Company Purchase Agreement: part payment retention
Template: Company Purchase Agreement: part payment retention
Introduction to company purchase agreements
his document is for selling or buying a single company of any size. It is suitable for low or high value transactions and for absolutely any sort of business.
Although this agreement is drawn for a buyer to use, it can be a valuable tool to either side of the transaction to give an understanding of what should be covered and what possibilities there are for negotiation.
It allows for:
- the sellers to be individual shareholders or a corporate body
- the buyer to be a corporate entity
- part of the price to be paid in shares of an acquiring company
- the remaining part of the price to be paid in cash and retained by the buyer against warranted profit forecasts (for up to a period of three years)
- the final price to be increased if the first year's profit target is met
- the company to own real property - additional warranties are included
Using warranties
Warranties are explained in detail in this article. In short, they protect the interest of the buyer, who does not have all of the information available to the seller.
It is fair and reasonable for a buyer to demand warranties and for a seller to give them. However, it is quite easy for a buyer to use warranties to improve his original deal. So, if you are a seller do not give a warranty if you do not know whether or not it is true, but do be prepared to go and find out information that could be within your knowledge.
115 warranties sounds too many. You may not need all of them, but you should consider each one. Our warranties are written in plain English. A seller should start with a full set unless he is sure he knows everything there is to know about his proposed acquisition, or the value is very small, or the company is not trading."
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