When you’re selling a business, there’s a lot of paperwork to deal with. One important document is the business sale agreement template. This document outlines the terms and conditions of the sale, and it’s important to make sure that everything is in order before signing it. In this article, we’ll discuss the basics of a business sale agreement template: elements, tips, sample, and FAQs.
Basics of a Business Sale Agreement Template
If you’re thinking about selling your business, it’s important that you have a well-written Business Sale Agreement in place so that both you and the buyer are clear on the terms of the sale.
A Business Sale Agreement is a contract used to transfer the ownership of a business from one person or entity to another. This document can be used for the sale of an entire business, or just certain assets belonging to the business. The agreement should lay out all the details of the transaction, including what is being sold, how much it is selling for, and when the transfer will take place.
The agreement may also include provisions for things like earn-outs, where the seller agrees to continue working for the buyer for a certain period of time after the sale in order to help transition the business successfully.
Elements of a Business Sale Agreement
When drafting a Business Sale Agreement, there are several key elements that should be included in order to make sure that all bases are covered. These include:
- A description of what is being sold: This should include not only the physical assets of the business but also things like licenses, contracts, trademarks, and other intangible property.
- The purchase price: Be sure to include not only the agreed-upon purchase price but also how it will be paid (e.g., in cash, installments, etc.)
- The terms of the sale: This should spell out when the sale will be finalized, any contingencies that must be met, and other important details.
- Warranties and representations: The seller will want to include warranties that the business is being sold free of liens and encumbrances and that all information provided about the business is accurate.
- Noncompete clause: This clause seeks to prevent the seller from starting a similar business in competition with the buyer.
Tips for Creating a Business Sale Agreement Template
With these key elements in mind, let’s take a look at a few tips for drafting an effective Business Sale Agreement template.
- Keep it simple: A Sale Agreement is a legal document, so there is a temptation to include every possible detail and contingency. However, this can make the agreement overly long and complex, which can be confusing for all parties involved. It is important to strike a balance between being thorough and keeping the agreement straightforward.
- Be clear and concise: As with any legal document, it is important to use clear and concise language when drafting a Sale Agreement. This will help to avoid confusion or ambiguity later on.
- Get input from all parties: Before finalizing any Business Sale Agreement, it is important to get input from all parties involved. This includes the buyer, seller, and their respective lawyers or advisors. By getting everyone’s input, you can be sure that all parties are on the same page and that there are no surprises later on.
- Use a template: There are many different templates available online for Business Sale Agreements. By using a template, you can be sure that all of the necessary elements are included in your agreement.
- Have it reviewed by a lawyer: Once you have drafted your Business Sale Agreement, it is important to have it reviewed by a lawyer. This will ensure that everything is in order and that there are no legal issues with the agreement.
Sample Business Sale Agreement Template
Below is a sample business sale agreement template that you can use as a starting point for your own agreement. This template includes all of the essential elements of a business sale agreement and can be easily customized to fit your specific situation.
