When you are purchasing the assets of a business you want to ensure that you are adequately protected and you have covered all the eventualities. This is where your team of accountants and lawyers can assist you by preparing the documentation to ensure you are adequately protected and you are buying what you expected.
Typically, when you are purchasing the assets of the business you want to ensure that the following factors are covered in any documentation:
- Listing all the assets being purchased and assets which are to be excluded.
- Valuation of any stock and clarification on ownership, any outstanding finance, any retention of title provisions from the suppliers (romapla clauses), whether the stock is of satisfactory quality, condition and fit for the purpose intended.
- Restraint of Trade (Non-Compete) clauses.
- Employees that are to be transferred as part of the agreement and resolving any outstanding employment issues.Â
- A list of all the machinery that is being purchased.
- A list of all the clients and suppliers.
- Transfer of any contracts to the buyer.Â
- Obtaining any consent from third parties as well as taking over any respective liabilities and what shall happen if the third parties do not give consent to the transfer of the agreements.Â
- Transfer of any hire purchase or lease hire agreements will be carried out by a formal assignment.
- Any premises may need to be transferred to the buyer. If the premises are owned by the seller this can be done by a normal conveyance of the premises. Where a lease is involved the parties would usually need to obtain the LandlordÂs consent and may have to enter into some form of guarantee agreement with the Landlord should he withhold consent. If there is not enough time for the lease to be transferred the seller may issue a licence to the buyer, so as to give an extension of time in relation to obtaining the LandlordÂs consent.
- Formal assignment of all Intellectual Property rights will be required.
- Update of the trade mark, patent and design rights register after completion of the transaction.
- Protection of goodwill.
- Creditors/Debtors – Responsibility for collecting debts and paying creditors usually remains with the seller. However, the buyer would usually want to ensure that these creditors are being paid and the debts are being recovered, to ensure that no damage is done to the goodwill of the business.
- Any warranties to put the buyer at ease and to extract any information from the seller which the buyer should know.Â
- Payment of VAT and any taxes should also be highlighted.