13 Basics of the contract of sale of businesses
What it is the essential content of a contract of sale of businesses?
The companies purchase agreement allowing a natural or legal person, acquiring ownership of a company in exchange for a price.
Is a contrato consensual, that is perfected by the competition of consent of the parties. This agreement should be on two fundamental aspects: price and item for sale.
Also, is a atypical contract, whose contents vary, depending on the characteristics of buyer and seller: Typically, the preparation of a "tailor-made" to meet the claims of both, the mode of payment agreed, or to the liability regime, inter alia.
If the buyer is a venture capital company, sellers often hold part of the capital, the management team is maintained and formalized the "exit mechanisms" investor. Industrial buyers, often they prioritize issues such as brand or customers.
The contracts for the sale of businesses, usually quite extensive, but its structure usually contains the contents indicated below.
1.- Las partes
Besides buying and selling, guarantors of the transaction is identified.
The intentions of the parties and the cause of the contract are expressed. They serve the interpretation thereof if doubt exists in the future.
This mention of "due diligence" is made, but the buyer will try to avoid such a reference serves to the seller can escape liability if.
Detailed description of what you are buying, be they stocks or shares or assets. In any case, it is customary to attach a balance sheet of the company and mention that consents have been obtained of possible holders of preferential rights, to avoid future problems.
4.- Conditions to closing
You can set conditions precedent for closing, as the approval of the transaction by the organs of society or obtaining the relevant administrative authorizations.
Amount, payment and price adjustments based on the achievement of certain milestones. Recourse to these adjustments, It may be deposited in the notary before whom the deed is signed until compliance is justified.
6.- Adjusting the interim period
Since there is agreement until the date on which effectively runs the operation passes a period in which the seller is imperative that direct the company as it has often done: Namely, can not be made "extraordinary" operations, or substantially alter relationships with managers or employees or set charges, leases or other commitments that may impair the position of the buyer.
7.- Hours trading
On the closing date, They should change the administrative and revoke the powers of the former directors.
Also, there may be cancellations of mortgage guarantees so if, must involve the financial institutions concerned.
8.- Representations and Warranties
They are a set of statements, primarily by the seller, breach of which will determine the consequences to be established, such as the contractual responsibility, the application of adjustment mechanisms, or even contract termination.
9.- Liability regime
Here is regulated in detail both the consequences of failure by the seller indicated in the previous section, as cases in which a third party liability requires the new owner. It is very common to be established which will be responsible seller, in the event that for a certain period, labor or tax claims arise.
To ensure the former regime of responsibility, are set for the buyer as collateral security devices, bank deposit guarantee, or withholding the price for a period of time or until certain fulfillment of one of the milestones is justified.
11.- Confidentiality clauses
The obligation not to report the contract or its terms is agreed and where there may be exceptions established.
12.- Other clauses
"Standard" clauses as the impossibility of establishing contract assignment, payment of taxes, Notifications, applicable law and jurisdiction and dispute resolution systems.
To contract a number of documents annexed, containing essential information for determining non-compliance where appropriate, as the balance sheets, Key Employee relations, or customers that may be relevant to have established non-compete clauses.
Ultimately, the companies purchase agreement You can avoid many future problems, or facilitate are resolved in a manner favorable to the party.