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A business purchase agreement is a contract to sell a business. It lists the business and its assets, the price, the payment terms and the closing date. Buyers and sellers use it, especially when the sale includes equipment, real estate or shares. This page gives you a free business purchase agreement template to fill out online or download, with a guide to every part of the form.
A business purchase agreement is a contract between the seller and the buyer of a business that sets out what is sold, the price, how the buyer pays and when the sale closes.
The same document goes by several names: business sale agreement, business sales contract, business purchase contract, business acquisition contract or agreement of purchase and sale of business. Whatever the title, the form does a single job: it puts the whole deal on paper before money and assets change hands.
A typical agreement covers these points:
The agreement describes how ownership will pass; it is not the transfer itself. At closing, the seller usually hands over a bill of sale for the business assets, and the purchase agreement names it among the closing documents.
A business sale agreement is often longer than other purchase agreements. It can include or sit beside other contracts, such as a non-disclosure agreement or a non-solicitation agreement. Many owners ask an attorney to read the draft before signing, even when the business is small.
You need a business purchase agreement whenever you buy or sell a business or a part of it, so that both sides agree in writing on what changes hands, at what price and on which date.
The agreement fits more than the sale of a whole company. Use it when you are:
For both sides, the signed agreement closes the negotiation. Each party knows what the other has promised, and neither can quietly change the terms afterward.
A business buy-in agreement covers a buyer who purchases part of a business and joins the current owners. Its main terms are the share being bought, the price, and each owner's role and say in decisions after closing. The template on this page is written for a single Seller selling a business to a single Buyer, so a buy-in usually needs terms added to it.
A business sale is usually set up either as an asset purchase, where the buyer buys listed assets of the business, or as a stock purchase, where the buyer buys the owner's shares in the company.
| Point | Asset purchase | Stock or share purchase |
|---|---|---|
| What the buyer buys | The assets listed in the agreement, such as equipment, inventory, customer lists and the trade name | The owner's shares in a corporation or membership interest in an LLC |
| Who owns the business afterward | The buyer, or a company the buyer sets up | The same company, now with a new owner |
| Typical sellers | Sole proprietors, and companies selling a single line of business | Owners selling their whole stake in a company |
| How the template on this page handles it | Exhibit A lists the assets sold and Exhibit B the assets the Seller keeps | Share counts and company details go beyond the asset exhibits |
A sale of company shares is often called a stock purchase agreement, and a sale of selected assets an asset purchase agreement. Both are kinds of business purchase agreements, and the checklist below applies to each.
A business purchase agreement includes the parties, the business and its assets, the price and payment terms, each side's representations and warranties, the closing conditions and date, and any non-compete clause.
The agreement opens with the full name and address of the Buyer and the Seller. When a party is a company, give its full legal name and its type of entity, such as a corporation or an LLC.
Give the business's full legal name and the trade name it uses with customers and suppliers. Describe every asset that goes with the sale and every asset the Seller keeps. List any loans, leases or supplier contracts the Buyer agrees to take over, so neither side is surprised at closing.
The price section gives the total price and how it is paid: in full at closing, in parts, or partly in cash and partly with a promissory note. It also says whether accounts receivable go to the Buyer or stay with the Seller.
Representations and warranties are statements each side makes about facts, such as the Seller's ownership of the assets or the accuracy of the financial statements. The clause also says what happens when any of those statements proves untrue.
Closing conditions are the events the sale waits on, such as a loan approval, a landlord's consent to assign a lease or a clean inspection. List each condition next to the closing date, and say what happens to any deposit if a condition is not met.
A non-compete clause keeps the Seller from running a competing business for an agreed time and area after the sale. A non-solicitation clause keeps the Seller from drawing customers or employees away from the business just sold. The non-compete agreement page explains these clauses in more detail.
A written business sale agreement holds both sides to the same terms: what is sold, what it costs, how the sale proceeds and what each side promises along the way.
