The Empire Flippers Migration Process: Transferring the Business and Completing the Deal
Congratulations, you’ve just closed on your business!
After all the time spent preparing or reviewing the business and all the back and forth of the negotiations, you’ve arrived at the final phase, also known as the “migration process.”
As the buyer, you’re ready to begin working on the business and growing your asset. As the seller, you’re ready to get paid!
Understandably, this can also be the greatest source of pressure for both sides, and it’s incredibly important that the migration is done properly. If it doesn’t go right, no one wins.
The migration process is considered one of Empire Flippers’ core strengths and is part of what makes us unique as a brokerage. Transferring the assets of an entire business from a seller to a buyer is often far more complex than just changing the account credentials and calling it a day. Each asset may have specific steps, terms of service, or security systems that, if moved incorrectly, could cause accounts to be temporarily locked and entire business deals to fall through.
We’ve received feedback from clients that given the complexities involved in transferring assets, our migrations process has helped them, as buyers and sellers, feel far more secure in the process.
For this reason, it’s shocking that most brokerages don’t have a migration department, and buyers and sellers are often left to navigate the post-sale transition process on their own.
After migrating over 2,000 businesses, we’ve learned a thing or two about how to do it successfully, and we want to share how it works.
Some of the most common questions we receive about the transition process include the following:
- How long will the process take?
- Am I protected if something bad happens during the transition period?
- How do we handle profits and expenses during the migration?
- When do I get paid?
This article provides a comprehensive overview of the Empire Flippers migration process and addresses some of the most common questions along the way, including important aspects of our terms. Most importantly, we’re going to show you how we ensure that this process goes smoothly so you can move onto the next stage of your entrepreneurial journey.
An Overview of the Process: The Four Phases of a Migration
A business is officially considered “sold” when Empire Flippers receives the buyer’s payment for the business. Only once a business officially has that “sold” status will it enter migration, at which point the buyer and seller will be assigned a migration advisor to guide them through the process.
The payout to the seller can only be released once the actual migration is successfully completed.
For a migration to be finalized, the following four phases must be completed:
- The pre-inspection phase
- The inspection period
- The post-inspection phase
- The payout phase
We’ll cover each of the four phases and what buyers and sellers can do to complete each phase smoothly and efficiently.
Phase 1—The Pre-Inspection Phase: Sending the Primary Assets
Once a business enters migration, a migration advisor is assigned to the business and will create a customized migration checklist with the business’ assets and the action steps to complete.
During the pre-inspection phase, the buyer is connected to all the assets necessary to review business performance during the inspection period.
This can mean being added as an admin user to a fulfilled by Amazon (FBA) account or having tracking IDs swapped out on a website for an affiliate business. Your migration advisor will determine which assets are necessary to transfer before proceeding to the inspection period.
Note: During phase 1, the buyer only receives the revenue-generating assets. All proprietary assets, such as supplier introductions and WordPress access, will be sent to the buyer after the inspection period is complete.
The timeline for this phase depends on how long it takes to provide the buyer with suitable access to be able to inspect the business, but the goal is to complete pre-inspection and enter inspection within one week of the sale.
Once we can confirm that the buyer is able to see normalized revenue, whether this is by being added as an admin on an account or having revenue redirected to their account, the migration advisor will let them know that the inspection period has started.
Phase 2—The Inspection Period: Looking Under the Hood
After a business completes phase 1, the migration advisor will send out an official notification that phase 2, the inspection period has begun.
The inspection period is often the most misunderstood part of the Empire Flippers brokerage terms for new buyers and sellers. It is also one of the most important forms of protection our brokerage terms provide to both parties.
The following sections provide the important details you’re going to need.
14 Days to Verify Performance
The inspection period lasts for up to 14 days and is the timeframe in which the buyer can review revenue performance and ensure there are no gross misrepresentations or discrepancies between the revenue observed in this period and the business as it was advertised at the point of sale.
Sometimes, a buyer may feel comfortable ending an inspection after less than 14 days or waiving the inspection entirely if they want to begin working on the business immediately or making material changes to it, such as using a different ad network on a content site.
We recommend that buyers take the time they need, but let us know as soon as they have finished inspecting the business and are comfortable moving forward if it is sooner than 14 days.
The 50% Threshold
The inspection is primarily financial, and a gross deviation is defined as an average gross revenue performance that is less than 50% of the advertised daily average.
