What should be in a business purchase agreement?

A business purchase agreement is the single document a buyer and seller actually sign to complete a sale, and everything that came before it — the letter of intent, the due diligence, the negotiated price — has to land somewhere inside it. Missing a piece here does not get fixed later; it gets fixed in a dispute, if it gets fixed at all.

The price, structure and adjustments

The agreement states the purchase price and how the deal is structured — an asset sale or a share sale — because the two carry very different tax and liability consequences for both sides. It also sets out how the price moves between signing and closing: adjustments for working capital, inventory counts or receivables collected are common, and the mechanics for calculating them need to be spelled out precisely rather than left to a handshake understanding.

Representations, warranties and the disclosure schedule

Representations and warranties are the seller’s factual statements about the business — that the financial statements are accurate, that there is no undisclosed litigation, that the equipment is owned outright. The disclosure schedule sits alongside them and lists every exception the seller is actually flagging, and a buyer’s remedies later usually turn on whether a problem was disclosed there or not.

Conditions, indemnities and what survives closing

• Closing conditions — steps that must happen before the deal completes, such as landlord consent or financing approval
• Indemnities — who compensates whom if a representation turns out to be false or a liability surfaces later
• A holdback or escrow — money kept back to secure those indemnities for a defined period after closing
• A survival period — how long a representation can still be relied on after the sale closes

The assignments buried in the schedules

Contracts, leases, licences and permits the business depends on often cannot move to a buyer automatically — many require a landlord’s or a counterparty’s consent, and some cannot be assigned at all. A purchase agreement should identify which of these need action before closing, because discovering a consent requirement after the ink is dry is a common way deals get delayed.