Purchase of business assets or hive-down
This is an agreement to buy some or all of the assets of a business. They might include fixed assets such as plant and equipment, current assets such as stock, or intangible ones such as customer lists or other intellectual property. The seller gives no warranties to the condition of what is being bought, nor takes any post-sale risk that the buyer might not be satisfied. The document can be used in any circumstance where it is not the business itself that is being sold, but constituents of it, for example, in a break-up of a company in administration, a hive-down or a hive-up.
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About this document
The most important feature of this agreement is that the seller gives no warranties. Risk for the assets bought is taken entirely by the purchaser.
It can be used for the sale of any type or combination of types of assets including machinery and equipment, stock, and work in progress. The only type of asset which it cannot transfer is real property (land and buildings), for which the involvement of a solicitor is required by law.
The document could be used in many situations, including the following:
A hive-down, where assets are disposed to a company, possibly a shell, in order for the shares in that company to be subsequently sold. It may be more tax efficient for the ultimate buyer to purchase the assets within a company structure rather than as assets by themselves, yet he or she may not want the obligations or the history of the original business.
A hive-up, where assets are bought by a parent business in order for the subsidiary to be sold separately or liquidated.
A sale by a liquidator or administrator or trustee in bankruptcy.
The owner of an unincorporated business wishes to sell assets so that he or she can move to another area, close the business or change the strategic direction of the business.
The owner of insurance re-claimed or fire-damaged goods wishes to sell them as seen.
A person is declared insolvent and the receiver is selling the assets as per order of the court.
The counter party – the acquirer – may be any person, business or other organisation.
This agreement is written in plain English, and is drawn for maximum flexibility and ease of use.
Key features are:
one step completion - buyer makes payment and take possession of goods
is not specific to any particular industry
can include sale of intellectual property
includes only the most basic warranties
provides options for payment
allow you to construct commercial terms to suit your exact business needs
includes practical and commercial help and suggestions
Alternative documents for slightly different situations
If you are only selling heavy physical assets then use: this agreement for the purchase of used plant or physical assets. It provides for transportation and delivery.
If the assets are intellectual property, an IP sale agreement may be more suitable.
If you are selling an entire business, whether as a going concern or not, then you should use a business sale and purchase agreement if the business is unincorporated and a company sale agreement for selling shares. These agreements are much fuller and include a menu of warranties for both sides.
This document was written by a solicitor for Net Lawman. It complies with current English law.
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