Business Sale Contracts should not be an after thought.

6 Mar 2017 12:00 AMTroy Potter
Business Sale Contracts should not be an after thought.

Sale & Purchase Agreements should not be the last step in the business sales process and should not be left entirely in the hand of your lawyer. They are a valuable tool that can be used to manage the sale of your business and can often save the deal from coming undone.

Your lawyer is the right person to be preparing and executing your business sales contract but the wrong person to be negotiating the terms.

Business sales agreements offer a whole lot more than just an agreed sale price or restraint of trade clause. Given the complexity of a business sale, as opposed to a real estate transaction, it is common and quite acceptable for agreements to include many special conditions which mitigate risk and remove barriers for both parties.

Special conditions such as Liquor License Transfers, Key supplier License assignments and cash trials may be familiar, but there are many types of special conditions that can be used to facilitate a successful sale. Examples of these terms include Earn outs, Security Deeds, Retention payments and Key employee continuation terms.



The Vendor and Purchaser would like a sale to succeed, otherwise they would not be in discussions. So consider a business sale negotiation simply as the process of discovering all the barriers that are in the way.. The terms and conditions within the sale agreement are the tools you can use to overcome those barriers.

It is unfair to expect your lawyer to prepare a business sales contract that reflects the negotiated outcome if they were not a party to the negotiations. So understand the business sales contract and if you need help negotiating the terms, seek professional advice from your Lawyer or business broker early and often.

Once executed, a well negotiated sales contract clearly defines conditions to be met from each side and an agreed time frame for it to happen. There is less chance of a deal failing to complete because both parties have already discussed and agreed as to what needs to happen in order to get there.

If you have your Business Sales contract in mind at the beginning of the Business Sales process, rather than as an after thought, you will automatically start to identify vendor and purchaser barriers. You will know early in the process, whether these barriers can be overcome or not, and your instructions to your lawyer will be more accurate and more effective.

Troy Potter : Licensed Business Broker 0412 286 176