In situations where the owner of a business or company desires to sell their interest to a third party, it is vitally important that the nature of the seller’s ownership is examined, and a determination made as to the proper method of transfer. Typically, a sale can be categorized in one of two ways: If the business is a corporation, LLC or partnership, and all assets of the business are held by that entity, the owner can merely transfer their interest in the entity to a buyer, and ownership of all the assets would necessarily follow. The problem? So would all the debts and other obligations of the entity. The alternative would be for the seller to just sell the assets of the business (the inventory, cash, furniture, equipment and receivables, for example). In this way, the seller retains ownership of the entity, but the physical assets are transferred to the buyer. Hence, the buyer would not take personal responsibility for the debts or other obligations of the entity (however, the inventory, furniture, etc. may have been pledged as collateral for a loan of the seller; care must be taken here). Once the parties agree on the proper method of sale, the questionnaire below will facilitate the preparation of accurate documents.
Available Packages:
- Purchase of Business Assets Only
- Sale of Business / Assets Forms & Documents should be used when the transferee will not take over ownership of the business entity, but rather, will merely purchase the assets of the business. The buyer should make inquiry that none of the assets are subject to financing or any other type of lien interest, and that the seller has full title to such assets without the joinder of any other party.
- Documents included:
- Business Purchase and Sale Agreement
- “Follow-Through” Instructions
- Purchase of Full Stock/Company Interest
- Transfer of stock / company interest documents should be used when the transferee will assume the seller’s interest in the entity owning the business, rather than purchasing the assets. The parties should review the entity formation documents to ensure that there are no restrictions on the proposed transfer. In addition to the documents provided here, if the entity ownership interest is evidenced by an actual stock certificate or other token of ownership, that certificate should be endorsed and delivered to the transferee as well.
- Documents Included:
- Business Purchase and Sale Agreement
- Bill of Sale and Assignment of Rights
- Transfer of Stock/Partnership/Membership Interest