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Losing Control Of Your Company: Lessons from eFront
Article by Peter Cooper

Trick 3: World Domination!

Before you become excited at the concept of your site becoming a major world player in return for a share of your company, just calm down. The way in which many businesses work is that they try to excite you into a deal and then get you to sign while you're all hyped up. It's just a sales pitch. They're just a salesman who's trying to hype up their 'opportunity' and get you to sign on the dotted line.

Even though you're going to get a financial return from them, this is little consolation if the contract has terms which allows them to hold back payment from you or refuse to pay under certain conditions.

You need to research the company. This is absolutely essential. Search newsgroups and the Web for independent references to their company name. Are they getting praise? Are there lots of complaints? Find other sites that have had shares purchased by other companies and e-mail their CEO for opinions. Many CEOs won't mind spending a few minutes to tap out a few lines about their experiences, although most won't want to reveal details.

The third rule is to know who the other party is. If you have someone who wants to buy a share of your business or take control in return for shares or cash, find out what they're really like. Don't just rely on their own words, find out if they have a reputation already.

In Conclusion

Giving up control of your company, even in return for a suitcase of cash, could be something you regret. You're finally losing the right to veto decisions made by others and you can't specify the total direction once someone else is in the driving seat. While the lure of cash and stock might be enough to tempt you to sign on the dotted line, when are you going to get the cash? Are the stocks going to be worth anything in a year?

If you want to follow one of the longest discussions surrounding this topic and the eFront saga then try F---edcompany.com's eFront thread. There's over 100 pages of discussion involving eFront webmasters, other web gurus and general Internet users. Find out what the saga is about!

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