The existence of a business sale agreement is very important, where this document must be officially signed by both parties involved so that it is legally valid.
This transaction can be in the form of an asset sale where all control of the asset and ownership is transferred to the new owner. It can also be a sale of shares, where all shares must be sold, so that the buyer has full control.
What Is a Business Sale Agreement?
A document containing a sales agreement involving the entire business of the seller to the buyer which includes terms and conditions that are under the auspices of the law and must be understood by both parties involved.
This business sale agreement has a binding in nature, it must be mutually agreed upon and signed by the seller and the buyer. The scope of the agreement includes basic logistics regarding the sale of the business, such as the sale price along with detailed information required by the allocation of obligations.
When the agreement has been established and the documents have been signed, then both parties can start the process of handing over the business assets.
If there are special conditions in the settlement of the transaction, then the parties involved need to arrange a special agreement as well. If at any time there is a violation of the agreement, each party who agreed to the agreement has the authority to withdraw and leave the agreement.
When to Use a Business Sale Agreement?
If at any time you have the desire to sell or buy a business, remember that transaction documentation is an important thing that should not be missed. This documentation aims to carefully verify all matters that need to be considered which are all included in a Business Purchase Agreement.
The various misunderstandings below often occur, therefore this agreement needs to be made as a precautionary measure:
The authority to sell the business is not owned by the seller.
Permits and authority to operate the business do not exist.
No financial audits are conducted by certified public accountants.
There is a sudden dividend payment.
There has been no payment / settlement of business obligations.
The buyer`s understanding does not match the actual company situation.
There was an unexpected increase in salaries and benefits for officials and employees.
Who Should Use a Business Sale Agreement?
Anyone who wants to sell or buy a business must use this business sale agreement. This agreement includes terms involving buyer and selected sellers as well.
Specific details that state the business sale, description of the assets and shares must be contained in the sale and purchase agreement of this business.
How to Write a Business Sale Agreement?
Some of essential components that should normally be included in a business sales agreement are described in the lists below (some points can be modified, depending on aspects relevant to your business):
The first and last name of the sellers And buyers.
The business outline.
Payment (including any amenity, equipment, machinery) and regulations if the buyer can`t complete the payment.
An index of sales at equitable trade value and an agreement to inform the IRS of sales at appropriate timescales.
After the agreement is signed, the closing date must be set within 10 days at the latest. Bill of Sale must also be sent to the buyer no later than 5 days after signing the agreement.
If either party fails to comply at the end of the agreement, the precedent conditions must be explained in this section.
A statement sentence that it is not considered a violation of law in the country where the agreement takes place if there is any action of any kind during or after the sale of the business.
Information from the seller containing details of the rental or sublease of the property, and a statement that there is agreement from the buyer that he will bear the costs necessary to complete the remaining lease or sublease.
Affirmation that there will be no litigation against the business at this time stated by the seller, the seller will settle any problems and costs incurred in the event of legal issues as long as the Business Sale Agreement is in effect.
Pledge of confidentiality made by both parties stating that they will not disseminate information or the contents of the agreement to outside parties during the sales process and also for 1 year after the agreement is signed.
Ensure that in the agreement there will be no additional third parties without the agreement of both parties.
Confirmation containing every notification involving the seller and the buyer must be made in writing sent by official letter or in person, the cost will be borne by the sender.
An agreement which states that if there is a dispute, mediation will be carried out.
Guarantee from the seller regarding the maintenance of property insurance until the completion of the sales process, after that the property insurance will be purchased by the buyer as well as insurance documentation will be submitted to the seller.
The signing of the Business Sales Agreement if the parties involved have agreed to the terms and conditions stated in the agreement form.