Paying For The Business Transfer

Business Transfer Agreement Guide

PAYING FOR THE BUSINESS TRANSFER
The company will need to pay the sole trader for the business and assets it acquires. Inevitably this involves valuing the assets of the sole trader business. You should discuss the best way of doing this with your accountant.

It is likely that the company will take on any liabilities of the business, so the value of the assets of the business in the company’s hands is usually offset by the liabilities the company assumes.

If there is any balance payable, then this will need to be satisfied in some way. If the company has cash this can be used or the company may issue the sole trader with sufficient shares in the company to represent the net value of the business and its assets.

Alternatively it may be more efficient for the sole trader to effectively make a loan to the company equivalent to the net purchase price.