A business being sold is usually known as a Transfer of a Going Concern (“TOGC”). The following points will assist a buyer considering the purchase of a TOGC:
The Business Heads of Terms
This is effectively an agreement that sets out the main terms of the business sale and includes all the main terms of the deal. Those terms which either party does not want to be binding are labelled as strictly ‘subject to contract’, so they will only become binding when the parties agree them in a formal written contract.
Business Sale Agreement
The contract of a TOGC transaction takes the form of a Business Sale Agreement. It contains all the terms of the sale, and it is drafted by both parties’ lawyers, including a breakdown of the price, goodwill and assets, employees and property owned and/or occupied by the business.