Seller Friendly Purchase Agreement

Definition - What does Seller Friendly Purchase Agreement mean?

A seller friendly purchase agreement contains clauses that are favorable to the seller of a business. There is no precise definition as to what constitutes "seller friendly" given that each seller has different concerns. The key point is that the seller, not the buyer, initiates the drafting of the document and drives the process to get an optimal deal.

Divestopedia explains Seller Friendly Purchase Agreement

One way to get a seller friendly purchase agreement is through a controlled auction. As part of the final bid process, prospective buyers will be provided with the seller's purchase agreement, and they will be asked to return a marked-up copy of the agreement with the purchase price identified. This is different than the typical process where the buyer prepares the purchase and sale agreement from scratch. Using this process, the seller is able to more easily compare offers between various prospective buyers. The potential downside of this approach is that if the initial seller friendly purchase agreement is too restrictive, it may scare potential buyers away from participating in the transaction altogether.

Share this: