The purchase agreement is where a handshake becomes an obligation. It is long, it is drafted by the buyer's lawyer, and most of it is boilerplate. Four parts are not, and a seller who reads those four carefully has done most of the work that matters.
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What is being sold, and what is not
Assets in an asset sale are listed, and anything not listed stays with you along with the liabilities attached to it. In a share sale everything goes. Excluded assets, excluded liabilities and the treatment of cash and debt at closing all belong here, and a vague list is where disputes start.
Price, adjustments and holdbacks
The headline price, the working capital target and how it is trued up after closing, any escrow and its release dates, any seller note and its terms, and any earnout and how it is measured. Read the earnout definition as though the buyer will run the business differently, because they will.
Warranties and their limits
The representations you are giving, the disclosure schedules that qualify them, and the survival period, cap and basket. Then the indemnity mechanics: who claims, when, and whether the escrow is the only recourse. These decide what your exposure looks like a year after the money arrives.
Questions people ask about business purchase agreement
Can I use a template?
For a very small asset sale with no employees and no deferred payment, a solid template reviewed by a lawyer can work. Anything with warranties, an escrow or an earnout should be drafted properly; the saving is not worth the exposure.
Who pays the legal fees?
Each side pays its own, in the normal case. Both are billed hourly, and both rise with how much of the agreement is negotiated rather than accepted.
What is a non compete doing in there?
Restricting you from competing after the sale, which is part of what the buyer is paying for. Check its length, its geography and its scope, because an unreasonably wide one can affect what you are able to do next.