Signature of Seller: ______________________________ Signature of Buyer: ______________________________ This Business Sale Agreement Template is entered into on [DATE] by and between: Party A, with a mailing address of [ADDRESS] (“Seller”); and Party B, with a mailing address of [ADDRESS] (“Buyer”). For the purchase and sale of the following business assets located at [ADDRESS]: - The business name(s), including any associated trademarks and logos; - The customer lists and the goodwill associated with the business; - The inventory, furniture, fixtures, equipment, and leasehold improvements; and - Any other assets agreed upon by the parties (the “Business Assets”). In consideration for the sale of the Business Assets, the Buyer shall pay to the Seller the sum of [AMOUNT] (the “Purchase Price”). The Purchase Price shall be paid in cash at the closing of this transaction. The Seller and Buyer hereby agree as follows: DEFINITIONS. For purposes of this Agreement, the following terms have the following meanings: “Business Assets” means the inventory, furniture, fixtures, equipment, leasehold improvements, goodwill, business name(s), and customer lists as set forth in Exhibit A attached hereto and made a part hereof. “Closing Date” means [DATE]. “Confidential Information” means any information or material that has or could have commercial value or other utility in the business in which the Disclosing Party is engaged. If Confidential Information is in written form, the Disclosing Party shall label or stamp the materials with the word “Confidential” or some similar warning. If Confidential Information is transmitted orally, the Disclosing Party shall promptly provide a writing indicating that such oral communication constituted Confidential Information. “Disclosing Party” means the person disclosing Confidential Information under this Agreement. “Receiving Party” means the person to whom Disclosing Party discloses Confidential Information under this Agreement. Confidentiality. The Receiving Party agrees: (I) to hold Confidential Information in strictest confidence for the sole and exclusive benefit of the Disclosing Party; (ii) to carefully restrict access to Confidential Information to employees, contractors and third parties as is reasonably required and shall require those persons to sign nondisclosure restrictions at least as protective as those in this Agreement; and (iii) not to use for Receiving Party’s benefit, publish, copy, or otherwise disclose to others, or permit the use by others for their benefit or to the detriment of Disclosing Party, any Confidential Information. The nondisclosure provisions of this Agreement shall survive the termination of this Agreement and Receiving Party’s duty under this provision shall remain in effect until the Confidential Information no longer qualifies as a trade secret or until Disclosing Party sends Receiving Party written notice releasing Receiving Party from this provision, whichever occurs first. Authorized Representatives. Each party acknowledges that its authorized representatives are bound by the terms of this Agreement. “Authorized Representatives” means a party’s employees, attorneys, accountants, and investment bankers who are bound by confidentiality restrictions at least as protective as those in this Agreement and who need to know the Confidential Information to assist such party in evaluating the business combination transaction contemplated by this Agreement. Exceptions. The confidentiality provisions of this Agreement shall not apply to any information that: (I) is or becomes generally available to the public without breach of this Agreement; (ii) was known to a party at the time of its disclosure or subsequently becomes known to such party from a source other than the disclosing party without breach of any confidentiality restrictions; (iii) is independently developed by a party without reference to any Confidential Information; or (iv) is required to be disclosed pursuant to law, regulation, subpoena, or order of a court of competent jurisdiction. Notwithstanding anything in this Agreement to the contrary, each party shall have the right to disclose the terms and conditions of this Agreement: (A) as may be required by law, rule, regulation, order, or other legal processes; provided that prior to such disclosure it gives reasonable notice thereof and consults with and considers in good faith the reasonable suggestions of the other party as to actions that may be taken to minimize disclosure; and (B) in confidence, to its accountants, attorneys, investment bankers or similar advisors. "Confidential Information" means any information or material that has or could have commercial value or other utility in the business in which Disclosing Party is engaged. If Confidential Information is in written form, the Disclosing Party shall label or stamp the materials with the word "Confidential" or some similar warning. If Confidential Information is transmitted orally, the Disclosing Party shall promptly provide a writing indicating that such oral communication constituted Confidential Information. The Receiving Party's obligations under this Section shall survive termination of this Agreement and Receiving Party's duty to hold Confidential Information in confidence shall remain in effect until the Confidential Information no longer qualifies as a trade secret or until Disclosing Party sends Receiving Party written notice releasing Receiving Party from this Agreement, whichever occurs first. Exclusions from Confidential Information. Receiving Party's obligations under this Agreement do not extend to information that is: (a) publicly known at the time of disclosure or subsequently becomes publicly known through no fault of the Receiving Party; (b) discovered or created by the Receiving Party before disclosure by Disclosing Party; (c) learned by the Receiving Party through legitimate means other than from the Disclosing Party or Disclosing Party's representatives, or (d) is disclosed by Receiving Party with Disclosing Party's prior written approval. Required by Law. Notwithstanding the foregoing, Receiving Party may disclose Confidential Information of Disclosing Party if required to do so under any federal, state, or local law, rule or regulation, subpoena, or legal process. Ownership/Intellectual Property Rights. Nothing contained in this Agreement shall be deemed to convey to either party any right, title, or interest in or to any Confidential Information of the other party except for the specific limited rights expressly granted above. All Confidential Information shall remain the sole and exclusive property of the Disclosing Party. If you have questions regarding confidentiality or non-compete provisions please seek independent legal counsel prior to signing this Agreement. Severability. