A California business purchase agreement is used to outline the terms and conditions of a sale of a business. Learn about the key components of a California business purchase agreement below.
How To Buy and Sell a Business in California
Selling and buying a business in California requires a lot of thought and research. Ensuring you use a business purchase agreement is a great way to outline the terms and conditions of any transaction. It can also help shield both parties from legal difficulties that may develop throughout the transaction while also ensuring that everyone is aware of their responsibilities.
To sell a business in California you need to:
- Prepare your business for sale – review your reasons why you’re selling, how long it will take to sell and if you will see the business entity with all the assets and liabilities or just the business assets.
- Negotiate terms of purchase – potential buyers will want to discuss a variety of terms that could make their way into the business purchase agreement, such as purchase price, financing, and representations and warranties.
- Disclose everything upfront – once you have a serious buyer, they will need an inspection period to do their due diligence. Make sure you prepare all relevant documents such as company books, financial records, accounts and contracts.
- Document the transaction – Ensure you use a business purchase agreement to document the sale.
To buy a business in California you need to:
- Decide what type of business you want to buy – narrow down the exact type of business you want to buy. Then, search for the right business for you.
- Understand why a business is for sale – before taking any additional action, you’ll want to learn why a business you’re interested in is for sale, it could be simply that the owner is retiring or something more worrisome such as a fundamental issue with the business.
- Do your due diligence – Once you’ve found a business that aligns with your needs and goals, you will need to gather as much information about the business as possible, crucially company books, financials, and contracts.
- Document the sale – Ensure you use a California business purchase agreement to record the transaction.
Whether you’re buying or selling a business in California, there are a number of documents you will want to consider using:
- California Bill of Sale
- Commercial Lease Agreement
- Trademark Assignment Agreement
- Non-Compete Agreement
What Needs to Be Included in a California Business Purchase Agreement?
To complete a California business purchase agreement, you will need to include the following information:
- The name and contact information of both the buyer and seller
- The date of the agreement and any other important dates
- A description of the business being sold or purchased, including its location (street address), assets that are part of this transaction like inventory equipment, etc., as well as liabilities associated with it such as debt owed by either party during their ownership period if applicable.
- Details concerning employees and whether or not they can keep their positions after the transfer of ownership
- The purchase price and payment terms agreed upon between both parties
- What happens if either side breaks this contract before closing can occur, or after it has already been done for any reason whatsoever (i.e., the buyer backs out at the last minute without cause; the seller does not deliver what was agreed upon)
- How the buyer and seller will resolve any disputes
- The signatures of both the buyer and seller.
It is also recommended that you have an attorney review your California business purchase agreement to ensure it is in compliance with state law before signing it, to protect your interests as well as the other parties.
California Business Purchase Agreement Sample
This is a typical example of a California business purchase agreement;