Buying and selling businesses is a significant entrepreneurial decision and occurs nearly a million times each year. However, most of these transactions are not done with the help and mediation of commercial brokers. It is important to protect your interests as either a buyer or a seller by knowing what you are purchasing and ensuring that the Business Sales Agreement reflects this.
A Business Purchase Agreement is a contract that formalizes the transfer of ownership of a business from a seller to a buyer. The agreement includes the terms and conditions of the sale, the sale price, disclaimers, warranties, and other optional clauses that protect the interests of both the buyer and the seller.
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Business Purchase Agreements: Why You Need One
Verbal Agreements just won’t do when buying or selling a business. Having a written contract formalizes the transaction between both parties. Having a written agreement also creates room for negotiation and can provide the information that has not been previously discussed to avoid misunderstandings or disputes down the road.
Outlines the Details
A sales agreement must contain the necessary details of the negotiation. Prices, quantities, order dates, client information, delivery date, delivery time, and payment terms must all be outlined in the contract. A Business Purchase Agreement must answer the how, where, when, why, and who questions to guarantee proper execution of the contract and ensure commitment of the deal between both parties.
Acts as Reference
Purchase Agreements is a form of contract that is legally binding and provides protection to both the buyer and the seller. Business Agreements serve as reference for disputes and can be used as evidence or a basis for decisions in legal proceedings or disputes.
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Drafting a Business Purchase Agreement
A Business Purchase Agreement should contain the complete names of both the buyer and the seller, including their address. Make sure that the names indicated are correct and that all parties involved are listed down in the contract to avoid one party sneaking away from the contract. When signing a contract, titles of the signatories must also be included.
Indicate the Items Included in the Sale
List down the items included in the sale such as business names, logos, business records, license, patents, trademarks, trade secrets, physical assets, and other items required to carry on with the business. Physical assets and their quantities should also be itemized in the contract.
Sale Terms and Resolution Terms
Indicate the total amount of the sale, the mode of payment, terms of installment, amount of downpayment given, and if payments will be issued via cash, check, or electronic transfer. A clause that indicates a means of resolution for any disputes may also be included in the contract.
As soon as all parties have fully read and understood the agreement, all parties involved are required to sign the document along with the date the contract was signed and the signatory’s complete name and title.
Have a copy ready for all signatories and let them sign multiple copies. Once signed, Business Purchase Agreements must be notarized by a notary public.
Also see: Sample Purchase Forms
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