If the average gross revenue performance falls below the 50% threshold, the inspection period offers protection for the buyer. In that case, the buyer can decide how they would like to proceed. This means they can discuss renegotiation or reversal or can proceed as normal (which tends to happen when a gross deviation is expected or justified).
If the business generates an average gross revenue above the 50% threshold, the inspection period offers protection for the seller. In this case, assuming there are no other blatant misrepresentations of other components of the business, a buyer must proceed with the deal.
Another aspect of the brokerage terms is that no material changes may be made to the business during the inspection period. Material changes to the business include editing product listings, adjusting PPC campaigns, etc. If a buyer makes a material change to the business, it is implied that they are waiving the remaining time in the inspection period so they can begin working on the business.
Once a buyer chooses to end the inspection period or after 14 days have passed with no deviations observed, the business will enter phase 3, the post-inspection phase.
Phase 3—The Post-Inspection Phase: Sending all the Remaining Pieces
The post-inspection phase is the final phase of the migration before entering payout. It consists of the following three parts:
1. Sending all remaining proprietary assets
Now that the inspection period is complete, all proprietary assets can be transferred to the buyer. These assets may include standard operating procedures (SOPs), customer email lists, and images.
These assets are sent after the inspection period as a protective measure for the seller and ensures that a buyer doesn’t receive intellectual property until it’s fully confirmed that they will be moving forward in the migration process.
2. Calculating profits and expenses owed back to each side
Prior to changing out payment details during a migration, a seller may have received revenue or may have paid for business expenses. All revenue generated during the migration will be owed back to the buyer, and the seller will be reimbursed for any operating expenses.
3. Confirming that all assets are on the buyer’s side
It is the buyer’s responsibility to confirm receipt of all assets. We recommend that buyers review the migration checklist to double-check each asset and ensure that they have access.
Once the buyer confirms they have received all remaining assets and approves of the payout to the seller, we proceed to phase four, the payout phase.
Phase 4—The Payout Phase
Upon entering the payout phase, the migration advisor will calculate the payout details, including the reconciliation amounts.
At this point, we will also send information about the payment methods we offer and how to connect with our finance department to receive your funds.
What About Earnout Payments?
A deal with an earnout means that a portion of the funds are paid upfront (at the end of the migration), and the remaining amount is paid over a period of time. The earnout terms are agreed upon in the sales stage prior to entering migration.
Once the migration is complete, your migration advisor will continue to help manage the earnout payments and ensure they happen according to the agreed-upon timeline or conditions.
The Migration Timeline
So, how long is all of this expected to take?
Depending on the type of business, a migration generally takes anywhere from four to six weeks. It can be shorter or longer than this depending on a business’ complexity and transfer requirements. For example, an affiliate site migration that only requires swapping out Amazon Associates’ tracking IDs may take two to four weeks, whereas an FBA business selling in the UK and Europe that requires VAT numbers for each country may take significantly longer.
While we can estimate a migration timeline based on previous migrations with similar business models, we cannot guarantee an exact completion date.
How to Speed up the Process
Migrations almost always rely on third parties (for example, an ad network or Amazon support) to successfully transfer certain assets, and at times, there can be delays with these transfers. Additionally, each type of asset has its own migration process, which often requires much more than simply changing login credentials.
That said, our goal as migration advisors is to complete migrations as quickly and safely as possible while ensuring adherence to the migration terms.
The best thing that a buyer and seller can do to minimize the migration time is to come prepared with the information necessary to perform the transfer.
As a buyer, this means understanding the requirements for operating a particular business model, such as the following:
- Creating a new legal entity and bank account
- Applying for a VAT number when acquiring an international business
As a seller, this means having all credentials and assets ready to share with the migration advisor and buyer. This can also mean having invoices ready to provide during expense reconciliation and having any debts or liabilities paid off prior to the migration.
It All Comes Down to a Successful Migration
We know—there is a lot to remember for this crucial last phase. As a buyer or seller, you just want to make sure the transaction completes as quickly and painlessly as possible.
For a seller who has come this far in a potentially life-changing exit or a buyer who is this close to acquiring an income-replacing asset, this is an important process. The migration advisor will help guide both sides make it to finish the line.
You can register a free marketplace account here to start looking at profitable digital assets. Or, if you are ready to make a life-changing exit, you can start the process of selling your business here.