When you buy assets in a business, you are not buying the business yourself, but only one aspect of it. This can mean a product, a client list or some kind of intellectual property. The company retains its name, commitments and tax returns. Ooh! I haven`t even highlighted all the sections that can be included in a sales contract, and I`m tired! It contains the terms of sale contained or not contained in the sale price, as well as optional clauses and guarantees to protect the seller and buyer after the transaction has been concluded. The contract may also provide that the buyer collects them on your behalf, as they may not want you to contact customers for a period after closing. Buying a brokerage book can increase revenue drastically, but only if the seller`s clients create the transition. In order to ensure a successful outcome, both brokers should take important steps before the terms of the agreement are concluded. During the transition phase, different strategies can be implemented to enable customer change. The typical starting point for determining a fair purchase price is the sales broker`s turnover of 12 months. This amount is then broken down into recurring and non-recurring revenues. Recurring revenues, such as members and monthly management fees, are higher than, for example, a high single commission paid when purchasing a variable life insurance policy. Other factors that can be taken into account are the average age of the clients, the length of the client and the annual growth of the money under management.
Yes, you rely on your lawyer to deal with most of the terms and conditions. However, they need an ephemeral knowledge of what should or could be in the business purchase contract. This way, you can check for errors and have a thorough understanding of them before you get to the closing table. In any particular order below, I become a list of sections that can be included in a business purchase contract. Some lawyers combine the sections I have listed or contain information that I have gathered in one section in another section. But for the most part, each segment of the sales contract explains who, what, when, where, how and how much of the business sale. The agreement regulates how accounting debts are recovered after closing. In the case of a share sale, accounting debts are automatically inherited from the buyer, but in the case of an asset sale, the buyer may not want to buy them (since he cannot recover them from customers after the sale), in which case you may need to keep them and withdraw them.
After 21 years as a licensed consultant specializing in corporate and private finance, Scott Krohn began his writing career in 2008 on various topics such as business, personal finance, health and IT. He graduated from Cal State University in Long Beach with a Bachelor of Arts degree. If the sale is subject to conditions – for example. B get the agreement of a key customer to transfer his contract – these are included in the contract and must be completed before the closing of the sale. The Ultimate Sale – the book that takes the Building A Sellable Business Blog/Podcast series to the next level. I have seen many, many business contracts over the years as a PSC®, as a CEPA and as a business owner. Nevertheless, I remain surprised and astonished by the length of these documents.