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Option To Purchase Business Agreement for New Zealand

Option To Purchase Business Agreement Template for New Zealand

A comprehensive legal agreement governed by New Zealand law that grants one party (the Option Holder) the right, but not the obligation, to purchase a business at predetermined terms within a specified timeframe. The document outlines the option terms, purchase conditions, due diligence requirements, and completion mechanics while ensuring compliance with New Zealand commercial law, including the Contract and Commercial Law Act 2017 and other relevant legislation. It provides protection for both parties by clearly defining the option period, purchase price mechanism, and conditions precedent to completion.

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Option To Purchase Business Agreement

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What is a Option To Purchase Business Agreement?

The Option To Purchase Business Agreement is a crucial document used in New Zealand business transactions where a potential buyer wishes to secure the right to purchase a business while conducting due diligence or arranging financing. This agreement provides the option holder with exclusive rights to purchase the business within a specified period, while protecting the vendor's interests through option fees and clear terms. It is particularly useful in complex transactions where immediate purchase is not feasible or desirable. The document must comply with New Zealand legal requirements, including the Contract and Commercial Law Act 2017, Fair Trading Act 1986, and relevant business legislation. It typically includes detailed provisions for the option's exercise, purchase price determination, due diligence process, and completion mechanisms, along with necessary warranties and representations about the business.

What sections should be included in a Option To Purchase Business Agreement?

1. Parties: Identifies and defines the parties: the Option Grantor (current business owner) and the Option Holder (potential purchaser)

2. Background: Sets out the context of the agreement, including brief business description and parties' intentions

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Grant of Option: Explicitly grants the option and states the exclusivity (if any) of the arrangement

5. Option Period: Specifies the duration of the option and any conditions for extension

6. Option Fee: Details the consideration paid for the option and whether it's applied to the purchase price

7. Exercise of Option: Describes the process and requirements for exercising the option

8. Purchase Price: Specifies the purchase price or formula for determining it

9. Deposit: Details deposit requirements upon exercise of the option

10. Due Diligence: Outlines the due diligence process and access rights

11. Conditions Precedent: Lists conditions that must be satisfied before completion

12. Completion: Details the completion process, including timing and obligations

13. Warranties: Sets out the warranties given by the vendor regarding the business

14. Confidentiality: Establishes confidentiality obligations regarding business information

15. General Provisions: Contains standard boilerplate clauses including notices, governing law, etc.

What sections are optional to include in a Option To Purchase Business Agreement?

1. Employee Matters: Required when the business has employees, covering treatment of employees upon transfer

2. Intellectual Property: Needed when the business has significant IP assets requiring special treatment

3. Lease Assignment: Required when the business operates from leased premises

4. Non-Competition: Optional restraint of trade provisions for the vendor

5. Third Party Consents: Required when specific third-party approvals are needed

6. Earn-out Provisions: Optional when part of purchase price is tied to future performance

7. International Trade: Required for businesses with international operations or compliance requirements

8. Environmental Matters: Required for businesses with environmental risks or compliance requirements

What schedules should be included in a Option To Purchase Business Agreement?

1. Schedule 1 - Business Assets: Detailed list of all assets included in the sale

2. Schedule 2 - Excluded Assets: List of assets specifically excluded from the sale

3. Schedule 3 - Lease Details: Details of any premises leases

4. Schedule 4 - Intellectual Property: List of all IP assets including registrations and applications

5. Schedule 5 - Material Contracts: List of important business contracts to be transferred

6. Schedule 6 - Employees: List of employees and their key employment terms

7. Schedule 7 - Purchase Price Calculation: Formula or mechanism for calculating the final purchase price

8. Schedule 8 - Warranties: Detailed warranties given by the vendor

9. Appendix A - Option Exercise Notice: Pro forma notice for exercising the option

10. Appendix B - Due Diligence Checklist: List of documents and information to be provided for due diligence

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

New Zealand

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions









































Clauses







































Relevant Industries

Retail

Manufacturing

Professional Services

Hospitality

Technology

Healthcare

Construction

Agriculture

Real Estate

Education

Transport and Logistics

Financial Services

Media and Entertainment

Tourism

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Commercial

Operations

Risk & Compliance

Executive Leadership

Business Development

Strategy

Relevant Roles

CEO

Managing Director

Business Owner

Corporate Lawyer

Legal Counsel

Chief Financial Officer

Finance Director

Business Development Manager

Commercial Director

Operations Manager

Company Secretary

Merger & Acquisition Specialist

Business Broker

Investment Banker

Risk Manager

Compliance Officer

Industries










Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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