Business Purchase Agreement Template

Before you enter a business purchase agreement, you can follow these steps to make preparations and give yourself an advantage when negotiating a deal:

1. Decide if you want to buy the whole business or just some assets.
2. Consult legal and tax advisors to understand the implications of any transaction.
3. Show interest via a letter of intent to purchase a business.
4. Conduct due diligence by studying the company’s financial statements and current operations.
5. Ask for a confidentiality agreement or non-disclosure agreement if you are sharing sensitive information.
6. Consult a business appraiser to fully understand the company’s worth.
7. Review existing business contracts to see ongoing obligations and debts.
8. Use valuation and due diligence findings to negotiate terms.
9. Secure financing via a business loan agreement so you can afford the purchase.

When you draft a business purchase contract, you can take steps to guarantee the document reflects your needs and upholds legal standards. Use our pre-designed template to ensure you include all the key details.

1. Record Information for Both Parties & the Business

Your agreement should include full legal names for both buyer and seller. Our template lets you easily input all buyers’ and sellers’ names. We even let you add more than one buyer and seller name if you have multiple parties involved.

You should also add information regarding the business itself. Include a description with the business address and entity type.

Example:

Sellers: John Martin and Stephanie Caldwell

Buyers: Nicole Baker

Company: Ace Computers, a limited liability company (LLC) that sells refurbished hardware located at 14 Pinehurst Avenue, Chicago, IL 60601

2. Dictate the Sale Terms

Declare if the pending sale will be the entire business or just some assets. Our template lets you easily identify which assets are included and left out of the sale. Simply select whether you will include or exclude all assets or sort them by business category.

Alternatively, you can only sell or exclude assets that you list in an exhibit. An exhibit is an additional document that accompanies your agreement and highlights specific assets. Be as specific as possible if you don’t plan to transfer the entire business to the buyer.

Example:“This agreement includes the sale of all books, records, goodwill, cash, receivables, insurance, equipment, and fixtures, as well as all inventory, excluding the sale of marked electronic devices.”

Assets vs. Stock Sales

Note that a business asset purchase agreement differs from a business stock purchase agreement. Assets are valuable items the company owns, while stock refers to the shares of company ownership.

If you are only selling assets and not equity, you may use an asset purchase agreement to simplify the process. This way, you won’t have to disclose liability details, and you can just identify the assets you’ll sell.

3. Detail Assumed Liabilities

State whether the buyer will take on all liabilities with the purchase or only the ones you describe. If you want to hand-pick liabilities, you can identify them in an exhibit or by categories like employee-related expenses or environmental liabilities.

When you provide specific liability details, you can ensure that the buyer and seller know the full extent of their responsibilities when the sale is done. Sellers often use liabilities as a bargaining chip, meaning the buyer agrees to accept existing debt in exchange for a lower purchase price.

4. Highlight the Purchase Price & Payment Details

List the purchase price as a total sum and detail allocations of the total. For example, suppose the total purchase price is $1 million. You may allocate $400,000 for the purchase of tangible assets and $600,000 for intangible assets like intellectual property. Our template lets you easily make these allocations so everyone knows exactly how the buyer will spend the purchase amount.

Once you sort these details, you can specify how the buyer will pay. A buyer with existing capital may opt to pay the full amount upfront. They can also put a deposit down and pay for the business in scheduled installments. State the payment due dates and whether the loan amount will accrue interest if payments come in installments.

5. Mention Closing Details

List the closing date so both parties know when the deal goes into effect and when the business will change hands. At closing, you can adjust the final purchase price based on changes in financial metrics or conditions.

Examples of adjustments might include prorated expenses like property taxes, utilities, and other costs incurred. Adjustments ensure fairness for both parties, minimize risk, and foster a smooth closing.

6. List Representations & Warranties

Factual statements and promises in a business purchase agreement establish trust between the buyer and seller. If their representations or warranties are false, the other party has legal recourse to seek damages or terminate the contract.

When you use our template, you don’t have to think of these representations and warranties yourself. Simply choose any of the pre-written options that apply, as we have several available based on ones that frequently show up in business sales.

