Considerations & documentation necessary for a Sale of Business

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There are numerous considerations at play in the sale of business.

The below information provides an indication of documentation which ought to be scrutinised.

This resource is prepared as a guide to highlight the considerations involved however it is not exhaustive and is not a substitute for legal advice.
Please contact Lisa Boogaard of Boogaard Attorneys on 072 116 4121 to set up a consultation should you require our professional services in the sale of a business.

1 Seller’s documentation
Memorandum of Incorporation and amendments; certificate of incorporation; seller’s registered address; names and addresses of the directors and secretary of the seller; copies of audited accounts for past 3 years and management accounts for current financial year.
2 Assets of the Seller
Schedule of all properties owned by the seller; properties let by the seller in connection with the business to be sold; plans showing extent of the properties if available; copies of title deeds and lease agreements of the properties; names and addresses of persons in occupation of the properties; details of existing uses of the properties; details of building contracts of the properties; copies of bye laws; licenses, statutory permissions approvals relating to the properties; details of any major work to the properties and supporting documentation; details of any onerous rights or servitudes attaching to properties; details and copies of any environmental audit reports and surveys, as well as confirmation that any recommendations have been followed; details of the non-domestic rateable values of any properties
3 Leases whether the seller is tenant or landlord
Details of which leases are subject to sub-leases; details of licenses, consents, waivers pertaining to lease agreements; confirmation that there has been no breach or that there is not any anticipated breach of any lease; details of rent paid by seller and whether any rent payable by the seller is subject to review or anticipated review;  details of service charges for past three years and whether or not the seller is aware of any substantial expenditure to be incurred on the leased property; details of any insurance policies on the leased property, full details of tenants where the tenant is not the seller.
4 Contracts
Copies of any credit agreement, rental, leasing and similar agreements together with details of assets involved, names of creditors, sums paid and any anticipated breach of these contracts;

Copies and details of any long term contracts, outstanding capital commitments, material supply agreement contracts with customers or suppliers;

Copies of any joint venture agreements or similar agreements involving the business;

Details of any substantial capital expenditure during the last two years;

List of major customers (those accounting for more than 5% of the business) and value of sales for last three years;

List of major suppliers (those accounting for more than 5% of the business) and value of purchases for last three years;

Details of any dealings with overseas countries & details of any restraint on dealing in any overseas country;

Details of any vehicles owned by the business and whether subject to credit agreements;

Copies of sale agreements, standard terms and conditions of trade, sale discount arrangements, licenses and all agency, distribution and consultancy agreements;

Any changes to the trade of the business or manner of carrying on business in the last 2 years;

Copies of agreements pertaining to the acquisition or disposal of fixed assets for the last 2 years;

Brochures and advertising materials of the business;

Any option agreements for options to acquire assets of any nature which are connected to the business;

Details of all insurances affecting the business.

5 Directors and employees
Full details of any directors and senior executives of the business, including service agreements and applicable restraints;

Full details of all persons employed by the business including term of service, designation, salary, benefits, notice period; details of trade union membership; details of pension or life assurance schemes.

6 Intellectual Property
Particulars of all patents, trademarks and copyrights.
7 Litigation and alternative dispute resolution
Full details of any legal action or application instituted as well as any alternative dispute resolution to which the seller is engaged in any capacity.