Selling or Buying a Business with Vendor Finance
Selling or Buying a Business with Vendor Finance
Perth Commercial & Corporate Lawyers
West Perth Legal offers comprehensive legal services to help vendors and buyers sell or buy a business with vendor finance.
Our vendor finance legal services for businesses include:
- Preparing & negotiating Business Sale Agreements
- Preparing & negotiating Vendor Finance Agreements
- Advising on asset protection strategies & preparing relevant legal documents such as security agreements, personal guarantees & power of attorney
- Business Settlement
West Perth Legal Advantage
Experienced Commercial Lawyers
Tailored and Professionally Drafted Agreements
Price Certainty (Fixed Fees Where Possible)
Responsive Lawyers
Selling or Buying a Business with Vendor Finance
West Perth Legal’s commercial lawyers have helped multiple WA businesses with selling and buying a business using vendor finance.
We prepare legal documents to cover various structures of vendor finance, including:
- Earn out payment formula where the buyer’s payment is based on the financial performance of the business
- Equity financing where the vendor provides stock in exchange for shares in the company
- Debt financing where the buyer agrees to a set price for the inventory with set interest rate and repays it over time
- Interest only where one principal payment is paid at the end of the term
- Interest and principal payments paid over agreed timeframe
- Stock draw down only where the buyer only draws down on the stock
Some of the key issues for the parties preparing to buy or sell a business with vendor finance to consider are:
- How much finance to provide
- How long the repayment period is
- Whether repayments are by instalments or at the end of the term
- Whether interest is payable on the loan amount and how much
- Whether a personal guarantee should be provided where the buyer/borrower is a company or a trust.
- If security is provided by the buyer/borrower.
Legal Services for Business Sale/Purchase with Vendor Finance
We prepare professional and bespoke Vendor Finance Agreements to cover important details of the loan and terms of repayment such as interest rate and repayment schedule, early repayment, default, and security assets. The agreement can also include details on the seller’s involvement in the business, and any financial reporting requirements by the buyer.
A Business Sale Agreement is a legally binding agreement between the seller and the buyer of a business. It sets out the terms and conditions of the transaction. The document is often drafted when the parties have come to an agreement on the commercial terms of the transaction, including the purchase price, deposit amount, conditions precedent, included assets, restraint of trade, and settlement date. It is the main document that governs the sale and purchase of a business, so it is important for the parties to have a legally drafted agreement.
West Perth Legal prepares bespoke Business Sale Agreements tailored to your business transaction.
We provide legal advice to help sellers protect against default by the buyer. Security protection for sellers can take multiple forms. West Perth Legal can advise on the most suitable asset protection for your situation. These can include signing a security agreement, registering a mortgage over a property, registering assets on personal security register, or preparing a Deed of Priority so that the vendor has priority against third party lenders.
A power of attorney allows the vendor to regain control over the business asset or license if the buyer defaults. West Perth Legal assists with negotiating and preparing a power of attorney in addition to a Vendor Finance Agreement.
A personal guarantee or a director’s personal guarantee signed by the buyer permits the vendor to pursue after the buyer’s personal assets in the event of a default to service the debt. This is an added level of protection for vendors if the guarantor has sufficient assets that can be relied upon.
West Perth Legal offers targeted legal advice on vendor finance via private consultations. We provide advice on the associated risks and the rights and obligations in a vendor finance transaction, how to structure a vendor finance deal and the legal documents required to best protect our clients’ interest. For existing vendor finance arrangements, we provide contract review services and help buyers or vendors understand their legal responsibilities and options.
Frequently Asked Questions
Commercial & Corporate Lawyers
We have helped hundreds of clients with their commercial legal needs. See our Commercial Law and Corporate Law pages for more information.
