Company purchase agreement: cash and shares, part deferred

A comprehensive company sale agreement for sale of single company for cash and shares in the buyer company. Provision for additional price if warranted profit is met. Includes an exhaustive list of warranties and a draft form of disclosure letter. Suitable for any size of company, in any industry. Use this template when first negotiating terms and as a final sale contract.

Suitable for use in: England & Wales and Scotland
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About this document

Note: All Net Lawman company documents comply with the Companies Act 2006 as amended.

This company purchase agreement is for a deal for part payment in shares of the buyer company and part in cash. There is also provision for an additional price to be paid if warranted profit is met in the current year. With the document, we have also included an example form of disclosure letter. This provides you a format as an indication of how a disclosure letter works and a style you could use. The wording can be added easily.

The document is intended primarily to protect the buyer, but it can also be used by the seller - to obtain a full understanding of what will be required and how to deal with issues which may arise in a future transaction.

Use the table below to select the template which best suits you. It does not matter what business the company is in. This template is suitable for all types of businesses. You can use one of these templates to buy a timber merchant or a design practice.

  Company or Group All Shares Bought/Sold Future Profit Guarantee Part payment in shares Price for target profit Retention of part cash Full Warranties Co owns real property
UK-CPcsl07 Group Yes No No No No Yes Yes
UK-CPcsl01 Company Yes 3 Years Yes Yes Yes Yes Yes
UK-CPcsl03 Company Yes Yes Yes Yes No Yes Yes
UK-CPcsl04 Company Yes No Yes No No Yes Yes
UK-CPcsl05 Company Yes No No No No Limited No

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IMPORTANT - Use a shareholder agreement too

As this deal entitles the seller to receive shares, immediately on completion of this agreement, the seller should enter into a shareholders' agreement with the existing shareholders of the buyer. All of the detailed control is best exercised through a shareholder agreement.

Application and features

  • This agreement is suitable for any type of trade or business.
  • Extensive use of warranties encourages full disclosure by the seller.
  • Suitable for a single company of any size.
  • Suitable provisions for contract to cover leasehold, freehold and tenanted property.
  • Limited warranties (unlike the others in this set).
  • Restrictive agreement prevents sellers from competing afresh.
  • Sellers protection provisions.
  • Various legal provisions usual in a document of this type.
  • Additional payment for "earn out" - profit in excess of target.
  • Buyers acknowledgement of inspection of physical assets.
  • Option for some sellers to be trustees and not therefore bound by the warranties.

A word about warranties:

Warranties are the essence of the deal. Warranties protect the interest of the buyer, who does not have the information available to the seller. It is fair and reasonable for a buyer to demand warranties and for a seller to give them. However, it is quite easy for a buyer to use warranties to "improve" his original deal. So, if you are a seller . . . . do not give a warranty if you do not know whether it is true, but do be prepared to "go and find out" information that could be within your knowledge.

115 warranties sound an awful lot. Do you really need them? Will you understand them? Net Lawman advises; absolutely yes and absolutely yes! Our warranties are written in plain English. A seller should start with a full set unless he is sure he knows everything there is to know about his proposed acquisition, or the value is very small, or the company is not trading.

The document includes 115 individual warranties in sections relating to:

  • General
  • No damaging effect of this agreement
  • Company structure and operation
  • Accounts
  • Cash flow
  • Taxation
  • Guarantees and borrowing
  • Assets
  • Trading and contracts
  • Exceptional regulations
  • Properties - all
  • Properties let by the company
  • Employment
  • Pensions
  • Insurance
  • Intellectual property
  • Information technology

This document was written by a solicitor for Net Lawman. It complies with current English law.

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