A sale of business contract protects the interests of the vendor and purchaser by documenting the transaction and agreement. After the parties agree on the key terms, the vendor’s solicitor usually prepares the contract. The contract clearly sets out what rights and assets will be transferred to the purchaser, the mechanics of the transaction, and the rights of the parties.
It’s important that your lawyers draft a sale contract that accurately records the deal and protects you from unnecessary risks. At Butlers Business Lawyers, we frequently draft sale of business contracts for vendors all over Australia in a variety of industries. We understand the importance of managing risks, while ensuring that the transaction meets the expectations of both parties. If you’re selling your business and need a sale contract, call us on (02) 4929 7002 or email us at firstname.lastname@example.org.
Types of business sales
A business can be transferred through a sale of assets or shares.
Business sale contract
A sale of business contract is appropriate if the vendor is selling the assets of the business.
Share sale agreement
On the other hand, a share sale agreement is used if the vendor is instead selling the shares of the company that operates the business. Our team are experienced in drafting both asset sale and share sale agreements.
Understand the business and transaction
Before instructing a lawyer to prepare a contract for sale, it is important that vendors understand the legal position of the business and the sale itself. This means understanding ownership of assets, the valuation of the business, and the agreements with third parties. When considering agreements to third parties, the vendor should consider whether the agreements could be transferred, and the other party’s attitude towards dealing with a new owner of the business. For example, if a business is leasing premises, the landlord’s preferences towards assigning, varying or granting a lease will significantly impact on the transaction.
Negotiating the terms of the sale
Once the vendor finds a buyer, the parties will negotiate the main terms of the sale. If the vendor has engaged an agent, they may assist with the negotiations. The parties will not only be negotiating a price, but terms regarding training, restraints of trade, stock valuation, and third party agreements. Once you have agreed on the key terms, the key terms of the deal may be recorded in a ‘letter of offer’ or ‘heads of agreement’.
Drafting the agreement
Once the parties have agreed on the terms, the vendor should provide their lawyers with a copy of the ‘letter of offer’, ‘heads of agreement’ or detailed instructions along with relevant documentation, such as leases, agreements with third parties, licences, and employee contracts. After the first draft of the contract is provided to the purchaser or their lawyers, the parties will negotiate further on the details of this agreement.
If you’re selling your business, call us on (02) 4929 7002 or email us at email@example.com to discuss your business sale with our experienced solicitors. We understand that selling your business is a significant step, and we want to help you move to the next phase of your journey with confidence.
“Butlers prepared standard contracts for every-day use in our business. The team ensured that the contracts complied with Australian Consumer Law and advised on best practices for PPSR registration. Their experience and knowledge in this complicated area was invaluable, and we feel that our business now has the best protection from expensive legal disputes.”