Example:“The seller has no liens filed against them, nor have they otherwise contracted to sell part of the business. The seller has paid all local, state, and federal taxes on the business.”

7. Provide the Covenants

Contractual covenants are legally binding portions of the contract between buyer and seller. Common covenants include promises regarding:

• inspections of financial records
• decisions, sales, or purchases
• payment of tax obligations
• violations or breaches of contract
• payment of employee salaries

8. Describe the Conditions Precedent

Conditions precedent state that the sales agreement depends on certain circumstances. Outline any conditions that must be true at closing for the business purchase to proceed. For example, the seller may require the buyer to secure a certain amount of financing before the sale can go through.

Our template has a field where you can describe your own conditions precedent in detail so you can clarify all expected terms.

9. Include Additional Clauses

Include any additional clauses, such as non-compete and non-solicitation clauses or confidentiality agreements. These clauses safeguard the buyer’s investment and maintain the company’s value. They also ensure that the seller doesn’t undermine the brand’s integrity by competing or revealing sensitive information after the deal concludes.

View a sample of a business purchase agreement template below to learn its structure. Once you study its format, you can use our template to create your own contract.

This is a document preview. Your customized version will be created after you answer a few quick questions.

State of _________________

BUSINESS PURCHASE AGREEMENT

This Business Purchase Agreement (this “Agreement”) is entered into as of the _____ day of

_______________, 20_____ (the “Effective Date”) by and among/between:

Seller(s): ___________________________________________________, (collectively the “Seller”) and

Buyer(s): ___________________________________________________, (collectively the “Buyer”).

WHEREAS, the Seller owns and operates a business known as ________________________ [Business

name], a ________________________ [State]: (Check one)

☐ Corporation

☐ Sole proprietorship

☐ Limited liability company

☐ Partnership

☐ Limited partnership

☐ Limited liability partnership

located at ________________________________________ [Address] that engages in the business of:

_______________________________________________________ [Description] (the “Business”); and

WHEREAS, the parties intend that the Seller shall sell to the Buyer the Business for the price, terms and

conditions described below, and pursuant to the attachments and exhibits, if any, annexed to this main

document.

NOW THEREFORE, for the reasons set forth, and in consideration of the mutual covenants and promises

of the parties hereto, and intending to be legally bound, the Seller and the Buyer agree as follows:

1. Sale of Business. On the terms and subject to the conditions set forth in this Agreement, the Seller

agrees to sell, assign, transfer, convey and deliver to the Buyer, and the Buyer agrees to purchase and

acquire from the Seller all rights, title and interests of the Seller in and to the Business, including:

(Check one)

☐ The assets described in Exhibit A attached hereto.

☐ ALL inventory, receivables, equipment, patents, trademarks, licenses, business records, goodwill,

going concern and other assets of the Business, whether tangible or intangible.

☐ The following assets only: (Check all that apply)

☐ (a) Cash. Cash and cash equivalents of the Business on hand or in financial institutions.

☐ (b) Receivables. Accounts receivable, notes receivable and other amounts owed or payable to the

Business.

☐ (c) Inventory. All inventory and works in progress, wherever located.

☐ (d) Intellectual Property. All intellectual property of the Business, including patents, copyrights,

trade secrets, know-how, trademarks, software and other content created for the Business.

☐ (e) Goodwill. The Seller’s goodwill and going concern with respect to the Business.

☐ (f) Licenses and Permits. All transferable licenses, permits, approvals, registrations, certificates

and other authorizations relating to the Business.

☐ (g) Contracts and Other Agreement. All contracts and other agreements, including leases, supply

contracts, purchase orders and other third-party contracts used in the operation of the Business.

☐ (h) Books and Records. All books, records, surveys, ledgers, files, documents, lists, reports and

other related materials and data related to the Business.

☐ (i) Prepayments. All prepaid expenses paid by the Business.

☐ (j) Equipment and Fixtures. All equipment, fixtures, and other tangible assets of the Business.

