A Business Sale Purchase Agreement is a comprehensive transactional document that governs the complete sale of an operating business as a going concern. This agreement covers the transfer of all assets, goodwill, customer relationships, trade names, operational systems, and ongoing revenue streams from seller to buyer. It differs fundamentally from an asset purchase agreement in scope -- a business sale encompasses the entire enterprise rather than selected assets.

The legal framework for business sales draws from multiple sources: UCC Article 2 for inventory and equipment, state business entity statutes for entity-level transfers, federal securities laws (if stock is involved), and state bulk transfer laws where still applicable. The Hart-Scott-Rodino Antitrust Improvements Act (15 U.S.C. 18a) may require pre-merger notification to the FTC and DOJ for transactions exceeding current threshold amounts.

Business sale agreements are particularly significant because they involve the transfer of goodwill -- an intangible asset representing the value of the business's reputation, customer base, and earning potential beyond its hard assets. Under IRC Section 197, goodwill acquired in a business purchase is amortizable over 15 years, making the purchase price allocation between goodwill and other assets a critical tax planning element for both parties. The agreement must also address employee transition under the Worker Adjustment and Retraining Notification (WARN) Act for businesses with 100 or more employees.

When a sole proprietor is retiring and selling the entire business to an employee, competitor, or outside buyer including all assets, customer contracts, and the business name. When partners are dissolving a partnership and one partner is buying out the others' interest in the complete business operation. When a family business is being transferred to the next generation through a formal sale rather than a gift.

When acquiring a franchise location from an existing franchisee, which requires both a business sale agreement and franchisor approval under the franchise agreement's transfer provisions. When purchasing a business through an SBA-backed loan, as the SBA requires a formal purchase agreement that meets specific documentation standards under SBA SOP 50 10.

Without a properly executed business sale agreement, the buyer risks inheriting undisclosed debts, losing key employees who were not bound by assignment provisions, or discovering that critical contracts and licenses are non-transferable. The seller risks post-closing liability for business obligations that should have been assumed by the buyer.

Business description and included assets -- provide a complete description of the business being sold, including trade names, DBA registrations, domain names, social media accounts, customer lists, vendor relationships, equipment schedules, inventory, and intellectual property. Attach detailed schedules for each category.

Purchase price structure -- specify the total price, payment method (lump sum, installment payments, or seller financing), and any earnest money deposit. If seller financing is involved, detail the promissory note terms including interest rate, amortization schedule, and security interest in the business assets under UCC Article 9.

Purchase price allocation -- allocate the price among asset categories (equipment, inventory, non-compete covenant, goodwill, customer lists) as required by IRS Form 8594. This allocation has significant tax implications: equipment may qualify for Section 179 expensing, while goodwill must be amortized over 15 years under IRC Section 197.

Seller representations and warranties -- the seller must warrant accuracy of financial statements, absence of undisclosed liabilities, status of permits and licenses, compliance with employment laws, environmental compliance, condition of equipment, and validity of customer contracts.

Non-compete covenant -- essential in business sales to protect the buyer's investment in goodwill. Must be reasonable in geographic scope, duration (typically 2-5 years), and activity restrictions. Enforceability varies significantly by state.

Employee transition -- address whether the buyer will offer employment to existing employees, honor accrued benefits, and assume existing employment agreements. Consider COBRA notification obligations and state mini-COBRA requirements for smaller businesses.

Due diligence period -- provide the buyer adequate time (typically 30-60 days) to review financial records, tax returns, customer contracts, pending litigation, lease agreements, insurance policies, and regulatory compliance status.

Closing conditions -- specify requirements such as landlord consent to lease assignment, regulatory approvals, key employee retention agreements, and satisfaction of any outstanding liens. Include provisions for prorating expenses like rent, utilities, insurance, and prepaid expenses as of the closing date.

Indemnification and escrow -- establish post-closing indemnification for breaches of representations and warranties, with a portion of the purchase price held in escrow (typically 10-15%) for a specified period to cover potential claims.