If sale of your business has been decided, be prepared to cover all your bases. You will need to draft a Business Sale Agreement. It is important to make sure the agreement contains all important terms and clauses of the deal.
The sale agreement should include the following items:
- Identification of parties including: name and address
- Character of each party: Sole proprietorship, professional practitioner or corporation
- Recitals: Desire of the seller to sell and the buyer to buy, desire of the seller to retire
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- Assets: Real property, including business building, good will, stock in trade, furniture, equipment and fixtures, trade names, patents, trademarks and copyrights, deposit and on hand cash, insurance policies, securities for debts, notes and accounts receivable, other assets and outstanding contracts, valuation of assets sold
- Nature of consideration: Assumption of liabilities and debts, payment of money, allocation of expense to various assets sold.
- Manner and time of payment: Personal guaranty of payment by buyer, partial payment on signing and balance on closing, escrow protection, payment in installment, mortgage, all cash on closing
- Closing: Inspection of assets sold, payment of the purchase price, conduct of business until closing, delivery of instruments of transfer, date of closing
- Inspection of records, books of premises: Furnishing of customer and supplier list
- Representations by seller: Absence of labor disputes, survival of representations, validity of copyrights, trademarks, patents and trade names, compliance with all laws affecting business, authority to property and assets, title of property and assets, all outstanding contracts, judgments, liens and other obligations disclosed.
- Indemnification of buyer
- The assumption by the buyer of the lease: obtaining of lessor’s consent to assignment of lease
- Broker’s commission
- Seller’s instruction to the buyer
- Covenant not to compete: Duration and territory
- Making necessary fillings and obtaining necessary approvals: Antitrust rulings, tax rulings and similar approvals
- Taxes imposed on transfer of assets or payment of sales, payment of other taxes
- Transfer of Tin
- Insurance
- Contingencies: On buyer’s continuation as a franchisee and on buyer’s obtaining license or permit
- Execution of bill of sale to transfer personal properties
- Transfer of titles of all motor vehicles
- Execution of warranty deed
- Risk of loss and remedies for default
- Modification of agreement and assignability of rights under agreement
- Manner of giving notice and arbitration of disputes
- Governing law and binding effect of the agreement on successors and assigns
- Date of execution and signatures
