Business Sale Definition

Sale of the ownership of a corporate business may be made in several ways. A transfer of the corporate stock and assets, in return for cash or stock of the buyer, is the most common method for the sale of a corporation. Merger and consolidation are other manners of transferring the business. The decision as to the form a corporate acquisition will take, and the contents of a sales agreement or an agreement of transfer will most often be based on tax factors. Numerous other considerations are important, however, and must be taken into account in drafting such agreements. For example, sales of all or substantially all of the assets of a corporation are regulated by statute in most jurisdictions, and the agreement must be drafted to assure compliance with the prescribed procedures and requirements. The board of directors and a stated percentage of the shareholders must generally approve the transaction. Where stock of the buyer is used for all or part of the purchase price, provision may be necessary for compliance with federal and state securities laws and with stock exchange rules.

The agreement of a non-corporate business will contain similar provisions specifying the terms of the sale, such as purchase price and terms of payment, provisions to purchase the assets and goodwill of the business, or for the purchaser not to compete with the business of the seller.

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