What Should Be Included in a Business Sale Agreement

When it comes to selling a business, it is important to have a comprehensive and legally binding agreement in place. The sale agreement outlines the terms and conditions of the transaction, and ensures that both parties are on the same page. Here are some key elements that should be included in a business sale agreement:

1. Purchase Price

The purchase price is a crucial element of any business sale agreement. It is important to clearly state the purchase price and any payment terms, including whether the price will be paid in one lump sum or in installments over time.

2. Assets Included in the Sale

The agreement should clearly state which assets are included in the sale. This could include equipment, inventory, real estate, intellectual property, and any other items that are integral to the business.

3. Liabilities

The agreement should also address any liabilities that the buyer will be assuming as part of the sale. This could include outstanding debts, pending lawsuits, or any other liabilities that the business may have.

4. Representations and Warranties

Both the buyer and seller should make representations and warranties regarding the business. These may include warranties that the business is free and clear of any liens or encumbrances, that all financial statements are accurate, and that the business has all necessary licenses and permits to operate.

5. Closing Conditions

The agreement should outline any conditions that must be met before the sale can be completed. This could include obtaining financing, obtaining necessary regulatory approvals, or resolving any legal disputes.

6. Non-Compete and Non-Solicitation Agreements

It is common for business sale agreements to include non-compete and non-solicitation agreements. These agreements prevent the seller from competing with the buyer or soliciting the buyer`s customers or employees for a specified period of time.

7. Governing Law

Finally, it is important to specify the governing law for the agreement. This will ensure that any disputes that arise are handled in the appropriate jurisdiction.

In conclusion, a well-drafted business sale agreement should include a clear outline of the purchase price, assets included in the sale, liabilities, representations and warranties, closing conditions, non-compete and non-solicitation agreements, and governing law. By including these elements in the agreement, both the buyer and the seller can be confident that the terms of the sale are clear and legally binding.