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Integration/Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties, whether written or oral. This Agreement may not be amended except by a writing signed by both parties hereto which specifically refers to this Agreement. Waiver. The failure of either party to insist, in any one or more instances, upon the performance of any of the terms or conditions of this Agreement shall not be construed as a waiver or relinquishment for the future of such term or condition, but the same shall continue and remain in full force and effect. The subsequent acceptance by either party of a breach of any term or condition herein which has occurred shall not be deemed a waiver thereof or consent to any further breach thereof. Assignment. This Agreement shall be binding on and inure to the benefit of each party’s successors and permitted assigns; provided however that neither party may assign its rights, interests or obligations under this Agreement without prior written consent from the other party, which consent shall not be unreasonably withheld. Governing Law. This Agreement and the performance of each party’s obligations will be governed by the laws of the State of [insert state], without reference to conflict or choice of law principles. The United Nations Convention on Contracts for the International Sale of Goods is specifically disclaimed. Counterparts/Electronic Execution. This Agreement may be executed electronically and in counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. This Agreement and each party's obligations shall be binding on the representatives, assigns, and successors of such party. Each party has signed this Agreement through its authorized representative. This Agreement may not be amended except in writing and signed by both parties. This Agreement sets forth the entire understanding of the parties with respect to its subject matter and supersedes all prior agreements or understandings related thereto. If any provision of this Agreement is found illegal or unenforceable, the remainder of this Agreement shall be interpreted so as to best effect the intent of the parties. This Agreement shall be governed by and construed in accordance with the laws of [insert state or country], without regard to its conflicts of law rules. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. The prevailing party in any action to enforce this Agreement shall be entitled to recover reasonable attorneys' fees and costs incurred therein from the other party. Each party hereby waives any right it may have to a jury trial in connection with any action arising out of or relating to this Agreement. This Agreement may be executed in counterparts, each of which is deemed an original, but all of which together constitute one and the same instrument. A facsimile or digital copy of a manually executed signature page shall be just as binding as an original signed copy of this Agreement. This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether oral or written. This Agreement may not be amended except by mutual written agreement of the parties. The headings used in this Agreement are for convenience only and shall not affect its interpretation. IN WITNESS WHEREOF, the Parties have caused this Business Sale Agreement to be duly executed as of the date first set forth above. Seller: ___________________________ By: _______________________________ Title: _____________________________ Buyer: ____________________________ By: _______________________________ Title: ____________________________
Both parties should sign and date the agreement. The signatures will serve as binding confirmation that both parties agree to all terms and conditions set forth in the document. If you’re selling your business, be sure to consult with an experienced attorney to ensure that all of your legal bases are covered. An ironclad business sale agreement can help you avoid potential problems down the road and protect your interests during the transaction.
FAQs about Business Sale Agreement
Do I need a business sale agreement template?
If you’re selling your business, it’s a good idea to have a written agreement in place. This will help ensure that both parties are clear on the terms of the sale and can help avoid potential problems down the road.
What should be included in a business sale agreement template?
A typical business sale agreement template will include information on the buyer and seller, the purchase price, financing arrangements, and other important details. Be sure to consult with an experienced attorney to make sure that all of your legal bases are covered.
How much does a business sale agreement template cost?
The cost of a business sale agreement template will vary depending on the complexity of the sale and the attorney you consult. However, it is typically a good investment to have a lawyer review your agreement to make sure everything is in order.
Do I need a lawyer to help me with my business sale agreement template?
While you are not required to have a lawyer, it is always a good idea to consult with one before entering into any legal agreement. An attorney can help ensure that your agreement is legally binding and that all of your rights are protected.
What is a non-compete clause?
A non-compete clause is a provision in an agreement that prohibits the parties from competing with each other after the agreement has been terminated. This type of clause can help protect your business interests by preventing the other party from starting a similar business or soliciting your customers.
What documentation do I need to sell my business?
The documentation you will need to sell your business depends on the type of business you have and the state in which it is incorporated. You will likely need to provide a copy of your Articles of Incorporation, as well as any other relevant documents such as your bylaws or operating agreement. You should also be prepared to provide financial statements and tax returns for the past few years.