A business purchase agreement template is a legal document that acts as an evidence of the transfer of ownership of an ongoing business from one party to another. Likewise other agreements, this agreement also explains the rights and responsibilities of both parties involved in the transaction.
Why does a business purchase agreement need?
A business purchase agreement protects both parties involved in transferring ownership from any challenges after closing. The legal framework given by this document assists in resolving disputes regarding the sale of certain assets, shares and shareholder control among the sellers and buyers.
Moreover, this agreement protects the sellers by giving them with a forum for handling disputes with the buyer. The seller also use this document to show that they indeed changed the ownership of the business.
The significance of a business purchase agreement:
There are four primary reasons that why businesses have to prepare bill of sale;
- Firstly, a business purchase agreement makes sure that the transaction is handled accurately from starting to end.
- Secondly, if there be any challenges after the sale, a business purchase agreement protects each party involved in the transfer of ownership.
- Thirdly, this is an important step in helping to make or maintain relationships with customers and suppliers.
- Lastly, the most important one is that it protects the future relationship between the buyer and seller.
How to write a business purchase agreement?
Let us discuss below step-by-step on how to include all the components in the business purchase agreement;
Date of sale
Most states require that the date of sale must be included in the agreement. This date indicates when the business transaction took place. After the actual purchase of property, assets, or shares, it can be a few days or months.
In the seller’s information, include the following details;
- The full name of the person selling their business
- How he/she intends to be referred to in the agreement
- Date of birth
- Their main phone number
- Email address
This is the most critical component of the business purchase agreement. It should be detailed and include the following;
- The company’s name
- ID number
- The business address
- Registered office address
Furthermore, this section should also capture the following;
State of corporation: in this section, you have to specify where the company’s headquarters are and where the business’ registration is situated.
Address of business’ main headquarters: this element demonstrates where the business headquarters are located. This address may be different from the registered office.
Asset, shares, and other interests: all the assets, shares, and personal property which will be transferred as part of the sale should be detailed and itemized in this section. It can also add other rights like copyright or royalty for patents.
Here, you have to specify when and where the transaction took place and the payment method utilized. You should include the;
- The purchase price
- Buyer’s information
- Date of transaction
The warranties section contains the promise that both parties have to make when they complete the sale of the business. It can consist of a list of warranties as well as an indication of how long it will last and what is covered in the agreement.
Finally, the participants of the agreement have to sign and date the document. You should encourage all parties involved in the transaction to get sign and date the business purchase agreement.
In addition to this, a business purchase agreement must be witnessed, signed, and dated as it is admissible in court and can be used to prove the transfer of ownership. Also, you have to get it notarized by a notary public.
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In conclusion, a business purchase agreement template should explain everything thoroughly and clearly in order to avoid misinterpretation or other issues by the parties involved in the transaction.