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Many companies are formed in partnership (one or more shareholders) and eventually it is time for the partnership to dissolve so that people can move on with their lives, find new challenges, and enjoy a new life.

It is typical that one partner wants to keep the business and another wants to sell so the challenge is to know how to value the sale.

Here is a breakdown of what could be reviewed prior to making further agreements with solicitor representations. If you can agree on these matters before accountants and lawyers are involved it can save a lot of time and cash.

 This following description is not a legal document. Use it as a guideline only for discussion between the parties and once you have a basic agreement, pass the information on to your solicitors for legal advice.

HEADS OF AGREEMENT

1. The Matter: Sell full interest in the Company between the Parties; the Sellers to the Purchasers
   
   

2. The Company: (NAME OF THE COMPANY)
   
   

3. The Sellers: (NAME/S OF THE SELLER)
   
   

4. The Purchasers: (NAMES OF THE PURCHASER/S)
   
   

5. Valuation Date: The sale needs a valuation date where all assets and liabilities will be recognised and contribute to the final sale price calculation: ___/___/___
   
   

6. The Assets to recognise are:

   1. Bank Account

   2. Investment Account

   3. Debtors Ledger

   4. Association Shareholdings

   5. Asset Register

   6. Good Will

   7. Shareholders Account (if overdrawn)

   8. Loans

   9. Any other discovery as at the Valuation Date
      
      

7. The Liabilities to recognise are:

   1. Creditors

   2. Stock on Hand

   3. Borrowings

   4. Shareholders Account (if not overdrawn)

   5. Any other discovery as at the Valuation Date
      
      

8. Other considerations:

   1. PAYE Due - Liabilities

   2. Holiday Pay Due - Liabilities

   3. Taxes Due - Liabilities

   4. Provisional Tax Paid - Assets
      
      

9. Sale Date: The date the actual ownership of shares transfers from the Sellers to the Purchasers will be:

   1. Full payment made by the Purchasers to the Sellers nominated bank account

   2. Legal documentation signed by all parties

   3. Seller is release of all personal guarantees relating to the company

   4. The completed update of company office records
      
      

10. Prior to Sale
    As per the Companies Act, until the sale has concluded, all Directors are jointly and severally responsible for the Company and its activities.
    This means the following conditions, by law, have to be maintained prior the sale:

    1. All company records, access, and review is available (without hindrance) of all accounts, to all Directors and their jointly agreed to nominated persons

    2. Payments from the Company accounts must be authorised by both Directors or nominated persons

    3. No changes to any Company official records, third party facilities, or passwords can be made without both Directors approval and notification of such changes in writing
       
       

11. Company Standing and Going Concern

    1. The Company (is / is not  < cross one out) a going concern (meaning that it is liquid and able to continue in a profitable manner)

    2. No action (intentional or unintentional) , document, or conversation that would jeopardise the Company's standing in the community, or its personnel, should be made to any other person or organisation.
       

12. Target Sales Date

    1. The date this sale is to be completed by is: ___/___/___

AGREEMENT

Signed ........ names, signatures and date of signing by all parties