What does a business purchase agreement cost? If you are purchasing a business, this is a question you probably have. So let’s explore this question and review some general information about business purchase agreements.
According to Based on ContractsCounsel’s marketplace data, the average cost of a project involving a business purchase agreement is $864.58.
How Much Does a Business Purchase Agreement Cost?
A business purchase agreement, sometimes called a business transfer agreement or a buy-sell agreement is a legal contract that transfers the ownership of a business from a seller to a buyer. This essential document should be used during any business purchase transaction because it lays out the deal's terms and conditions.
A business purchase agreement is used for various businesses, including brick and mortar retail stores, professional services, restaurants, or online companies. In addition to facilitating a sale, a business purchase agreement also serves to establish a fair market valuation of the company and its assets and liabilities.
Getting help from a business lawyer to draft a business purchase agreement is highly encouraged because this contract outlines essential information about the transfer of ownership of the business from the seller to a buyer. However, suppose the contract is poorly written or doesn’t contain all the necessary terms. In that case, both parties are at risk for financial damages and contract breaches.
What’s Included in a Business Purchase Agreement
Business purchase agreements will differ based on the type of business and the terms established by the seller and the buyer. These contracts are highly customizable but will include some basic clauses.
Clauses that you will mostly find in a business purchase agreement include:
- Information about the buyer and seller. At the beginning of the contract, names and contact information of both the buyer and seller should be recorded. All parties involved in the transaction need to be correctly identified to avoid legal issues.
- Description of the business. The business purchase agreement should include details about the business being transferred. Details include an overview of the company and its services. This statement attests that the seller is the legal owner and can sell the business and any other applicable representations and warranties.
- Financial Details. It is essential to include the sale price of the business and any other financial stipulations like deposits or down payments.
- Terms of the sale. One of the most critical clauses in a business purchase agreement is defining the terms of the sale. For example, it must be clear whether the business purchase includes assets like tools, equipment, and property.
- Covenants. Covenants cover the seller’s closing obligations like tax liabilities, loans, and third-party fees. This section could also include protective clauses for the buyer and seller, like confidentiality clauses.
- Terms of the transfer. When a business changes ownership, many details need to be addressed, like employee training or transferring customers. These details should be noted in the business purchase agreement.
- Closing. The closing section will include information about the closing date and money that must be paid on this date.
Who Pays for a Business Purchase Agreement?
Suppose a buyer and seller choose to hire an attorney to draft a business purchase agreement to transfer ownership of a business. In that case, someone will have to pay the attorney.
There is no steadfast rule on paying for the business purchase agreement. Payment terms can be negotiated between the parties. However, the business purchase agreement should detail which party will be paying the legal fees.
Examples of Business Purchase Agreement Projects
Business Purchase Agreement Drafting
Business purchase agreements can be very complicated. Therefore, it is recommended that you consult with an experienced attorney to ensure your agreement is legally binding and contains all necessary clauses.
Business purchase agreement drafting typically involves a consultation with the buyer and seller to learn about the terms they want to include in the agreement. Then implement them into a business purchase agreement template to ensure it has everything the parties need.
Business Purchase Agreement Review
Suppose you choose to draft your own business purchase agreement. In that case, it is a good idea to have a lawyer review it before using it for a transaction. The laws regarding business purchases will vary in states. If you aren’t familiar with your state’s laws, a lawyer can guide you through the sale process.
Business Purchase Agreement Drafting Cost
If you hire a lawyer to draft a business purchase agreement, it will come with costs because the lawyer will charge for their time and legal expertise to complete the project.
ContractsCounsel’s marketplace data shows the average business purchase agreement drafting costs to be $1,138.57 across all states and industries.
Business Purchase Agreement Review Cost
If you choose to draft your own agreement and have a lawyer review the contract, you will still incur legal fees, but they will typically be less. In addition, reviewing a document should take less time and work than drafting a document from scratch.
ContractsCounsel’s marketplace data shows that the average business purchase agreement review costs $481.00 across all states and industries.
How Do Lawyers Charge for a Business Purchase Agreement?
Business lawyers can charge for services in various ways. Depending on the type and complexity of the project, lawyers will typically use an hourly rate fee schedule or a flat fee rate.
Hourly Rates for Business Purchase Agreements
Many business lawyers bill their time using an hourly rate fee structure. This means the lawyer will provide an hourly rate to be approved by the client and log time in a timesheet. Then, the lawyer will bill the client at the end of the project or case. This is typically the safest way for the lawyer to charge clients because they are covered if the case takes longer than initially estimated.
ContractsCounsel’s marketplace data shows the average hourly rate for a business lawyer ranges from $250 - $350 per hour.
Flat Fee Rates for Business Purchase Agreements
Flat fee billing structures are becoming more popular for contract drafting projects like a business purchase agreement. Lawyers will provide the client with a flat fee quote for legal services in this fee structure. The benefit of flat fee billing is that it gives certainty to the client on the project's total cost. However, it is important to ensure the client knows what’s included with the fee before starting the project, as it may not involve rounds of revisions.
ContractsCounsel’s marketplace data shows that the average flat fee rate for partnership agreement costs $864.58.
Get Help with a Business Purchase Agreement
Do you need help with a business purchase agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.