Agreement for Sale of Business as a Going Concern

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• Sep 1, 2023
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Agreement for Sale of Business as a Going Concern: What It Is and Why It Matters

When a business owner decides to sell their business, it`s important to ensure that the sale is structured in the most beneficial way for all parties involved. One way to achieve this is by entering into an agreement for the sale of the business as a going concern.

What is a Going Concern?

A going concern refers to a business that is currently operating and generating revenue. In other words, it is a business that is not in the process of being wound down or liquidated. When a business is sold as a going concern, the buyer takes over the operation of the business and continues to run it as it was being run by the previous owner.

What is an Agreement for Sale of Business as a Going Concern?

An agreement for sale of business as a going concern is a legal document that outlines the terms and conditions of the sale of a business. This agreement is crucial because it lays out the details of the transaction, including the purchase price, payment terms, and other important terms and conditions.

Why is it Important?

An agreement for sale of business as a going concern is important for several reasons. First, it protects the interests of the buyer and the seller. For example, the agreement can include provisions for what happens if the business fails to meet certain performance targets after the sale, or if there are unexpected liabilities that arise after the sale.

Second, this type of agreement can also be important for tax purposes. In some jurisdictions, a sale of a business as a going concern may be treated differently for tax purposes, which could result in a lower tax bill for the buyer and the seller.

Finally, an agreement for sale of business as a going concern can help to ensure a smooth transition of ownership. By clearly laying out the terms and conditions of the sale, both parties can have a clear understanding of what is expected of them during the transfer of ownership. This can help to minimize disagreements and potential legal disputes after the sale has been completed.

In Conclusion

If you are considering selling your business, it`s important to work with an experienced attorney who can help you to draft an agreement for sale of business as a going concern that meets your needs. This type of agreement can help to protect your interests, ensure a smooth transition of ownership, and potentially even result in tax savings.