Free Business Sale Agreement Template

You have worked hard to build your business, but now it is time to move on. Whether you are selling to pursue other interests, start over, or retire, a business sale agreement protects your hard work and investment by ensuring you receive fair compensation under fair terms.

A lot is involved in selling a business. Here are some questions you must think about: Will the buyer acquire every asset or some of it? Will they pay goodwill? Who takes on current debts? What about the available inventory? How much is the business worth? A thorough audit of the business is necessary to answer those questions.

When you have the figures ready, it’s time to meet with potential buyers. Having preliminary discussions helps you know their expectations so you can draft a suitable agreement. For example, a great candidate may not want to purchase vehicles or other assets with the business. If you can sell those separately to another party, there’s no need to turn down a good offer.

After reaching an agreement, you can draft an agreement that meets all your needs. Although all business sales are unique, there are common items on every such document. Here’s an overview of what your contract should contain.

The Contents of a Business Sale Agreement

Before starting your business purchase agreement, you must first know the business’s value. You determine that amount by determining the fair market value of physical and intangible assets and the business’s liabilities. Sometimes, buyers pay more than this amount because of the business’s good reputation and customer base. That extra payment is known as goodwill. Considering these factors beforehand allows you to negotiate the best price without overlooking any aspect.

You should wait to draft the agreement until you have discussed the terms with a prospective buyer. You can use a business sale template to guide the conversation, but it may require some alterations to suit your unique business sale. When you are ready, ensure you include the following sections.

Buyer and Seller Information

Like other contracts, a sale agreement should contain the names of each party, their addresses, and contact information. This section also clarifies that the named individuals or entities have entered into a business sale agreement.

Sale of Business Details

Begin by describing the business you are selling. Include the name, business type and operations, location, and the owner. Next, list the assets that are up for sale and those that are excluded.

Below is an example of some assets you may be selling.

• The business name
• A list of physical assets, such as buildings and equipment
• A list of intellectual property you are selling as part of the package
• A list of customers you have built over time
• Existing contracts and agreements

You may choose to exclude some assets in the list from the sale.

Purchase Price

The sale price is a crucial component of the agreement. It should consider all the assets included in the sale and the business’s current liabilities, such as taxes and other debts.

Payment Terms

Decide whether the buyer pays the deposit upfront or makes a one-time payment. Then, provide the payment method and pay-by date.

Closing Date

Determine the final day of the transaction and explain what’s expected of both parties on that day. For example, the seller may have to deliver the bill of sale and lease assignments if it’s part of the agreement. The buyer typically presents proof of full payment.

Representations and Warranties

Buyers and sellers should include warranty statements proving they are committed to the contract. Such representations and warranties assure either party that proceeding with the transaction presents no unknown risks. The seller should represent that they own the business and have the legal capacity to sell, and there are no undisclosed liabilities or liens. The buyer may guarantee that they have conducted due diligence and accept to acquire the business as is.

Confidentiality Clause

Both parties should agree to keep sensitive information private. The seller must exercise caution regarding sharing details that may affect the future of the company they sell. Set penalties if either of you breaks the agreement.

Non-compete Clause

You may include a non-compete clause within the contract or make it a separate document. This clause requires the seller not to engage in any activity that competes with the business for a specified duration.

Governing Law

Predetermine the laws that inform the implementation of the contract and under which you will resolve disputes related to the agreement.

Provision for Amendment

Outline the procedure any amendments to the document must follow.

Severability Clause

This clause allows the agreement to remain in full force even when a provision within it becomes invalid.

Indemnity Clause

Both parties can agree not to hold each other liable for any losses resulting from breaches of the contract.

Dispute Resolution

Explain how disputes will be resolved, whether through mediation, arbitration, or litigation.

Signatures

Designate spaces for both parties to sign and date. If your jurisdiction requires witnesses, ensure you sign the document in their presence.