A Sale of Business Agreement is entered into where one party (the “seller”) wants to sell its business to another party (the “buyer”).
This agreement is not suitable for sale of shares in a company. In the event that the sale and purchase of the business includes the buyer purchasing real estate or taking over a lease then we recommend that legal advice be sought. We recommend that you seek tax, accounting or legal advice to ensure that the transaction is structured in the most tax effective way. Generally the sale of a business is not subject to GST.
If you’re involved in a business sale where the other side will be hiring a lawyer, it’s important that you also instruct a lawyer to handle your sale.
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You will need the following information to generate your document:
- Name of the seller and buyer
- Address of the seller and buyer
- Completion date
- Total purchase price
LegalVision’s LVDox™ Free Term Sheet/ Heads of Agreement sets out:
- a clause setting out the completion process;
- a clause setting out how employees will be managed;
- a restraint clause which provides that the seller must not carry on or be involved in a business similar to, or in competition with, the business or use, disclose or communicate any confidential information relating to the business; and
- a warranties and indemnities clause.
The term/period of the restraint and the restraint area must be reasonable to protect the legitimate business interests of the business purchased by the buyer. If they are not reasonable then the restraint may not be enforceable.
This agreement assumes that the total amount of consideration payable in relation to the purchase of the business is to be paid by the buyer on completion. It may need to be amended depending on the terms agreed by the seller and buyer.
The purchase price payable by the buyer to the seller may be apportioned between goodwill, plant and equipment and stock. The apportionment of the purchase price between these assets of the business may give rise to different tax consequences and therefore provides the opportunity for tax planning by the seller and the buyer, for which accounting, taxation or financial advice should be sought.
It might also make more sense to use a state specific sale of business agreement, rather than the LVDox™ Free Sale of Business Agreement, as the other parties’ solicitor will generally be more familiar with the state specific document. One of LegalVision’s solicitors will work out which document is best suited to your needs, and move forward with that.
As well as amending the LVDox™ Sale of Business Agreement so that it works in way which is reflective of your specific needs, your LegalVision lawyer will provide advice on the detailed sale process. Our specialist business lawyers have a comprehensive understanding of sale of business processes and will ensure you have the right documents, in addition to the Sale of Business Agreement, in completing the sale.
You can choose to upgrade your LVDox to a LVDox Pro document. Upgrading your legal document has the following benefits:
- Consultation with a lawyer specialising in your industry
- Review of the legal requirements for your business
- Drafted specifically for your business and industry
- Document reviewed and signed off by a lawyer
- Covered by LegalVision’s professional indemnity insurance
- We provide a fixed-fee service so there are no surprises