Intangible Assets included in a business sale normally range from website(s), email addresses, social media accounts, to phone numbers, logos, and even the Fictious Name that the business is operating under. By no means is this a complete list, as every business is different and will have varying intangibles conveying with the purchase.
We all know that these items are normally included in a business sale transaction, but what does the actual transfer of these items look like, from seller to buyer? We will cover how some of the most common items are normally dealt with as they transition to the new owner of the business. The transfer of these intangibles usually happens AFTER closing, during the familiarization period where buyer and seller are working together to handover the business and train the new owner.
How phone numbers are transferred will depend on the phone companies involved and what the particulars are surrounding the phone situation are. If it’s an office setting, with business landlines, then it is easy for the buyer to set up an account with the current provider, and the seller initiates the transfer to the new owner. If the situation is that the company cell phone will be conveyed, then the new owner just needs to have the seller transfer the phone number to their provider and activate the phone with the number on their new account. Whatever the scenario might be, the seller will need to call their phone provider to initiate the transfer and then the buyer will need to set up their own accounts and be ready to receive the phone number or account transfer. This process can take a few days to complete, so it’s important to do your research on the process with the companies involved. They will let you know how it works, what each party needs to do, and how long it will take.
Here we are talking about the business website(s), domain name registration, email address(es), and social media accounts. The seller will need to get a list of all of the usernames and passwords for each of the digital items that have conveyed with the sale. Then it is best to literally sit down with the buyer and transfer every account over to them in person. This process is tedious and can take some time. The seller essentially needs to log in, change the name, email and phone contacts to the new owners’, and the new owner needs to then create new passwords for everything. The reason we say that it’s easiest to be sitting together to do this is because often when account changes are being made, the company will require verification codes to be emailed or texted to the info they have on file, in order to make those changes. The seller can then be sent the codes and the buyer can put them in, so that they can make all of the account holder changes necessary.
DBA/Fictious Name/Trade Name
Most times when a buyer purchases a business, they want to continue running the business with the current “Doing Business As” name, to ensure a seamless transition between owners. If the seller has the DBA registered with the state, then they will need to go through the official channels to transfer it. If the business doesn’t currently have a registered DBA/Fictious Name or you will be changing the trade name, then you will need to register it.
Trademarks and Patents
With intangibles such as trademarks and patents, the seller will need to find out the proper way to get these legally transferred to the buyer. HERE is a link that provides more information on this topic for trademarks and HERE is information for assignment of patents.
Client List/Business Records
Once closing has happened, then the buyer will need all of the client lists and records of the business. How these are transferred to the new owner will depend partly on their current method of storage. It might be stored on a point of sale system or on Quickbooks for example, and most business software gives the option for the seller to export lists and records, and then the buyer can input them into whatever system or software they plan to use. Some businesses are a little more “old school” and they will have all of their records hand written or have boxes of old invoices etc and those will either need to be handed over to the new owner or the seller will need to scan everything into electronic form and send the buyer the files. The seller will often need to retain records as well, in order to complete tax returns for the current year of business, so this process isn’t always easy if the records aren’t kept digitally. If the records are kept on excel files for example, then those files simply need to be send over to the buyer. That can be done via a service like DropBox or SharePoint, or the files can all be loaded onto a memory stick and handed to the buyer. However buyer and seller want to handle this part is ok, you just want to make sure both buyer and seller have everything they need.
When it comes to company files, the new owner will need absolutely everything that the business uses to function. Logos, paperwork (such as invoices, field reports, inventory reports, company letterhead, or any type of forms the business uses in daily operation), marketing items, training manuals, company policies and procedures etc. will all need to be in the hands of the buyer so that they have access to everything they might need to run the business. The way these are transferred depends on the business and the current method of storage. For example, the business computers might all be included with the sale, and the files are all physically on the computers. If files are stored on software or in the cloud, then a process similar to how client lists, and business records are transferred would apply here as well. You could use a sharing service like Dropbox or the files can all be put on a USB data stick. However they make their way from seller to buyer, the most important part is that the seller gives the buyer everything they could possibly need to operate the business.
Make Sure You Have Everything
Of course this list isn’t exhaustive of the intangibles that might be transferred in the business sale, but hopefully it has given you an idea of how the general transfer of intangibles works. As previously mentioned, this process will be unique for each business sale, because every situation and circumstance is different. The seller just need to prepare for all of this and have everything ready to transfer to the buyer and the buyer needs to make sure that they have absolutely everything they need from the seller before the familiarization period is over.