CONTRACT FOR SALE OF BUSINESS
If you own your own business, or are considering buying an existing business, there is a lot you need to know before taking the final step. Businesses can be incredibly complex entities with multiple parties involved. If there are significant assets, debts or properties associated with the business, having accurate descriptions so all parties understand what they are and how to deal with them can be a time-consuming, exacting task. If you are considering selling your business, or if you want to buy a business, this is what you need to know:
WHO CAN SELL A BUSINESS? Anyone who owns a business (commonly referred to as a ‘vendor’) can to sell it to another party. If multiple people own a business—such as a partnership or company—anyone with an ownership interest may be able to sell that interest. Of course, there may be rules that regulate who can sell, whether they need approval of any partners or co-owners or shareholders, but if you own a business, you can sell it.
WHO CAN BUY A BUSINESS? Put simply, anyone to whom the owners wish to sell. That can be a single person, a group of people or a single person representing a group of people. Whoever wants to buy a business must agree with the seller, which should be in writing.
WHAT DO I HAVE TO DO TO SELL MY BUSINESS? Whenever you want to sell or buy a business—or an interest in a business—you will need to ensure the sales agreement is clear, and put into writing. Since businesses often involve much work, complicated financial statements, employees and other concerns, you first have to ensure everything is in order.
WHAT INCLUSIONS NEED TO BE IN THE BUSINESS SALE AGREEMENT? A lot. There needs to be a detailed explanation of every part of the business so all parties are sure of what they are selling, what they are buying, and what they can or cannot do. A buyer must be able to state how they will pay for the business, a seller must state what they are selling, and everyone has to be sure they are complying with all correct laws and legislation.
CAN I KEEP THE SALE TERMS SECRET? Of course. Confidentiality agreements and non-disclosure terms are common in Business Sale Agreements. If you are buying a business that involves the transfer of trade secrets or proprietary information, you’ll need to be doubly sure what the status of these properties will be once the sale is complete.
Whether you’ve come to the point where you want to sell your business and retire, or if you want to start a new career and believe buying a business is the way to go. The sale of a business is a complicated matter for all parties involved. Even a small business often has significant issues involved with its transfer, and everything needs to be clear to ensure everyone understands the terms. A good Sale of Business Agreement leaves nothing in the dark, and it allows everyone to be certain of their position.