Agreement by Vendor to Act as Agent of the Company Purchasing a Business

Agreement between the vendor and the purchasing business that is purchasing the business within which the vendor works. Setting out the terms of the agreement. Business Purchase Agreement

A business purchase agreement, also referred to as a business transfer agreement or an offer of business agreement, is an agreement entered into between a seller and purchaser for rights to the business. Therefore, the purchaser is essentially taking over the company from the seller. The agreement itself incorporates the terms of the deal, what is both included and excluded in the deal itself, as well as any discretionary provisions and guarantees.

Importance of a Business Purchase Agreement

In the event that you are interested in purchasing a business, or in the alternative, if you own a business and wish to sell it to an interested buyer, this agreement is the most important document that explains in detail the terms of the deal.

This type of agreement is important in the following scenarios:
• if you wish to sell your business and you need to incorporate the terms contractually;
• when you wish to purchase or sell a business, the agreement enables both the seller and purchaser to settle on the terms of the deal, which will be referenced in the agreement itself. This incorporates all aspects of the deal itself;
• the agreement sets forth any restrictive clauses, including a covenant not to compete, non-solicitation, confidentiality, and non- disclosure clauses. These guarantees are important to reference in an agreement to ensure that both the seller and purchaser abide by such restrictions.

For example, before entering into an agreement, a third-party vendor may need to complete a transaction for the sale of goods/services as promised between the seller and vendor prior to the seller transferring the business to the purchaser. If the business exchange takes place prior to the transaction with the third-party vendor, such terms and conditions should be put forward in the agreement.

What is Included in a Business Purchase Agreement Restrictive Clauses

The agreement may incorporate four diverse prohibitive statements or guarantees, including the following:
• covenant not to compete;
• non-solicitation;
• confidentiality;
• non-disclosure.

Assumed Liabilities

When a purchaser buys a business from the seller, the purchaser takes on responsibility for the business liabilities, including any outstanding loans, records payable balances, or funds owed to a current vendor. The assumed liabilities clause is generally stated in all agreements.

Purchasing agents, also known as buyers, generally work in the purchasing departments of large companies or governmental entities. Centralizing many of the organizations buying functions saves money and creates a fair process to assess proposals from various suppliers and sales representatives. Selling to a purchasing agent may be different than to your other clients who do not employ that position.

Dealing with agents, who can be aggressive and difficult to contact, requires special considerations, especially for smaller companies facing competition from big businesses.

Request for Proposal

Before a purchasing agent buys from a supplier, a request for proposal may be distributed to several companies that carry the required item. The request for proposal (RFP) specifies all documents needed, along with pricing, for a company to be considered as a vendor.

Each organization may have different requirements, but you will likely need to submit specifications of the product or service, a time line for delivery and information about your company. Do not make exaggerated claims about your item or the ability of your business to supply it on a large scale. If you have doubts about meeting the requirements, its best to wait for an RFP that you can fulfil.

Communication

Building relationships is part of the selling process. With most contacts, sales representatives become acquainted with them on a professional and personal level. This helps in matching a product with the customers needs. Even though it may not be a simple task, attempt to contact the purchasing agent directly. If you are successful in obtaining a phone number or email address, introduce yourself and ask pertinent questions about the organization. Inquire about details that may not have been specified on the RFP.

After you submit your proposal, contact the buyer again to keep updated on the progress of choosing a vendor and to answer any questions.

Procedures

Submit the necessary paperwork and pricing as directed by the purchasing department, agent or request for proposal. Reject the notion that you might win the bid without providing all requested documents. If you are familiar with an employee outside of the purchasing department, do not ask that person to intervene on your behalf, as it may not always work in your favour. Purchasing agents do what is best for their companies and work independently, though they may confer with other employees.

Key requirements to be considered when completing the vendor application form:
• completion of Application Form is required by all vendors seeking to conduct business. A company profile or BBBEE certificate will not be accepted as a replacement for the completed Vendor Application Form;
• all new vendors must hold a valid BBBEE certificate or affidavit of at least level 4 rating;
• under the Amended Codes of Good Practice, a QSE (Qualifying Small Enterprise) with majority black owned shareholding and all EME`s (Exempt Micro Enterprises) are required to produce a sworn affidavit as proof of their B-BBEE status;
• generic and QSE entities with less than 51% black owns shareholding have to submit a full verification certificate;
• principal Contractors must fulfil at least seventy percent of an order. Sub-contracting is only permitted for a maximum of thirty percent of the same order;
• only fully completed vendor application forms, signed by the authorized representative of the applicant;
• full signature of the authorized representative of the applicant is required when alterations are made to the vendor application form;
• all fields on the vendor application form must be completed by applicant. Information that is still outstanding will be regarded as incomplete and vendors will not be considered for registration;
• • businesses providing information that is found to be intentionally incorrect or fraudulent will be disqualified;
• applicants who have been previously been declared insolvent and wish to do business must have been rehabilitated and must provide the necessary proof thereof;
• fronting can result in a business being blacklisted;
• certified copies of the required documentation must accompany the fully completed vendor application form.

Vendor Warranties

If you are thinking about selling your business, it is important to consider the extent and structure of any vendor warranties you give as part of any sale agreement. Providing warranties about matters that you do not know about, or that you know are not true, can have serious legal and financial consequences.

Vendor warranties are promises provided by a vendor to the buyer as part of a business sale agreement. Essentially, the vendor will be promising to the buyer that a particular state of facts exists. Vendor warranties are important for the buyer, as they provide certainty that the buyer is getting what they pay for. They are also important for the vendor because comprehensive warranties usually make a business easier to sell, and at a higher price.

Restraint of Trade

Restraint of trade stops vendors from becoming competitors for a period of time in a certain geographical area, generally two years and sufficient distance to keep them out of the precinct, suburb, town, region or country.

In effect, why agree to purchase a business when the owner can just set up down the street and keep much of the business that relied on personal relationships and reputation.