☐ (k) Real Property. All real property, including all buildings, fixtures, structures, signage and

improvements, owned by the Business.

☐ (l) Insurance. All insurance policies of the Business and claims, refunds or proceeds thereunder.

☐ (m) Tax Refunds. All refunds or claims for any federal, state, local or foreign taxes paid by the

Business.

☐ (n) Subsidiaries and Investments. All membership or equity interests in any subsidiary, joint

venture or other investment of the Business.

☐ (o) Personnel Records. All personnel records and files of employees of the Business.

☐ (p) Claims or Rights. All claims, causes of action or rights of recovery related to the Business.

☐ (r) Other:______________________________________________________________________

2. Excluded Assets. Notwithstanding anything to the contrary in this Agreement, the Seller will not sell,

assign, transfer, convey or deliver to the Buyer the following assets: (Check one)

☐ Not applicable.

☐ Assets listed in Exhibit B attached hereto.

☐ Excluded Assets:___________________________________________________________________

____________________________________________________________________________________

3. Assumed Liabilities. Unless otherwise specified herein, the Buyer agrees to assume and be

responsible for: (Check one)

☐ The liabilities listed in Exhibit C attached hereto.

☐ ALL current liabilities incurred by the Seller in connection with the Business.

☐ The following liabilities only: (Check all that apply)

☐ (a) Accounts Payable. All accounts payable of the Business.

☐ (b) Accrued Payroll. All accrued payroll owed to employees of the Business or other amount owed

in relation to any employee benefit plans.

☐ (c) Employee-Related Expenses. All liabilities related to employees, including severance or costs

associated with termination of employees.

☐ (d) Tax Payable. Any taxes or liabilities relating to the Business or ownership of the Business.

☐ (e) Environmental Liabilities. All liabilities and obligations related to environmental laws or

regulations.

☐ (f) Contractual Obligations. All obligations and liabilities in connection with the contracts and other

agreements included in the sale of the Business.

☐ (g) Accrued Other Business Expenses. All other current expenses and liabilities relating to the

Business.

☐ (h) Other: _____________________________________________________________________

4. Excluded Liabilities. Notwithstanding anything to the contrary in this Agreement, the Buyer will not

assume or be liable for: (Check one)

☐ Not applicable.

☐ Any liabilities related to any excluded assets, in addition to the liabilities listed in Exhibit D attached

hereto.

☐ Any liabilities related to any excluded assets, in addition to the following liabilities: _______________

____________________________________________________________________________________

5. Purchase Price. Buyer will pay to the Seller the purchase price for the sale of the business in the total

sum of $__________ (the “Purchase Price”), payable by wire transfer: (Check one)

☐ At the time of closing.

☐ Including a deposit as follows:

(a) $__________ at or before the signing of this Agreement, which sum shall be held in escrow and

applied to the Purchase Price at the time of closing hereunder; and

(b) The remaining balance at the time of closing hereunder, subject however to any adjustments

provided for in any other part of this agreement.

6. Allocation of Purchase Price. The Purchase Price shall be allocated in accordance with the Internal

Revenue Code §1060: (Check one)

☐ As agreed upon by the parties within thirty (30) days of the closing date.

☐ As follows:

Asset

Value

_______________________________________________________

$_____________

_______________________________________________________

$_____________

_______________________________________________________

$_____________

_______________________________________________________

$_____________

_______________________________________________________

$_____________

_______________________________________________________

$_____________

7. Adjustments at Closing. (Check one)

☐ Not applicable.

☐ Adjustments shall be made at the time of closing as follows: ________________________________

____________________________________________________________________________________

8. Closing Date. The sale and transfer of assets and the closing under this Agreement shall take place

on ____________________, 20_____ (the “Closing”). At that time Seller shall deliver possession of the

tangible property and all assets included in the sale to the Buyer and all other instruments and documents

necessary to transfer the Business and assets to Buyer. Seller shall at that time execute and deliver all

papers and instruments suitable for filing and/or which are necessary to transfer ownership of the trade

name to Buyer, and Seller shall thereafter cease to use said name in any manner or purpose. When that

delivery is made to Buyer and when Seller receives the balance due on the Purchase Price, the sale by

Seller to Buyer shall be completed and effective, and Buyer shall have ownership and possession of the

Business and the assets.