A buyer who expects every asset and a seller who meant to keep a few can arrive at closing with different deals in mind. The same goes for a seller expecting a lump sum and a buyer planning to pay in parts. Writing the asset lists, the price and the payment method into the agreement settles those points early.
A business sale can take months while the buyer checks the business and the seller finishes contracts or prepares the staff. The agreement can describe how the business runs until closing, the conditions the sale waits on and who handles each step. With that plan on paper, an attorney or an escrow agent can take over parts of the process.
Representations and warranties in a signed agreement give each side written promises to point to if the other does not follow through. Without them, a dispute turns on memory and good will.
When a business sale includes land or an interest in land, the writing rules for land contracts can apply: the statutes below make such a contract void or unenforceable unless it is in writing and signed (Ala. Code § 8-9-2; Mass. Gen. Laws ch. 259, § 1; Utah Code § 25-5-3; W. Va. Code § 36-1-3).
| Jurisdiction | Writing rule | When it applies | Citation |
|---|---|---|---|
| Alabama | The agreement is void unless it, or a note or memorandum of it expressing the consideration, is in writing and subscribed by the party to be charged or a person that party lawfully authorized in writing | A contract for the sale of lands or any interest in them, except leases for a term not longer than one year, unless the purchase money or a portion of it is paid and the seller puts the purchaser in possession of the land; the same writing rule covers any agreement that by its terms is not to be performed within one year | Ala. Code § 8-9-2 |
| Massachusetts | No action may be brought on the contract unless it, or a memorandum or note of it, is in writing and signed by the party to be charged or a person that party lawfully authorized | A contract for the sale of lands, tenements or hereditaments, or of any interest in or concerning them | Mass. Gen. Laws ch. 259, § 1 |
| Utah | The contract is void unless it, or a note or memorandum of it, is in writing subscribed by the party making the sale or that party's agent authorized in writing | A contract for the sale of any lands or any interest in lands | Utah Code § 25-5-3 |
| West Virginia | The contract is not enforceable unless it, or a note or memorandum of it, is in writing and signed by the party to be charged or that party's agent | A contract for the sale of land | W. Va. Code § 36-1-3 |
This table lists only the codes our sources hold. It does not mean an unsigned land deal is safe anywhere else: put any sale that includes land in writing, have both sides sign it, and check the land contract rule where the land lies before you rely on the deal.
Under Ala. Code § 6-5-102, suppression of a material fact which the party is under an obligation to communicate constitutes fraud; the obligation may arise from the confidential relations of the parties or from the particular circumstances of the case. In a business sale, this is one reason for a seller to list known problems in the disclosure schedules rather than leave them out.
Buying an existing business runs from finding the right business and checking its numbers to signing the business purchase agreement and closing, with the price talks and due diligence in between.
Find a business for sale. Look on business sale websites, ask business brokers and investment firms, and talk to people in the industry you know.
Evaluate the business. Look at what it earns, its cash flow, the return on the investment and the value of its assets. Most of this comes from the owner, so start the relationship on a good footing.
Negotiate the price and the assets. Agree on the purchase price, any deposit and the list of assets included and left out. Many buyers bring in an attorney at this point.
Send a letter of intent. A letter of intent, or LOI, works as a written offer to buy the business and outlines the deal you propose. Say in the letter which parts bind the parties, such as a confidentiality clause, and which do not.
Complete due diligence. Once the LOI is accepted, the seller usually opens the books. Review the financial statements, tax obligations, contracts, leases and any debts the owner has not mentioned.
Sign the business purchase agreement. Put the agreed terms into the agreement. The template on this page and the steps below show where each term goes.
Close the sale. Pay the price as agreed, in a lump sum or in parts, and receive the bill of sale and the other closing documents from the seller. Before you pay, ask the tax agency where the business operates whether a buyer of its assets can be held to the seller's unpaid taxes, and whether the seller can obtain a tax clearance letter first.
These steps follow the FormsPal Business Purchase and Sale Agreement template on this page, in the order of the form. Going into a deal with a simple template form is not advisable as it’s better to customize your template and make it suit your business. You also should receive legal advice before creating a legally-binding purchase agreement. Here is how to fill out your business purchase agreement template once you have customized it.
