How do I buy or sell a business?
When a business broker is working on behalf of a vendor to sell a business, they will often prepare a sale and purchase agreement. Whether you are the vendor or purchaser of the business, it is always advisable to have the agreement checked by a lawyer before signing.
If you have reached a private agreement to buy or sell a business (with no broker involved) we can draft the sale and purchase agreement for you. We would also make sure you are aware of your obligations and negotiate terms that are most favourable to you and your business.
What will be in the Agreement for the Sale and Purchase of a Business?
Among other things, the sale and purchase agreement would usually contain the following:
- Details of the business including what is actually being bought and sold. This sounds obvious but there are often assets that need to be specifically included or excluded from the sale.
- The purchase price and how it is broken down between tangible and intangible assets and stock.
- Warranties from the vendor about the business such as historical (but not future) turnover.
- Undertakings by the vendor to provide handover assistance to the purchaser.
- Restraints on the vendor from selling and then setting up in competition with the purchaser.
- Where the premises are leased (they often are), details of the lease such as rental, lease terms and renewal and rent review dates.
- Any conditions such as due diligence and finance.
How else can we assist with a business sale and purchase transaction?
Once the sale and purchase agreement has been signed we would usually assist with:
- Due diligence on the business, including checking contracts that the vendor has entered into as suppliers and customers.
- Arranging for the premises lease to be assigned from the vendor to the purchaser.
- Ensuring that encumbrances, such as financing statements that are registered against the assets of the business, are removed on settlement.
- Assisting with employee related issues.
- Arranging for the correct amount of money to change hands between the parties. There will almost always be adjustments to the purchase price to take into account things such as a deposit paid, or money paid in advance by the vendor that will actually be for the benefit of the purchaser.
Getting expert legal advice can make the difference in protecting you from any potential or hidden risks involved in the business purchase. We pride ourselves on giving real-world advice and we understand how to cut through the jargon.
You may also like to read our article on Preparing for a Business Sale.
"You expect your lawyer to be professional and an expert in their field, but when you work with the team at Davenports Harbour, you know they have taken the time to get to know you and make sure you understand what is the best way to proceed for your situation."