A Guide to Composing a Business Transfer Agreement
Whether you want to sell or purchase a business, having a properly written business transfer agreement is of utmost importance. If you’re not sure how to write one, you’re not alone! Composing any legal document is stressful and complicated for most people. Luckily, you can rely on our guide to learn what a business transfer agreement should look like.
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Business Transfer Agreement Explained
A business transfer agreement is a legal document that outlines the terms of the sale of a business and its assets. It is also known as a:
- Business sale agreement
- Business purchase agreement
- Agreement for purchase and sale of servicing
- Agreement to sell business
The agreement is signed between a current business owner and a buyer. This contract should spell out a verbal agreement between the two parties and confirm the terms of the transaction.
A business transfer agreement is useful if you want to sell:
- Your company’s office or real estate
- The name of the company
- The customer list
- The accounts receivable
- Furniture, supplies, or machinery from your business
Crucial issues that your business purchase agreement should address are:
- Which assets are being transferred?
- What’s the number of shares that are being sold?
- Who is selling the business?
- Who is going to be the new owner of the business?
- Will the existing employees be re-hired?
- When will the transfer of ownership be completed?
- Will loans, accounts payable, and other liabilities be transferred as well?
Learn Which Elements Your Business Purchase Agreement Needs To Include
Business ownership transfer is a complex procedure, which is why your contract will probably include many elements. While each business purchase agreement is different, they all need to cover some basic info.
You can consult our table to see which sections your business purchase agreement should consist of:
|Sections To Include||
|Signing parties and business description||The first paragraph of the agreement should state the names and addresses of both the buyer and the seller of a business. This section also needs to include the name, location, and purpose of the business that’s being sold|
|Assets||It’s crucial to list all the physical, financial, and intangible assets that the current owner wants to sell. The contract also has to include the assets that aren’t going to be sold|
|Sometimes, the buyer of the business assumes liabilities such as:
This part of the agreement should disclose if and which liabilities will be transferred
|Terms||The terms section of the agreement should spell out the following info:
|Disclosures||Both signing parties are obligated to disclose impediments to the deal. These are some examples:
|Signatures||The agreement won’t be valid until both parties sign it (preferably in the presence of a notary)|
How To Draft a Business Transfer Agreement
You can create a business transfer agreement by yourself, even though this option is risky, especially if you’re not familiar with legal terms. You can also:
- Rely on business transfer agreement templates
- Set aside enough money to hire a lawyer
Hiring a lawyer is costly, but it’s the safest solution to getting a properly written business purchase contract.
Are you on a tight budget? If you can’t pay hundreds of dollars for a single document, you should take a look at a few contract templates to see how your document should look like. Note that you’ll probably have to modify the sample you choose to ensure it’s suitable for your business transfer needs.
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