Selling a Business

Do you need a sale of business contract?

If you are selling a business, then you will need a sale of business contract prepared by a professional lawyer to ensure that all your interests are covered legally.

Next to your home and family, your business is probably the most important asset you have, so whatever the reason for you selling your business, you need to take care that the sale doesn’t fall through due to some “technicality” or because you have not properly bound the purchaser to a contract. Selling a business is not simply a matter of handing over the keys to the front door, collecting your cheque and walking away. There are many issues that need to be addressed, which is where a sale of business contract comes into the process. You owe it to yourself and your family to be advised properly.

Here is an example of some of the matters that need to be addressed when selling your business:

• The consent of the Lessor to the assignment of your lease.
• How is the purchase price to apportioned as between goodwill, fixtures and fittings, plant and equipment etc.
• What happens to your staff. Are you responsible for their entitlements such as long service leave, sick pay and holiday pay.
• What are the tax implications of the sale.
• What happens to your debtors and creditors.

What is included in a sale of business contract?

Essentially, a sale of business contract includes everything that is involved in the sale, as well as the terms and conditions that have been agreed with the buyer. These include, but are not limited to the following:

• Assets that are being sold to the buyer, including property, fixtures, equipment and stock.
• Rights to the use of any names and logos.
• Relevant liabilities, including creditors and the lease of any buildings.
• Whether the employees and their entitlements will transfer with the sale.
• Clauses covering specific issues, such as the buyer reneging on the sale.
• Restrictions that may prevent you from setting up a competing business.