Add a Confidentiality Clause to your Purchase Agreement

July 11, 2014  |   How to Buy & Sell Websites   |     |   Comments Off on Add a Confidentiality Clause to your Purchase Agreement

After you buy a website, the last thing you need is for the seller to announce to the public how much you paid for the website. If the price goes public online, it’s publicly-available forever. This will greatly limit any future transactions you may plan for the website.

I’ve repeated this advice loudly in other articles: Keep your website sale PRIVATE & CONFIDENTIAL.

Don’t just sit back and hope that the seller will keep his mouth shut. State this clearly in the purchase agreement. The seller may be allowed to announce that he sold the website to you. But under no circumstances can he disclose the sale price publicly.

Some buyers even go as far as including a penalty if the seller violates the terms of the confidentiality clause. Sellers will generally fight against paying a penalty fee in the form of cash to buyers. So penalties sometimes include a discount on monthly debt payments by the buyer to the seller in the case of a website sale that includes seller financing.

However, a penalty can be tough to enforce unless the buyer has undeniable proof that the seller disclosed the sale price publicly. Nonetheless, a confidentiality clause in the purchase agreement is enough to scare any seller into staying quiet. No seller wants to destroy his sale and big cash payday by doing something stupid.

Why bother hiding the sale price from the public anyway?

Well, the main reason is it gives the buyer more options. Nobody knows what the future holds. The buyer may look to sell the website in the future or raise capital for website development. If future investors know exactly how much the buyer paid for the website, then the buyer loses bargaining power.

Human nature never changes. Investors are human beings and will not be willing to pay much more than the buyer paid for the website. Suddenly, every investor has a dollar reference point and many will make low-ball offers. This puts the buyer in a difficult position.

So for this reason, always keep your website sale PRIVATE & CONFIDENTIAL. Be sure to include this confidentiality clause in your final purchase agreement.


Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.

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