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Is it customary for a potential buyer to want "back access" to a website before purchase?

Hi, I have a buyer very interested in purchasing an online business with a history as an asset sale. I have tons of paperwork regarding tradename certificate, written appraisals and reports, examples and even traffic report. This is the first time I've ever had anyone say they would sign my NDA's, but they want back access to the website. I'm not sure if the owner will allow this or if they should even consider it. Has anyone else dealt with this request and if so, how did you handle it?
Thanks
Angie, globalnerd@yahoo.com

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Answers (10)
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Ecommerce Exit Strategies
Travis County, TX

Angie,

In our experience it is a common and reasonable request given that the proper paperwork is in place and the request comes at an appropriate time during the transaction. That being said I would not give such access without an offer.

We typically grant access like this through a buyer seller webinar were the seller can login in securely and simply share his desk top with the other participants allowing the buyer to verify information with out having his own access our passwords.

Every situation is unique, and there is usually more than one way to verify information, if the buyer is unreasonable or hard to deal with early in a transaction be careful moving forward things can deteriorate quickly, and you can spend many hours bending over backwards for an unreasonable buyer prospect.

Best of Luck

BradYeager

Aug 27, 2009
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Cook County, IL

I assume this question was posed for brokers and in all my years as a broker, I had only one request for access before purchase. The seller denied it and the deal went through as planned. I believe it was because the seller had proven with reports and valuations the business worth. Had they not had proof of value, I would have suggested that the seller allow access ONLY after a signed NDA, Non compete and LOI with deposit was made.

Aug 23, 2009
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As a buyer this is what I think would be reasonable:

Before I sign an LOI I am going to want read only access to the hosting account. That is going to allow me to verify traffic volume etc. and will provide a decent reality check on the sales figures.

After I sign an LOI, if the site sells product,
then I am going to want to have a read only peek at the database - but only as the very last item on my DD list.

Allowing the buyer limited access to the hosting account is not that risky. Allowing the buyer access to the database, even read only, could be very risky for the seller.

For me as a buyer, in most cases I could care less about the site's coding because I will rewrite it anyway. Knowing if an estore was custom written or built on 3rd party software and what that software was would be important to me. Usually it is obvious.

For most sites, giving the buyer access to some of the code so they can evaluate how badly written it is (ha) isn't particularly dangerous. Just give them some random sections - not all of it. With very few exceptions, there is nothing unique on the internet. Your code isn't special. If I can see your site I can pretty much reverse engineer it. The only exceptions might be some special back end logic that falls into the category of a trade secret. If a site has something like that I would not share it until after the sale - period.

Aug 23, 2009
Aron Culver
BTI Group / Business Team
CA

Very common and necessary. Just make sure you're as protected as can be with a Confidentiality and Non-Circumvent/Compete Agreement(s) in place. Make sure the buyer is also qualified and has an offer in place with this being a contingency to closing.

Aug 11, 2009
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How to Buy a Business
WA

Personally, I don't know about eBay Motors but would never buy a used car sight unseen. Sellers lie.

As to websites, you really can't be certain what's under the hood unless you take a look. We'll have to disagree on this, but I would strongly advise anyone against buying a dynamic website unless you understand how the it works.

Jul 27, 2009
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

That is a disturbing thought. It's like hearing that someone bought a used car sight-unseen over the telephone.
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The last time I checked, Ebay Motors was the highest volume used car seller in the US. And yes, most of these vehicles are sold over the telephone and internet. Sight unseen. (I even sold a Porsche Boxster over the telephone myself, sight unseen)

Back to the back access; I would strongly discourage back access unless it is part the due diligence process after an offer to purchase has been executed. Back access is more than simply sharing confidential information of the website's operation. It is a Seller's Intellectual Property and could be very damaging to the seller if compromised by an unscrupulous buyer. Proceed with caution..

Jul 27, 2009
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How to Buy a Business
WA

I have had two LOIs on an online business I have listed and have never had a buyer request back access.

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That is a disturbing thought. It's like hearing that someone bought a used car sight-unseen over the telephone.

Jul 25, 2009
Douglas Batts
Murphy Business & Financial Corporation
Collin County, TX
Premium Broker

I have had two LOIs on an online business I have listed and have never had a buyer request back access. I would not even consider giving a buyer back access unless it is part of the due diligence process, after an LOI or Offer to Purchase has been executed.

Jul 24, 2009
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Orange County, FL

I agree with Peter. As a technical person, there's no way I'd ever consider purchasing any sort of existing website or other software product without seeing the code and underlying architecture of how it was built. I wouldn't be concerned.

Jul 24, 2009
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How to Buy a Business
WA

If it's a dynamic site rather than a static one then any sophisticated buyer will want to see what's "under the hood." If it's a static (i.e., html) site then there's usually no need. The admin can set up a temp account for the buyer to use for this express purpose. The temp account will restrict what he can do while logged in.

Jul 23, 2009

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