A California business purchase agreement outlines the terms and conditions of a sale of a business. Learn about the critical 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 ensuring that everyone knows their responsibilities.
To sell a business in California, you need to:
- Prepare your business for sale – review 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 purchase terms – potential buyers will want to discuss various words 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. Ensure 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 kind of business you want to buy. Then, search for the right company for you.
- Understand why a business is for sale – before taking any additional action, you’ll want to learn why a company you’re interested in is for sale; it could be simply that the owner is retiring or something more problematic, 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 must gather as much information as possible, crucially company books, financials, and contracts.
- Document the sale – Ensure you record the transaction using a California business purchase agreement.
Whether you’re buying or selling a business in California, there are several documents you will want to consider using:
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., and 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 an attorney review your California business purchase agreement to ensure it complies with state law before signing it to protect your interests and the other parties.
California Business Purchase Agreement Sample
This is a typical example of a California business purchase agreement;