You have now come to the final stage of the process of buying a business. You have found the perfect business to buy, have done adequate due diligence, gathered the resources and capital you need to buy the business and are now ready to close the deal.
But, here’s something that you need to keep in hand before proceeding to officially buy the business. What is it? You need to keep in hand all the important documents and agreements. Why do you need them? Having all the required and necessary documents with you will help you to have a smooth and uncomplicated transfer of the business. What are the documents that you will need? Read on to find out.
A List Of All Important Documents That You Need To Have Before Officially Closing The Deal
- Sales Purchase Agreement
This document will prove that the sale has taken place. It will vouch for the official transferring of the business assets to you from the seller. It’s a vital document to possess while buying an existing business.
- Adjusted Purchase Price
This document will state the final count of the purchase cost of the existing business. The price will also include all the prorated expenses like rent, utilities, and inventory.
- Lease Document(s)
If there is an existing business lease and you are taking it over, ensure that you have the related document and that the landlord is aware of that. If you are negotiating a new lease, then ensure that you have the document which everyone understands.
- Vehicle Documentation
If you are buying a business that also gives you vehicles, you will have to transfer the ownership to yourself with the local DMV. Hence, make sure that you have all required completed forms and vehicle documents at the time of the sale.
- Documents having Patents, Copyrights, and Trademarks
While buying an existing business, you have to ensure that certain trademarks, copyrights, and patents are transferred to you- the new owner. Some forms are required to make the transfer. Hence, double-check that you have them also.
- Non-Compete Agreement
Asking for non-compete from the previous owner is a standard procedure. It is a good idea to obtain the agreement because it will ensure that the previous owner will establish a competing firm right across the street.
- Consultation or Employment Agreement
When will you need this agreement? When the seller decides to stay in the company as an employee. Hence, if that is the scenario, make sure that you have the agreement signed by him/her.
- Asset Acquisition Statement
Document that outline the assets that you have acquired in this business acquisition and also for how much. This is an essential document because it’s needed for your tax returns in the future. Hence, make sure that you have it.
The Benefits Of Having All The Necessary Documentation
Many business professionals vouch for the fact that keeping all the documents in a safe place is essential for smooth takeover, integration, and also for future concerns if any crop up. Many also suggest keeping digital or electronic copies of the documents and agreements stored in an online storage platform. Don’t forget to protect the access of such platforms as they can be easily hacked!
Here are the benefits of having such important papers with you:
- They can help you avoid legal troubles that may arise due to duplicated documents
- They are required for financial audit
- They can help you to avoid surprises in the future. You don’t want authorities knocking on your door and telling you that you don’t have the proof for the ownership of an asset or copyright of something concerning the business.
- They make the integration process simple and quick
- Documents also ensure that there is clear communication between you and the seller
- Accurate documentation and agreements protect both the seller and the buyer.
You are ready to take full ownership of the business! Starting a new business from scratch can be very challenging. However, buying an existing business eliminates the complexity and simplifies the planning process. Additionally, possessing all the above necessary documentation and agreements will make the process even smoother and seamless.
What can help you to be in control when you are buying an existing business? Expert advice! Experts and professionals will help you to know every detail while buying a business and will also ensure that you have everything in hand.
Bowarr Management LTD has been serving the business and M&A industry for several decades. We have collaborated with a lot of individuals and businesses on various M&A deals. Our team of experts and professionals are one of the best in the industry and will provide premium services for the due diligence process and also for successful deal closure. Get in touch with us for further queries and information!