What is a Business Sale Agreement?

The importance of a business sale agreement in selling your business

Whether you’re selling your business - in which case you’ll need an asset sale agreement, or selling shares in your company - in which case it will be a share purchase agreement (SPA), the basic format of the agreement is broadly identical although the detail varies considerably.

The structure of either an asset sale agreement or a share purchase agreement will be along the following lines:-

• Definitions

• Details of the deal – the purchase price, whether stock is included or additional, how the purchase price is paid and, for asset sale agreements, how the purchase price is broken down between the different parts of the business (goodwill, fixtures and fittings, contracts etc)

• Conditions precedent – anything that has to be done before the contract can be performed

• The warranties and any limitations to those warranties

• The operative clauses dealing with other parts of the business, e.g.

• transferring over contracts held by the business;

• transferring over the employees;

• dividing / apportioning pre-payments, deposits and book debts between the seller and the buyer.

Download our Guide to Selling your Business here.