Business Transfer Agreement
Business Transfer Agreement, The transfer of the business takes place between the owner of the business and a buyer who is ready to invest to get lawful possession of the business.
Along with the transfer of the business, the assets and liabilities are attached and transferred to the buyer.
A Business Transfer agreement governs what is transferred to the buyer under the business. This includes financial, physical, and intangible assets along with the assets that the owner does not want to sell. The liabilities which are transferred to the buyer are also outlined in detail within this Agreement.
2 WAYS OF STRUCTURING A BUSINESS TRANSFER AGREEMENT
- First, it lays the manner of the sale regarding the business. This Agreement is not the final document pertaining to the sale of the business, this agreement just enlists the sale that the parties have intended to pursue along with the assets transferred under the business.
- Secondly, a Business transfer agreement plays the role of a deed of conveyance, where the transfer and sale of the business are executed by such Agreement.
IMPLICATIONS THAT MAY ARISE THROUGH A BUSINESS TRANSFER AGREEMENT
The owner of the business may undertake this challenge to sell his business for better prosperity, in case of size and as well as profit. Sale can happen in 2 ways, one sale is the entity sale whereas the other is the asset sale.
When the sale is regarding the asset sale then the buyer is in a good position to avoid being handed over with the liabilities but there seems to be a higher income tax rate imposed on the asset sales than the tax imposition on entity sale.
The essential elements of this Agreement
- Sale of the entity or assets.
- Continuation of the business activities.
- Transfer of undertaking as a whole along with its assets and liabilities.
- Lump sum consideration for transferring the business.
GET YOUR BUSINESS TRANSFER AGREEMENT DRAFTED BY A LEGAL EXPERT
Using a normal template that you may come across online is not the right template to proceed Business Transfer Agreement. Such templates do not necessarily involve all the essential clauses which must be present since all the clauses in the agreement must be drafted keeping into consideration the role of the business owner and buyer and an outline of the assets and liabilities transferred to the buyer. Hence, it is better legally to approach a contract lawyer/corporate lawyer who would look into every necessary aspect before drafting a Business transfer agreement. We at VSK & CO ADVOCATES AND LEGAL CONSULTANTS draft commercial, corporate, and IPR agreements from scratch to make sure that you do not face any legal consequences later.