Business Transfer Process
The process is likely to include some or all of the following elements:
Non-disclosure agreement
The seller may wish the prospective buyer to agree that any information provided will be treated confidentially and even that the fact of the negotiations should remain confidential.
Lock-out agreement
The buyer may wish the seller to agree not to enter into negotiations with any other party for an agreed period during which the parties hope the transaction will be completed.
Heads of terms
The parties may wish to sign short-form and non-binding heads of terms which confirm their agreement on the principal issues that the subsequent main agreement will provide for.
Due diligence
The buyer will want to ask questions about, and seek a more detailed understanding of, the company he is buying. The seller will normally provide that information by written response to a questionnaire.
Business transfer agreement
The principal document which will set out the detailed agreement between the parties as to the terms on which the business will be transferred including what assurances about the business will be given to the buyer by the seller.
Disclosure letter and bundle
The seller normally gives certain warranties about the business to the buyer. Some of those warranties may be true subject to specific exceptions. The seller can, by disclosing those exceptions to the buyer at the time of sale, prevent them from becoming the subject of a warranty claim thereafter.
Service or consultancy agreements
These documents may be required where one or more of the sellers is to continue to be employed by, or act as a consultant to, the company after completion.
Meetings of directors and shareholders
One or more meetings of both the board and the shareholders may be required to approve various aspects of the transaction.
Non-disclosure agreement
The seller may wish the prospective buyer to agree that any information provided will be treated confidentially and even that the fact of the negotiations should remain confidential.
Lock-out agreement
The buyer may wish the seller to agree not to enter into negotiations with any other party for an agreed period during which the parties hope the transaction will be completed.
Heads of terms
The parties may wish to sign short-form and non-binding heads of terms which confirm their agreement on the principal issues that the subsequent main agreement will provide for.
Due diligence
The buyer will want to ask questions about, and seek a more detailed understanding of, the company he is buying. The seller will normally provide that information by written response to a questionnaire.
Business transfer agreement
The principal document which will set out the detailed agreement between the parties as to the terms on which the business will be transferred including what assurances about the business will be given to the buyer by the seller.
Disclosure letter and bundle
The seller normally gives certain warranties about the business to the buyer. Some of those warranties may be true subject to specific exceptions. The seller can, by disclosing those exceptions to the buyer at the time of sale, prevent them from becoming the subject of a warranty claim thereafter.
Service or consultancy agreements
These documents may be required where one or more of the sellers is to continue to be employed by, or act as a consultant to, the company after completion.
Meetings of directors and shareholders
One or more meetings of both the board and the shareholders may be required to approve various aspects of the transaction.