How to sell a business with recurring income

12 replies
One of my business partners is a site flipper..

He contacted me last night and said he has membership
websites that is is planning to sell which already have subscribers
who are paying on a recurring basis.

He was hoping he could just push the subscribers
from his PayPl Business account to buyer's PP Business account but
quickly learned that in PP you cant do that.

Unfortunately, each customer must manually unsubscribe and then resubscribe,
which needless to say can be a nightmare.

So my question is, moving forward, what payment processors allow for someone to have multiple accounts, can just push the account to the new owner?

Hope that was clear.

Thanks
DT
#business #income #recurring #sell
  • Profile picture of the author Gambino
    I'm not aware of any payment processors that allow that; although I'd assume some exist. So, sorry I can't be of more assistance.


    IMO, ethically, I think you should at least alert the existing customer base that ownership has changed or is changing, let them know what changes to expect - if any, and what/when to expect them. Then give them the option to stick around or not. Maybe a one month free, or free product incentive to stick around and see what the new owner has to offer.


    There's a reason PayPal doesn't let you just swap customers payments to different people, it's kind of important that paying customers know who they're paying and for what.
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  • Profile picture of the author Sid Hale
    Originally Posted by Donald Truehart View Post

    He was hoping he could just push the subscribers
    from his PayPl Business account to buyer's PP Business account but
    quickly learned that in PP you cant do that.
    ...but he can - if he sets up his PP account correctly.

    First - the PP business account is not "his", it is a totally separate account set up specifically for that business, with it's own checking account and/or credit card information.

    You can set up as many Paypal accounts as you like, as long as each account is for a separate business entity. Each account is separately verified by Paypal, so there should be a true separation of banking and/or Credit Card accounts that need to be set up specifically set up for that business account.

    Then, when the business is sold, use the Contact Us button at the bottom of the page to have the EIN changed to the tax id for the new owner.

    New name, business information, address, phone, and banking info can be changed in the PP account profile, but I suspect that can all be handled while on the phone w/ Paypal, when changing the EIN.
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  • Profile picture of the author kk075
    That's true...he can just transfer the whole Paypal account. All he'd have to do is remove his personal information, give the login details to the new owner, and then have him fill everything back out.

    I would check with PayPal 1st though, I doubt they'd like this idea at all.
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  • Profile picture of the author talfighel
    I personally don't think he can do that plus I don't really get why would he sell such thing.

    To be honest with you, I would not go through with this transfer/transaction of recurring customers. It it is headache and you are wasting your time.
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    • Profile picture of the author Jack Gordon
      Originally Posted by talfighel View Post

      I personally don't think he can do that plus I don't really get why would he sell such thing.

      To be honest with you, I would not go through with this transfer/transaction of recurring customers. It it is headache and you are wasting your time.
      Businesses with recurring customers are sold all the time. There is nothing inherently mysterious or special about an online business.

      If the business assets are transferred properly, and the customers are an asset, then PP should have no issue whatsoever.

      It is when people try to do such things without understanding the laws and tax implications that they get into trouble (and cause trouble for companies like PP, which now has to be the bad guy and reject you)
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  • Profile picture of the author David Keith
    sid is right, you can include the current paypal account with the sale of the business.
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  • Profile picture of the author newideamarketing
    Banned
    Its pretty simple.

    The transaction is very easy. If they set it up like legit business then , they are transfer the buisness to the new company happens all the time . Also buying recurring income is great things, you know people will buy it and its great starting place, and you can just keep scaling up . Also paypal will have no problem with it . If you do it right and take all the proper steps.
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  • Profile picture of the author bobby_shahzad
    Moving forward, my advise is to capture credit cards of subscribersusing from credit card gateway like authorize.net or stripe. This way the new owner can simply change api key and payments start going to his accounts..

    It also depends on what kind of membership software you are using. My advise would be to use a cloud based membership system like Constant Continuty - Membership Management Software simply because it makes tranfer of your digital assets to new owner so simple rather than going through hosting complications
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  • Profile picture of the author Thomas Smale
    Paypal is one of the more awkward payment processors, but as mentioned above, *business* accounts can be transferred. There's no way to do it without handing the account over to a new owner. Best thing to do is ensure any other income/expenses go through a different account. I've done it numerous times across numerous business sales. You will need a well written contract so make sure the transaction is big enough to justify it.

    In future, tell your friend to keep separate payment processor accounts for each individual entity. Stripe is one of the better options I've seen - very popular with SaaS business owners and relatively simple to transfer. In Internet marketing circles, Clickbank, Bluesnap and 2checkout are also easy to transfer to buyers.
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  • Profile picture of the author Donald Truehart
    Great advice guys! Thanks
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  • Profile picture of the author lunaBEAM
    you're not allowed to sell a paypal account even if it's on one business... because a paypal account is not owned by a business, its owned by PayPal.
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    • Profile picture of the author Sid Hale
      You don't sell it. You sell the business.

      Originally Posted by lunaBEAM View Post

      you're not allowed to sell a paypal account even if it's on one business... because a paypal account is not owned by a business, its owned by PayPal.
      You simply transfer the Paypal account to another business entity.

      If you have a business account, click on the Profile button and look near the bottom of the page. It tells you quite plainly that to change the EIN (Employer Identification Number), click on the Contact Us link.

      The EIN is the federal government Tax ID for a unique business. If you change the EIN (which they clearly allow for), you are changing the business. The business owns the EIN - not YOU.
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