9. Representations and Warranties of Seller. Seller represents and warrants that:

(Check all that apply)

☐ (a) Seller is duly qualified and organized, and is validly existing and in good standing, under the

laws of its state of formation.

☐ (b) Seller has the requisite power and authority to enter into and perform under this Agreement.

☐ (c) Seller is the owner of and has good and marketable title to the property involved in this sale,

free of all restrictions on transfer or assignment and all encumbrances except for those that are set

forth in this Agreement.

☐ (d) Seller is not required to acquire any consents, approvals or authorizations by any

governmental authority to execute, deliver and perform its obligations under this Agreement.

☐ (e) The execution and delivery of this Agreement by Seller will not conflict with or result in a

violation of or default under any material agreements to which Seller is a party or create a lien upon

the Business.

☐ (f) There are no proceedings, judgments, or liens are now pending or threatened against Seller or

against the Business.

☐ (g) Seller has complied with all applicable federal, state, and local statutes, laws, and regulations

affecting Seller’s properties or the operation of Seller’s business, and Seller has received no notice of

a violation or citation same from any governmental agencies.

☐ (h) Seller has not otherwise contracted to sell, pledge, or mortgage all or part of the Business.

☐ (i) Seller has all necessary licenses and permits required to operate the Business.

☐ (j) Seller has paid all taxes, federal, state and local.

☐ (k) Seller has in full force and effect a general liability and casualty insurance policy in such

amounts as are carried by similar companies.

☐ (l) Seller has presented to Buyer true, complete, and correct information and documents regarding

the Business, and none of the information contains an untrue statement of material fact or omits to

state a material fact.

10. Representations and Warranties of Buyer. Buyer represents and warrants that:

(Check all that apply)

☐ (a) Buyer is duly qualified and organized, and is validly existing and in good standing, under the

laws of its state of formation.

☐ (b) Buyer has the requisite power and authority to enter into and perform under this Agreement.

☐ (c) Buyer is not required to acquire any consents, approvals or authorizations by any

governmental authority to execute, deliver and perform its obligations under this Agreement.

☐ (d) There are no proceedings, judgments, or liens are now pending or threatened against Buyer

that may effect of delay its purchase of the Business.

☐ (e) The execution and delivery of this Agreement by Buyer will not conflict with or result in a

violation of or default under any material agreements to which Buyer is a party.

☐ (f) Buyer understands that Seller is making no other representations or warranties other than as

provided in this Agreement.

11. Covenants. Between the signing of this Agreement and the date of the Closing:

(a) Buyer shall have the right at any reasonable time prior to the Closing, at Buyer’s expense, to

inspect or have inspected by a certified public accountant or other financial expert, the books and

records of the Business.

(b) Seller will operate the Business in the usual and ordinary manner and will not enter into any

contract except as may be required in the regular course of business.

(c) Seller shall not remove or cause to be removed any inventory of the Business except upon sale in

the ordinary course of business or in the event of return to a supplier for credit.

(d) Seller will pay all taxes, federal, state and local.

(e) Seller will not do anything to cause a violation or breach of any contracts relating to the Business.

(f) Seller will pay and will not increase the salary or commissions of any employee, agent, or

representative of the business.

12. Conditions Precedent. (Check one)

☐ Not applicable.

☐ The Closing is subject to the satisfaction of the following conditions on or prior to the date of the

Closing: ____________________________________________________________________________

____________________________________________________________________________________

13. Covenant Not to Compete. (Check one)

☐ Not applicable.

☐ Seller agrees to a non-compete.

