Purchase of Business Agreement Information
A Purchase of Business Agreement is also known as:
- Business Transfer Agreement
- Sale of Business Agreement
What is a Business Purchase Agreement?
A Business Purchase Agreement is a contract used to transfer the ownership of a business from a seller to a buyer.
It includes the terms of the sale, what is or is not included in the sale price, and optional clauses and warranties to protect both the seller and the purchaser after the transaction has been completed.
A Purchase of Business Agreement can be used to buy or sell any type of business, including retail stores, industrial shops, restaurants and eateries, professional service offices, and many others.
Assets and Shares
Purchase of Assets
When you purchase assets in a business, you are not purchasing the business itself, but only one aspect of it. That may mean a product, client list, or type of intellectual property. The company or business retains its name, liabilities, and tax filings.
Assets can include:
- Confirmed sales orders
- Business contracts
- Books, files, and records
- Goodwill and business name
- Cash and bank balances
- Records of excluded assets
- Accounts receivable
Purchase of Shares
When you purchase shares in a company, you are purchasing a portion of all aspects of the business. If you buy all of the shares in the company, you own all facets of the business.
A condition precedent is when you create terms that deem you must meet certain requirements before a specified date. If the terms are not met, the agreement will become invalid.
Generally, the conditions include that the seller must provide all the proper documentation required for the sale and transfer of the business and that all warranties and promises made within the Business Purchase Agreement will continue to be true and accurate on the closing date of the sale.
A Purchase of Business Agreement may include four different restrictive clauses or warranties, including:
- Confidentiality, and
- Environmental compliance
When a buyer takes on a loan, mortgage, or accounts payable balance they are assuming a liability for the business. Buyers may take on some, all, or none of the liabilities accrued by the seller during the lifetime of the business.