Mergers and acquisitions involving e-commerce businesses require the legal assistance of lawyers with deep experience and success with e-commerce sale/purchase transactions. E-commerce M&As are unique because e-commerce business “space” has some unique features. Of course, there are many overlaps between standard business mergers and acquisitions (“M&A”) and an e-commerce M&A. Thus, you need attorneys with industry-specific and general M&A business legal skills. If you need help with your ecommerce M&A, contact us here at Revision Legal. Revision Legal is an e-commerce business. We have a “can-do and get-it-done” attitude, and we understand the unique challenges online businesses face. In terms of experience, we have:
- Handled and advised on the consummation of sale/purchase of hundreds of online businesses
- Been general counsel to e-commerce aggregators, roll up funds, and holdcos, to one of the largest brokers of digital assets, and to large and highly popular blogs, message boards, and online communities
- Handled e-commerce financing, including venture capital, debt, equity financing, and credit facilities
- Litigated several complex e-commerce business disputes, including domain name ownership disputes, trade secrets claims, contract and distribution disagreements, etc.
- And more
As noted, business M&As are legally complex and often practically and personally complex. Many e-commerce firms are small, closely held businesses, and as such, there are many potential legal issues relevant to that fact. For example:
- Will the owners and “key” employees remain after the M&A?
- If not, will the seller’s owners and “key” employees be asked to sign non-compete agreements?
- How much of the revenues/profits of the acquired e-commerce business is a function of the work of those owners and “key” employees?
- Will any sort of transition services be needed from the seller’s “key” employees?
- And more
Aside from these types of issues to be negotiated in the Purchase Agreement, any successful e-commerce M&A will require due diligence with a focus on unique features of e-commerce businesses. Standard M&A due diligence will, of course, look to demonstrate and verify various aspects of the deal, such as proof of revenue, inventory (if any), profits, compliance with corporate formalities, compliance with laws, codes and regulations, freedom from litigation, information about financing and ensuring assets that are transferred are free of liens and encumbrances, sales tax issues, etc.
However, for e-commerce M&As, there is another layer of due diligence required because the business is largely online. For example, if the acquisition e-commerce business operates a website, state and federal laws require effective cybersecurity procedures and protocols. Aside from verifying such procedures and protocols, due diligence will need to review whether that has been an actual or attempted intrusion that led to unauthorized access to the system network, resulting in loss of data and/or business information. As another example, there are many state laws now regulating consumer privacy, the sale/sharing of personal information/data, etc. Thus, e-commerce M&A due diligence will need to review the acquisition’s data collection, storage, use, sharing/selling, etc. A few other examples include:
- Review of compliance with terms and conditions of any online platform — like Amazon — used by the e-commerce business to be acquired
- Review of social media accounts
- Checking business credit ratings and the terminated merchant file/Match list
- Registration of domain names
- And more
Contact the E-commerce M&A Lawyers at Revision Legal
For more information, contact the experienced e-commerce M&A Attorneys at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
