Purchase of Business Agreement Information
A Purchase of Business Agreement, also known as a business sale agreement, or business transfer agreement, is a document used to transact the sale of a business between two parties (a buyer and a seller).
LawDepot's Purchase of Business Agreement may be used in England, Wales, Northern Ireland, and Scotland.
Who Needs a Purchase of Business Agreement?
You may need a business sale agreement if you:
- Own a business and will be selling assets or shares
- Are purchasing an existing business
- Are purchasing certain assets of a business
- Are transacting a merger and acquisition
What Information is in a Purchase of Business Agreement?
A Purchase of Business Agreement includes information such as:
- Buyer and seller details
- Property specifications
- Payment terms and options
- Clauses and warranties
- Assumed liabilities
- Representations and warranties
- Conditions precedent
- Dispute resolution, and more
When creating your Purchase of Business Agreement, you can customise it by only selecting the options that are relevant to you and your business acquisition.
Business Assets and Shares
When transacting the purchase of a business, you will need to determine if you are purchasing or selling shares or assets.
Shares in a business are percentages of the whole. Shares entitle you to a portion of the profit of the business, but don't necessarily allow you to have authority over the business itself. If you have controlling shares in a company, such as 51% or higher, you have the ability to make decisions for the company.
Assets include inventory, resources, property, and contracts. You can choose to purchase all assets, or exclude those that you do not wish to purchase. When purchasing assets, they do not give you control over the business.
Payment Terms and Options
After deciding upon a price for the business, payment terms will need to be negotiated.
If the balance will not be paid in full on the date that the contract is signed, you will need to determine a closing date, and choose whether or not a deposit will be required. It is recommended that, if the balance will be paid at a later date, you use a promissory note to document the amount owing and the due date.
Payment options include:
- Lump sum payment of outstanding amount. This means that the balance will be paid in full on the closing date.
- Lump sum plus promissory note for the outstanding amount. This means that the buyer will put a deposit down on the balance, and will owe the rest as per the terms of a promissory note.
- Promissory note for outstanding amount. This means that no deposit will be made and the balance will be paid as per the terms of a promissory note.
Documents Related to a Purchase of Business Agreement: