Guide to our Business Transfer Agreement

Posted by Stephen on 22nd November 2015

This is a shortened version of the guide to our Business Transfer Agreement template that is for use when a business is being sold by way of an assets sale or a business sale. (The full guide is provided with the template when you purchase it.)

This agreement incorporates various options, so it is appropriate:

1. the vendor is a company, a partnership or a sole trader;

2. the purchaser is a company, a partnership or a sole trader;

3. whether there are any employees of the business or not; and

4. for most different types of business.

This template is not appropriate to be used where the purchaser is purchasing some or all of the shares in a company (i.e. a share purchase). In such a case, the company would come with all the potential and actual liabilities that it already has, which might be unknown to the purchaser, including tax liabilities.

Avoiding significant problems for the purchaser with such a purchase is a complex task and great care needs to be taken. It is not appropriate to carry out such a transaction on a DIY basis, without the assistance of legal advice from an experienced corporate lawyer who specialises in company and business sales – in particular, much protection for the purchaser would be needed around the warranties and tax covenant/indemnity.

The template is not appropriate to be used for mergers or take-overs of charities. A more simplified transfer agreement would normally be used for that.

The agreement presumes that the purchaser is not paying a very significant amount to buy the business (e.g. under £30,000). If this is not the case, then the purchaser should take legal advice on the whole transaction from an experienced corporate lawyer who specialises in company and business sales, as much more detail would be desirable around the warranties, in order to reflect the greater risk the purchaser is taking by paying more for the business.

In this agreement we have pared the warranties (see the heading