Purchase And Sale Of Business Agreement
If the due diligence investigation following a buyer`s offer to purchase is successful, it is time to enter into the final – and very important – negotiations that precede the conclusion of the sales. A purchase and sale agreement (SPA) is a legally binding contract that describes the agreed terms of the buyer and seller of a property (for example. B of a company). It is the most important legal document in any sales process. Essentially, it presents the agreed elements of the agreement, contains a number of safeguard measures important to all parties involved and provides the legal framework for the conclusion of the sale. The G.S.O. is therefore essential for both sellers and buyers. The company`s statutes will provide clear instructions for making decisions authorizing the agreements. A decision by the directors specifies whether assets or shares of a company are acquired (see our article: Selling assets against sale of shares), the first step is to negotiate and design the GSP. The GSP is sometimes prepared by real estate agents, brokers or even the parties themselves. However, it is customary and recommended that lawyers be retained to prepare or at least verify the GSP before the parties sign.
At this point, the buyer and seller will likely have had preliminary discussions on the main terms (for example. B purchase price, asset or sale of shares), or even have written a non-binding letter of intent setting out all essential conditions. The lawyers are then tasked with negotiating and repairing the details of the GSP. The parties must also agree on a deadline, which is the date on which the transfer of ownership is officially carried out. The deadline for submission is often 30 to 60 days after the signing of the GSP, but this depends on the circumstances of the parties. The buyer should therefore avoid these qualifications which limit the seller`s liability, as this would not lead to a transfer of the risk of compensation from the seller to the buyer. In the case of a sale of a commercial value or a value that occurs when a company sells its customer lists and its business name, it is essential that the agreement include a non-competitive agreement. This is due to the fact that the total purchase price is based on the seller`s overvalue. There are no hard or physical assets such as products, equipment or inventories that represent the value of the business.