12 Legal Documents Needed in a Business Purchase – Part 1
Hopefully you have read our blog titled “Buying a Small Business” for an understanding of the two primary types of sales that occur when purchasing an Arizona business. There are 14 legal documents that are typically included in the purchase of a business, which will be described herein and in our next two blogs.
The following legal documents are usually included in Arizona business purchases:
- Purchase Agreement
- Escrow Agreement
- Bill of Sale
- Promissory Note
- Security Agreement
- UCC-1 Financing Statement
- Personal Guaranty
- Non-compete Agreement
- Consulting or Employment Agreement
- Consent of Landlord to Assignment of Lease
- Assignment of Lease
Depending on the type of purchase – entity purchase or asset purchase – the main document that evidences the agreement to buy/sell the business is the purchase contract. It may be called an Asset Purchase Agreement, Stock Purchase Agreement, or something similar. This contract outlines the various terms and conditions of the sale.
It is common for the purchase agreement to attach all of the ancillary documents as an exhibit to the purchase contract. By doing so, when the parties execute the purchase agreement they are also agreeing to the form and content of the additional, subordinate documents. This is an effective means for ensuring the sale closes in a timely manner and without further disputes.
It is important to note that the above is not an exhaustive list. Every transaction is different and additional documents may be required or only some of the above-listed documents may be needed. Certain tax forms may need to be prepared to document the allocation of the purchase price to the individual assets, and it is much easier to complete the form contemporaneously with the sale than to try to recreate the transaction from memory at a later date.
Our next two blogs will discuss each of the above-listed documents, but if you are interested in purchasing or selling a business, contact us for help. We can review your individual transaction and help you understand all of the legal documents that will be required to protect your best interests and successfully close the deal. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.