 | Do-It-Yourself Forms: Under $60 |
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 | Having an Attorney Review an Agreement: $100-$400+ |
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 | Having an Attorney Draw Up a Contract: $1,000-$4,500+ |
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| A business purchase agreement (or stock purchase agreement for a corporation) is used when a buyer is acquiring an entire business, its assets and its liabilities, including its debts and obligations such as unpaid taxes or potential lawsuits. However, the most common arrangement for buying a small business (and often the most beneficial from a buyer's perspective) is an asset transfer agreement, where the buyer purchases specific assets (or all the assets) of a business, but not the entire entity. | | |
| Typical costs: | - Sample purchase/transfer agreements are available from FindLaw.com and the US Federation of Small Businesses Inc. Generally these samples are considered an informational starting place in creating a written agreement; the exact requirements for a legal contract vary in each state and must be followed for the agreement to be valid. Companies such as LawDepot.com or MyTechnologyLawyer.com sell online forms that you can adapt to your circumstances for $20 -$60 and up, depending on the amount of advice/service included.
- Having an attorney draw up a business purchase contract or an asset transfer agreement often requires at least 10-15 hours of the lawyer's time at an hourly rate of $100 -$300, for a total of $1,000 -$4,500. That's a starting point for a straightforward agreement with revisions. More complex agreements or those with a lot of changes will take more time and therefore cost more.
- Having an attorney review an agreement proposed by the other party could take an hour or more, starting around $100 -$400 and going up depending on how much work is involved and your attorney's hourly rate.
What should be included: | - The process of selling a business takes a minimum of several months. Among other steps, you will want a potential buyer to sign a nondisclosure/confidentiality agreement before providing details about your business operations. The nonprofit group Score lists 12 crucial steps for selling a small business and FindLaw.com outlines the advantages and disadvantages of an asset transfer compared to a purchase.
- Each aspect of a purchase agreement can have tax or other implications, so many experts recommend having legal advice from the first stages of negotiating a business or asset purchase agreement. The document itself is likely to be both long and complicated; for more elaborate deals, the contract plus attachments can be hundreds of pages long. Usually the buyer's lawyer provides the initial draft of the agreement; then the seller reviews the document with another attorney and suggests possible revisions. Lawyers.com provides an overview of the sale process.
- A typical agreement should include such items as a list of the assets being sold, the purchase price, a list of inventory and specific financial arrangements (in as many as 90 percent of all sales of small businesses, the seller provides some of the financing for the buyer). The Small Business Administration offers a checklist of what should be part of the agreement and a Colorado attorney provides a glossary of common terms.
Shopping for a business sale attorney: | - In business law, attorneys who handle legal disputes are litigators while those who handle contracts, securities and other business matters are transactional lawyers. An Illinois attorney provides tips for selecting a business lawyer.
- Referrals to business attorneys are available from Lawyers.com and FindLaw.com.
- Your attorney should provide you with a written fee agreement; be sure you understand what is or is not included, and all potential costs.
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Article updated November 2008 |
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