What is a transfer agreement?

Business Transfer Agreement Guide

WHAT IS IN A SOLE TRADER TO LIMITED COMPANY BUSINESS TRANSFER AGREEMENT?

Our business transfer agreement sets out detailed terms in respect of the business and assets that are the subject of the transfer including:

  • Which assets are included in the transfer and which assets (if any) are excluded.
  • How the value of the business will be calculated and paid – often it will be a combination of the company assuming the liabilities of the business and issuing the sole trader with shares equal to the net asset value of the business. Alternatively the net value might be documented as an unpaid loan by the sole trader to the company.
  • Provide for the benefit of any contracts the sole trader originally signed (e.g. a lease or long term supply or customer contracts) and which the company has agreed to perform, to be assigned to the Company – this may require the consent of the other party to the contract (e.g. landlord, customer or supplier) or require a specific assignment or novation document.
  • Apportion the outgoings of the business.
  • Employee transfer.