Business Sale and Purchase Agreement (Assets only)

What is a business sale and purchase agreement (assets only) and when should you use it?

A business or asset sale transfers the assets that make up a business to the buyer.

It is quite different to a share sale, where the entire legal entity which makes up the business – assets and liabilities – are sold.

For this type of sale you should use our share purchase agreement

Assets will usually include tangible (e.g. property, plant and stock) and intangible (e.g. goodwill and intellectual property) assets.

This template is a simple business purchase agreement listing the assets being sold and those being excluded from the sale.

Business sales can be complex, and this template has been specifically drafted to be short-form and designed for a relatively simple transaction.

Premises have been included, but the template anticipates that the relevant transfer deeds, assignments and consents have already been agreed with the buyer and will be executed and delivered as part of the completion process.

The template also makes provision for the transfer of all existing employees of the business in accordance with TUPE Regulations.

Third-party assets, such as assets subject to leasing, rental and hire-purchase agreements, are not included in the sale.

Still, a commitment is made that reasonable endeavours are made to assign these as soon as reasonably practicable.

Note that this template includes a set of short-form, basic warranties, which may need to be extended depending on the transaction in question.

This template does not include a guarantee and, most importantly, other than provisions related to VAT, does not include any tax provisions or tax warranties.

Independent tax advice must be sought.

What else might you need?

You might want to consider using a Heads of Terms Agreement where the buyer and the seller have agreed the principal terms of the assets (or business) sale and you want to put them in writing to avoid any misunderstandings and identify any pitfalls before committing to a more formal agreement.

You can use our Heads of Terms template to assist you.

We recommend that before you share any confidential information about your business you get a confidentiality agreement to protect it.

Use our confidentiality agreement to get the protection you need.

This should then be followed by a due diligence of the Company to investigate its financial, tax and sometimes commercial affairs.

You will find our due diligence enquiries template useful for this.

You may also need what is a called a disclosure letter.

This is a letter issued to the Buyer prior to completion of the sale and is designed to protect the Seller from future claims by the Buyer.

You can find our disclosure letter here