Volt.Networks · #11 03-11-2007, 01:56 AM

What escrow service would you use?

taylorwilsdon · #12 03-11-2007, 09:29 PM

Quote:

Originally Posted by Volt.Networks

What escrow service would you use?

Honestly, if it was a transaction large enough to justify escrow, I would offer to fly someone from the other party to wherever you live, put them up in a hotel for a night and take them out to dinner. Do the transaction in person (have them make a full withdrawal or transfer in a local bank branch) and part ways. This is safest for both parties and you'll leave with a nice fuzzy feeling.