(a) Seller shall not engage in a business similar to that involved in this transaction in any capacity,

directly or indirectly, either as a principal, agent, manager, owner, partner, employee, officer, director,

or stockholder of any company or corporation, or engage in or become interested financially or

otherwise in any business, trade, or occupation similar to or in competition with the business sold

hereunder, within a radius of __________ miles from the City of __________________, for a period of

__________ ☐ months ☐ years from the date of closing or so long as Buyer or his successors

carry on a like business, whichever first occurs. The parties agree that this provision is an essential

part of this Agreement and is material to the sale and purchase of Seller’s business. For purposes of

this Agreement, “business similar to that involved in this transaction” includes within its scope any of

the following: _____________________________________________________________________.

(b) (Check if applicable, strike out if not)

☐ The parties agree that Buyer shall have the right to assign this restrictive covenant in the event

that Buyer sells the business, and Seller agrees to remain obligated by the covenant to any

subsequent purchases from Buyer.

(c) Seller shall pay the sum of $__________ to Buyer for each week in which or during which Seller

may breach or violate the restrictive covenant not to compete contained herein. Buyer’s receipt of

such sums each week shall not be deemed a waiver or release of Buyer’s rights to prevent further

violations by seeking equitable relief in a court of law.

14. Notices. All notices given under this Agreement must be in writing. A notice is effective upon receipt

and shall be sent via one of the following methods: delivery in person, overnight courier service, certified

or registered mail, postage prepaid, return receipt requested, addressed to the party to be notified at the

address designated by either party upon reasonable notice to the other party.

15. Amendment. This Agreement may be amended or modified only by a written agreement signed by

both of the parties.

16. Survival of Terms. All covenants, warranties, and representations herein shall survive this

Agreement and the closing date.

17. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties and

their successors and assigns. Neither party may assign its rights or delegate its duties under this

Agreement without the other party’s prior written consent.

18. Governing Law. This Agreement will be governed by and construed in accordance with the laws of

the State of _________________, without regard to the principles of conflict of laws.

19. Disputes. Any dispute arising from this Agreement shall be resolved through:

☐ Court litigation. Disputes shall be resolved in the courts of the State of ______________. Each party

waives any objection to the laying of venue for any such suit, action or proceeding in such court.

(Check if applicable, strike out if not)

☐ If either Party brings legal action to enforce its rights under this Agreement, the prevailing

party will be entitled to recover from the other Party its expenses (including reasonable attorneys’

fees) incurred in connection with the action and any appeal.

☐ Binding arbitration. Binding arbitration shall be conducted in accordance with the rules of the

American Arbitration Association.

☐ Mediation.

☐ Mediation, then binding arbitration. If the dispute cannot be resolved through mediation, then the

dispute will be resolved through binding arbitration conducted in accordance with the rules of the

American Arbitration Association.

22. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be

deemed to be an original, and all of which together shall constitute one and the same document.

23. Headings. The section headings herein are for reference purposes only and shall not otherwise affect

the meaning, construction or interpretation of any provision in this Agreement.

24. No Waiver. No Party shall be deemed to have waived any provision of this Agreement or the exercise

of any rights held under this Agreement unless such waiver is made expressly and in writing.

25. Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in whole

or in part, the remaining provisions shall not be affected and shall continue to be valid, legal and

enforceable as though the invalid, illegal or unenforceable part had not been included in this Agreement.

26. Entire Agreement. This Agreement and the attachments and any associated documents represent

the entire agreement between the parties, and there are no representations, warranties, covenants or

conditions, except those specified herein or in accompanying instruments or documents.

27. Miscellaneous.

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Seller Signature

Seller Full Name

Seller Signature

Seller Full Name

Buyer Signature

Buyer Full Name

Buyer Signature

Buyer Full Name

EXHIBIT A

EXHIBIT B

EXHIBIT C

EXHIBIT D

State-Specific Samples

Some states have unique laws and regulations that impact business purchases. Our state-specific business purchase agreement templates ensure compliance and address particular requirements that our standard agreement may not cover.

Looking to buy or sell a business? Legal Templates makes it easy. We provide a comprehensive business purchase agreement template that helps you accurately document the sale terms. Plus, we’ve included key protections, like confidentiality clauses and conditions precedent, to offer ample security as you proceed with your deal.

We guide you through each section of our template, ensuring you cover all your bases and write a legally sound business purchase agreement.