Writing a sale of business agreement can seem like quite the task to tackle because it is essentially the document that holds the transaction in place and keeps everyone safe from getting financially burned by any part of the process. The contract provides the framework for the agreement, and it even serves a reference that any of the parties to the agreement can look back on in times of uncertainty.
Including All Parties
When you first begin drafting your sale of business agreement, you are going to need to clearly spell out who all is involved in the sale with full names and addresses. Any investors or other parties that are involved financially in any way are going to need to be included. This is mostly to avoid confusion down the road in the event that the buying parties might need clarity on who exactly was involved in the sale.
Going Over What Exactly is Being Sold
This may take some time, but you’ll need to list every exact thing that is being sold. This includes everything from the logos and design to the business records and databases. Anything associated with the business will need to be included in this section to avoid conflict or confusion.
Drafting the Disclosure Section
The disclosure section is a major one that will keep anyone involved in the contract from pulling any low blow stunts, if you will. The disclosure section essentially states that all parties to the contract have disclosed all pertinent liabilities such as law suits, debts, or other burdens. If there are undisclosed encumbrances that the seller has failed to mention, the buyer is essentially not responsible for them per the sale of business agreement. Additionally, it can protect the seller from buyers with undisclosed bad credit or other hindrances. This is why it’s extremely important to include this section. It essentially ensures that no one is hiding any skeletons in their closets and everything is out on the table. Breaching this contract means that the other party is not held liable.
Documenting Payment Terms
The terms of payment must also be documented in the contract. This means, for example, if the payment for the business is going to be made in installments, this will all be recorded and documented in the payment terms section. The payment terms should also be very specific, including information pertaining to whether it will be paid for cash or check, or even other parties that are involved such as brokers or bank institutions.
Finalizing with Signatures
When the time comes to sign the document, it is best that you require all parties to sign their names just as they appear in the beginning of the document to avoid confusion. It may be a good idea to get the contract looked over and “OK’ed” by an attorney before handing it to anyone involved in the transaction. They’ll be sure to help you find any loopholes and strengthen the document to where it is as clear and solid as possible.