This provision appears at the beginning of the business purchase agreement. It contains the legal names and contact information for the seller and buyer. Ensure you identify all parties correctly since legal complications can result otherwise.
Detail an overview of the company and its operations in this provision. It should contain a statement attesting to the seller’s legal authority to authorize the sale, as well as other legal representations and warranties.
This clause will outline all of the financial terms related to the sale, like the purchase price, deposit requirements, and timing of when the payment(s) will be made.
This section will define the type of sale that is being made and the assets included and excluded from the sale. This provision will also include a section on property transfers detailing the condition and value of assets, such as equipment, tools, and property.
This provision details the seller’s obligations surrounding the closing, including taxes, loans, fees, benefit transfers, and salaries. Additionally, you can use this section to list buyer and seller agreements and protective clauses, such as a non-competition agreement.
The buyer and seller require a clear understanding of who is responsible for what, including the seller’s role, new employee training, and customer obligations. You can also detail the need for a bill of sale finalization to serve as the transaction’s conclusion.
If third-party brokers were used, this provision should include the legal names and contact information for those intermediaries and the party responsible for broker compensation.
This section of the business purchase agreement is typically straightforward as it addresses logistics, the closing date, and time. Additionally, it executes title transfers and specifies the money to be paid at closing.
Representations and Warranties
Representations and warranties are promises made by the seller about the business being sold. These promises can include statements about the business’ assets, liabilities, financials, and operations. The point of this section is to give the buyer assurances as to what they are buying.
The indemnities section outlines any obligations one party would have to another to compensate or ‘indemnify’ the other party for certain losses, damages, or liabilities that may arise after the transaction is complete. In other words, indemnities are designed to protect both the buyer and seller from any unforeseen events or misrepresentations.
The dispute resolution clause provides both the buyer and seller a procedure and means to address any sort of dispute that may transpire as a result of the transaction. It is always smart to outline how disputes are addressed in any type of business transaction, so that both parties understand their options and means beforehand.