SALE OF BUSINESS AGREEMENT
Be it as an owner of a business thinking of selling or a prospective purchaser of a business thinking of buying, the process of selling or buying a business is complicated with much to be considered. Businesses can be extremely complex, often with a number of parties involved. If there are considerable assets, debts or properties tied into the business, obtaining an accurate picture is the first step. Knowing what you are buying is essential!
Obtaining this information can be a time consuming and tedious task. If you are thinking about selling your business or if you want to buy a business then the following maybe helpful:
- WHO CAN SELL A BUSINESS OR PART OF A BUSINESS?
Anyone who is a business owner (commonly referred to as a ‘vendor’) can sell their business. If there are multiple owners of a business, such as a business partnership or company, then anyone with an ownership interest may be able to sell their interest. Their right to sell their share/or shares in a business will be governed by the charter or "articles of incorporation" of the business. There may well be regulations that govern who can sell, how they can sell and whether they need partners, co-owners or shareholders approval. However, if you own the business outright then you can sell it at any time you chose.
- WHO CAN BUY A BUSINESS?
Quite simply, anyone the owners wish to sell to. That could be a single person, a group or a single person acting as an agent for a group of people. Who ever wants to buy a business must make an agreement with the seller. This should ALWAYS be in writing. The process would preferably start with a signed Heads of Agreement and then be formalised in Sale of Business agreement.
- WHAT'S INVOLVED IN THE SALE OF A BUSINESS?
Whenever you want to buy or sell a business, or an interest in a business, you will need to ensure that the Sale of Business agreement is detailed, accurate and clear. Most importantly, it must be in writing. As selling or buying a business involves significant time, often complicated financial statements, employee concerns and other matters, it is wise to involve an accountant at some stage in the process. Either way, you must be sure everything is "in order" before you proceed.
- WHAT NEEDS TO BE INCLUDED IN THE SALE OF BUSINESS AGREEMENT?
There needs to be a detailed and accurate description of every aspect of the business. All parties must be sure of what is being bought or sold and how the transaction is to be handled. A buyer must clearly state how the business purchase will be paid and a seller must state clearly the terms of the sale process. Both Buyer and seller must comply with all relevant Laws and legislation governing the sale.
- CAN I KEEP THE TERMS OF THE SALE CONFIDENTIAL?
Yes. Non-disclosure terms and confidentiality agreements are common in Business Sale Agreements. If you are buying a business that involves the transfer of intellectual property (trade secrets), you will need to be certain that both parties are protected during the sale process. The asset value, both tangible and intangible, must remain protected through out the entire transaction.
If you are at a point where you are ready to sell your business, or maybe start a new business phase in your life and believe buying a business is a sound proposition, the decision and subsequent transaction is a complicated matter.
Even a small business can have significant issues involved with its transfer. A good Sale of Business Agreement encompasses all relevant areas of the sale process and details all pertinent information. It allows everybody involved to be certain of their position and be clear on the outcome.
RP Emery's lawyers have prepared an easy to read Sale of Business Agreement, drafted in plain English and complying with all Australian laws. Our comprehensive Sale of Business Agreement comes complete with a detailed "user guide" to simplify the process. The RP Emery Sale of Business Agreement is available now.
Sale of Business Agreement
Business Leasing Agreement
Should you consider "leasing" your business, as an alternative to selling, RP Emery has a complete Business Lease Agreement available. Have a look and see if it suits your requirements.