Selling an Online Business: Defining What the Assets Actually Are

The situation

Winston, an accountant, and Luc, a pharmacist, had spent about ten years building an online business on the side. It started as a hobby project and grew into a business generating substantial revenue, run almost entirely through a website, a set of supplier and fulfillment contracts, a customer email list built up over a decade, and a handful of social media accounts with large followings. Neither of them worked in it full-time, but by the time they decided to sell, the business was valued at roughly $3.2 million.

They found a buyer, Chantal, who ran a similar operation and wanted to fold their brand into her own. The two sides negotiated a price and a closing date directly, then brought the draft agreement to Treadstone Law's flat-fee business sale service to have it reviewed before anyone signed.

On paper, the deal looked simple. There was no real estate, no equipment, no inventory sitting in a warehouse. The entire business lived online, which made Winston and Luc assume the legal side would be straightforward too. It was not.

What the review found

The draft agreement, put together from a template Chantal's side had used before, described the purchased assets in one sentence: "the business known to the parties and all assets used in its operation." That kind of language works reasonably well for a business built on physical property. It works poorly for a business built entirely on accounts, code, and data, because those categories raise problems a generic asset list never anticipates.

The first problem was the social media accounts. Several of the platforms the business relied on for marketing prohibit transferring account ownership outright in their terms of service — an account belongs to the person or entity that opened it, not to whoever is running it day to day. An agreement that simply says the accounts are "included" does not actually transfer anything; it just creates a promise that cannot be enforced the way a bill of sale can.

The second problem was the custom software behind the site's checkout and subscription system. It had been built years earlier by an outside contractor, paid a flat project fee, with no written agreement addressing who owned the resulting code. Under Canadian copyright law, a person who creates original work generally owns the copyright in it unless they assign that ownership in writing — being paid for the work is not, on its own, enough to transfer ownership. Winston and Luc had been using the software for years assuming it was theirs. Legally, ownership was unclear.

The third problem was the customer database — roughly 40,000 email addresses collected over a decade, each with purchase history attached. That data had been collected under the business's own privacy practices, for its own stated purposes. Transferring it to a new owner touches Canadian privacy law, which generally expects that personal information continues to be used consistently with the purpose it was originally collected for, and that customers have a reasonable way to know their information has changed hands.

None of these were reasons to abandon the deal. They were reasons the draft agreement, as written, would not actually deliver what Chantal was paying for.

What we did

1. Built a full asset inventory before touching the agreement. Rather than negotiate around vague language, our team worked with Winston and Luc to list every asset the business actually depended on: the domain name, the website and its source code, the checkout software, five social media accounts, the customer email list, three active supplier contracts, and the registered business name. Nothing got included in the sale by assumption.
2. Chased down the software's chain of ownership. We contacted the original contractor and arranged a written assignment of copyright in the checkout software, confirming Winston and Luc — and therefore the business being sold — actually owned what they were selling. This closed a gap that could otherwise have surfaced years later as a dispute between Chantal and a contractor she had never met.
3. Restructured how the accounts would move. Because several platforms prohibit outright transfer of account ownership, the agreement was rewritten to require Winston and Luc's active cooperation: updating account credentials and administrative access to Chantal at closing, and providing a defined period of support to handle any platform verification steps that come up. The agreement also addressed what happens if a platform refuses to recognize the change of control, so the risk sat with a defined process rather than an open question.
4. Added specific data transfer and notice terms. The customer database transfer was documented as continuing the same purpose the data was originally collected for — marketing and fulfillment related to the same product line — with a plan for notifying customers of the change in ownership shortly after closing, consistent with standard Canadian privacy practice.
5. Negotiated a holdback tied to a successful transition. Rather than release the full $3.2 million at closing, the agreement held back about $320,000 — roughly ten percent — in escrow for 90 days, released once the accounts, supplier relationships, and data transfer had all been confirmed working on Chantal's side. This gave Chantal real protection against the specific risk in this deal — a digital asset that turned out not to transfer cleanly — without holding up the rest of the sale.
6. Added non-compete and non-solicitation terms for Winston and Luc. Since both were selling a business they had personally built and marketed under their own names on some platforms, the agreement included reasonable restrictions preventing them from starting a directly competing venture or contacting the transferred customer list for a defined period after closing.

The outcome

The sale closed on schedule at the full agreed price of roughly $3.2 million. The copyright assignment from the original contractor came through about three weeks before closing, clearing the one issue that could have derailed the deal entirely if it had surfaced after money changed hands instead of before.

The 90-day transition period went smoothly. Account access transferred without any platform flagging the change, the supplier contracts were formally assigned to Chantal, and the customer notice went out on schedule. At the end of the 90 days, the full holdback was released to Winston and Luc — none of it was needed to cover a problem, but having it in place meant Chantal was not being asked to pay in full for assets whose transfer she could not yet verify.

Winston and Luc walked away from a decade-long side project with a clean sale and no lingering exposure to disputes over accounts, code, or data. Chantal got a business she could actually operate, not just a set of login credentials and a promise.

What you can learn from this