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Taking the time to negotiate the exact terms and conditions with the purchaser of your business will help you to avoid a host of potential issues in the future. As well as helping you secure the deal you're looking for, a legally-sound business sale agreement can protect you against liability issues, disputes and loss of assets.
Here's everything you need to know about a business sale agreement, including where to find a free template you can download.
What's in this guide?
- What is a business sale agreement?
- When should I use a business sale agreement?
- Business sale agreement vs. a term sheet
- What's included in a business sale agreement?
- How effective is a business sale agreement?
- Do I need a lawyer for a business sale agreement?
- Get access to customisable business sale agreement templates online
- How do I write a business sale agreement?
- Where to get free legal documents and templates online
What is a business sale agreement?
A business sale agreement is a legally binding document that sets out the terms and conditions by which a seller will sell their business and transfer assets to a buyer.
It is also known as a business sale contract, business purchase agreement, sale of business agreement and sale of business contract.
This type of agreement lists the conditions of the sale in detail, such as the selling price, list of included assets, and dispute resolutions.
Download this template at Lawpath
When should I use a business sale agreement?
If you are buying or selling a business or assets, then you'll need to negotiate a business sale agreement with the parties involved.
Before you can do this, it's sometimes recommended that you draft up a Heads of Agreement first.
Business sale agreement vs. a term sheet
Unlike a business sale agreement, a term sheet is a non-binding agreement. It outlines in bullet form the terms and conditions of the sale of business. It is the precursor to a business sale agreement and greatly assists a lawyer when drafting up the final legal document. It also helps the buyer and purchaser to commit to their original agreement of terms and conditions.
What's included in a business sale agreement?
A business sale agreement is a long and detailed document consisting of 34 pages divided into 21 sections and 10 schedules that the list the terms and conditions of the following:
- Sale price
- Terms and conditions of sale
- Conduct of business before completion of the sale
- List of shares and assets included: stock, training, employees, superannuation, contracts and equipment
- Warranties and guarantees
- A restraint clause
- Goods and services tax (GST)
- Confidentiality clauses
- Dispute resolution terms and conditions.
How effective is a business sale agreement?
A business sale agreement is essential when it comes to the transfer of shares and assets. Without a business sale agreement, you'd have no legal ground to stand on and you run the risk of losing a lot of money and assets.
A business sale agreement needs to satisfy both party's terms and conditions in order to be effective.
Having a legally binding business sale agreement can help in many ways. It can:
- Clearly identify the responsibilities of buyer and seller
- Protect you from losing money
- Ensure proper conduct in the transfer of assets, employees and premises
- Reduce the risk of legal and liability issues.
Do I need a lawyer for a business sale agreement?
Legally you don't need to hire a lawyer to draft a business sale agreement, but it could be a big risk not to. With such an important and long and complex document, it could take a lawyer's expertise to put it together without error or omission.
Get access to customisable business sale agreement templates online
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How do I write a business sale agreement?
It helps if you start with a Heads of Agreement document that outlines the terms and conditions of the sale. This is a document you need to negotiate with the purchaser and it can save your lawyer a lot of time and you a lot of money.
Also, find a free template of a business sale agreement that you can download from the Internet and go over it with the purchaser. This can also help to cut down on extra time spent in a lawyer's office.
Where to get free legal documents and templates online
There are a number of free online templates available for business sale agreements and some that let you view the document before downloading. These include:
- LawDepot. LawDepot offers hundreds of business and legal documents, free to download. All you do is fill them in online before downloading the documents straight to your computer.
- Wonder.Legal. Choose from more than 140 legal document templates with an average fee of $22.96 to download. All you have to do is fill out a questionnaire and Wonder.Legal does the rest.
- Lawpath. Lawpath is an online legal resource for small businesses and entrepreneurs. You can view samples of legal document templates for free, but a fee is required for access to downloads and customisable options.
- LegalVision. For a monthly membership to LegalVision of $199, you'll get unlimited access to free downloads of legal document templates (includes the business sale agreement).
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