If you plan to sell your small or mid-size business, you’ll probably enter into a sales agreement with the person or entity purchasing your company. The Small Business Administration provides a long list of items that should be covered by any such sales agreement.
Obviously, you’ll need the legal names and contact information for everyone involved. It seems like a common-sense step, but ensuring the legal details are correct can help keep you from a nasty post-sale surprise. If you want to sell your company to another small entrepreneur who will continue with the business, you don’t want to later find out that buyer John Smith was actually purchasing in the name of a large corporation.
Next, you should document the assets and liabilities that are being transferred as part of the sale. You might own the building that the business is currently housed in but not plan on including that property in the transaction. To avoid litigation after the fact, make sure all such details are clear and that everyone agrees to them.
Again, it sounds like common sense, but you should always ensure that the payment terms are clearly spelled out in the contract. Will you accept a single lump sum? Are you going to accept a cash payment and then part of the profits for several years? Will you become a shareholder? The monetary arrangements by which a company can change hands are many and they are rarely simple.
We’ve just touched the tip of what should be included in any business sale agreement. To ensure your contract covers all the basics and protects your interests, consider working with an experienced business law professional.
Source: Small Business Administration, “Selling Your Business,” accessed Aug. 12, 2016
