What other types of agreements are usually involved in the sale transaction process?
New Jersey business transactions attorney, Harold I. Steinbach, reflects on what a business owner needs to know with sales transactions process.
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Typically, a whole host of agreements depending on the facts will also be done at the same time as the contract of sale. If money is still owed, over time there’ll be a purchase, a promissory note together with a security interest. Very often, the buyer wants some key seller employees to stay on so there might be employment agreements. There are going to be restrictive covenants because the buyer does not want the owners or the sellers coming back and competing another form so there’ll be those restrictive covenants. There’ll be confidentiality agreements.
Well, some of these might be built in to the asset purchase agreement but we need to make sure the seller isn’t using the same confidential information it had before. There might be a lease involved maybe the seller’s keeping some real estate and leasing it to the buyer or there’ll be an assignment of lease. There’ll be an assignment of various contracts. There can be quite a few agreements and the closing binder can be quite thick depending on how complicated the deal is. There might also be shareholder agreements among the buyers. If the buyer is owned by several people, they may sign their own shareholders agreement as to how they should govern the company going forward.