When it comes to buying and selling a business, having a thorough buy-sell agreement in place is essential. This document outlines the terms and conditions of the transaction, and helps to protect the interests of both parties involved. If you`re in the process of negotiating a buy-sell agreement, here are some key items to include on your checklist:
1. Purchase price. The agreement should clearly state the purchase price, along with any terms for payment (such as a down payment or installment plan).
2. Assets and liabilities. The agreement should outline which assets and liabilities are included in the sale, as well as any exclusions.
3. Closing date. The agreement should specify the date on which the transaction will be completed, as well as any conditions that must be met before closing (such as obtaining financing or completing due diligence).
4. Representations and warranties. Both parties should make certain representations and warranties to each other regarding the business and the transaction. These may include statements about the business`s financial condition, legal compliance, and the seller`s ownership of the business.
5. Indemnification. The agreement should outline the parties` obligations to indemnify each other against any losses or damages that may arise from the transaction.
6. Non-compete agreements. If the seller will be leaving the industry or starting a new business, the agreement may include a non-compete clause to prevent them from competing with the buyer.
7. Contingencies. The agreement may include a number of contingencies to protect the interests of both parties. For example, the buyer may require that certain contracts be transferred to them as part of the sale.
8. Dispute resolution. The agreement should provide a framework for resolving any disputes that may arise between the parties. This may include mediation or arbitration clauses.
9. Confidentiality. In order to protect the business`s intellectual property and trade secrets, the agreement may include confidentiality provisions.
10. Governing law. Finally, the agreement should specify which state`s law will govern the transaction, as well as any jurisdiction where legal disputes will be resolved.
By including these key items in your business buy-sell agreement, you can help ensure a smooth and fair transaction for both parties. Consider working with an experienced attorney or business broker to help you draft a comprehensive agreement that meets your needs.