Documents to get to grips with in a business purchase

There are numerous documents that you will become familiar with during a business purchase:

Share purchase agreement – this is the principal document in the purchase of shares in a company or group of companies. The document is traditionally drafted by the buyer and will often be hundreds of pages long, it deals with the normal contractual details: consideration, restrictive covenants, completion arrangements etc and importantly will devote a large amount of space to warranties and indemnities. As with any agreement you must ensure that you obtain expert legal advice regarding this document.

Exclusivity agreement – this agreement prevents the seller from negotiating with other potential buyers for a specified period of time thus giving the buyer a period of exclusivity in which to conclude the deal. In some situations a sum of money will be payable by the potential buyer in order to gain this period of exclusivity.

Confidentiality agreement – this document is of particular importance and imposes a duty of confidence on the buyer in respect of certain confidential information concerning the company being purchased. Note: just because you have not signed a confidentiality agreement does not mean that you are subject to a duty of confidentiality, if you are unsure then seek legal advice.

Transfer agreements – there are likely to be a number of these: trade mark assignments, copyright assignments, lease assignments to name but a few.

Stock transfer form – this document transfers shares in the company to the buyer.

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