The screenshots under each step show the FormsPal Business Purchase and Sale Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Agreement date, Buyer and Seller. Enter the date of the agreement. Then enter the Buyer's name and address. Next enter the Seller's name, the type of entity the Seller is, and the Seller's address. Use an address where each person can receive mail.
Name of the Business. In the first recital, write the name the Seller's business is known by. Use the full legal name of the business, not just the trademark.
Purchase price and closing date. Write the purchase price in Section 1 and the closing date in Section 2. Choose a business day to avoid confusion. If the Buyer pays the full price by wire on the closing date, tick the first payment box.
Cash plus promissory note option. If the payment is split, tick the second box instead. Enter the cash amount and the amount of the promissory note in the two blanks. Tick only one of the two payment boxes.
Business trade name. In Section 5, write the name the Seller grants to the Buyer.
Accounts payable exceptions. Section 7 covers accounts payable. Normally, the business seller takes it upon themselves to pay all accounts payable before the closing of the deal, but if there are any exceptions, they should be noted in this section. List each exception on the lines under Exceptions, or leave the lines blank if there are none.
Covenant not to compete. If the Seller agrees not to compete, tick the first box in Section 9 and enter the number of months after closing.
No non-compete option. If there is no non-compete, tick the second box in Section 9 instead and leave the months blank.
Post-closing consulting. To have the Seller help after closing, tick the first box in Section 14. Enter the Seller's principal and the number of days.
No consulting option and governing law. If there is no consulting, tick the second box in Section 14 instead. In Section 15 (Governing Law), write the state the parties choose.
Seller signature block. On page 5, the Seller signs and prints a name and title under Seller.
Buyer signature block. The Buyer signs and prints a name and title under Buyer. Re-read the filled form for mistakes before signing.
Filling in the business purchase agreement template is only part of the job. These steps cover the exhibits, the final read-through, the signatures and the copies, so the agreement is complete when you hand it over.
Describe the assets in the exhibits. Prepare this part before you fill in the template, because the first page refers to Exhibit A and Exhibit B. In the exhibits attached to the document, describe the business assets that are going to be transferred to the new owner and the ones that aren’t a part of the transaction. Give details, such as addresses of properties and registration numbers of businesses and intellectual property. Make sure that this part of the agreement is correct before attending the signing.
Read the whole document. Re-read the filled-in agreement for typos and mistakes.
Sign the document. Both the Buyer and the Seller sign it. Signing binds the two parties to the agreement's terms, but the sale itself still has to close. At closing, the conditions the agreement sets are met and the transfer documents are signed and handed over: a bill of sale, any deed, and any lease assignment the landlord consents to. If land is part of the sale, read the statutes that apply when the sale includes land.
Keep your copies. Keep a signed copy of the agreement and its exhibits for each party.
A business purchase agreement sets out the terms of the sale and how it will take place. The bill of sale is a separate document that the buyer receives at closing. Keep both documents together in one file, along with the exhibits.
Yes, a business purchase agreement works for selling a sole proprietorship, and the sale is an asset sale. The owner has no shares to sell, so the agreement lists the equipment, inventory, trade name, leases and other assets the buyer takes over.
Have these details ready before you start:
With these at hand, you can finish the business purchase agreement template in one sitting.
Yes. Use the Create My Document button at the top of this page to answer a few questions and build your business purchase agreement template online. You can also download the PDF or Word file and fill in the PDF with the FormsPal PDF editor.
The template has two payment boxes. In the first, the Buyer pays the full purchase price by wire transfer on the closing date. In the second, the Buyer pays part in cash and part with a promissory note. Tick only one of the two.
They are the two attachments named on the first page of the template. Exhibit A describes the assets that come with the business. Exhibit B describes the assets the Seller keeps.
Yes. It is a good idea for the Buyer and the Seller each to keep a signed copy, together with the exhibits.
General information, not legal or tax advice.
