Toolkit · Business
The Business Sale and Acquisition Toolkit
26 U.S.C. § 1060
- Type
- Toolkit
- Jurisdiction
- National
- Date
- 2026-06-25
- Topic
- Business
This toolkit collects the working documents used to buy or sell a privately held business. The valuation items include an adjusted earnings worksheet and a risk-factor scoring sheet that translates concentration and owner dependence into a multiple. The negotiation items include a confidentiality agreement outline, a letter of intent template that separates binding from non-binding terms, and term sheets for the earnout, the escrow, and the indemnification architecture. The diligence items include a complete request list and a findings tracker that routes each finding to a price adjustment, an indemnity, a condition, or a walk-away. The closing items include a consents and approvals tracker, a landlord consent request letter, a tax clearance request, a personal guarantee release letter, a purchase price allocation schedule, and a full closing document checklist. The post-closing items include a working capital true-up worksheet and an indemnity claim notice. Each is drafted to be adapted, with bracketed fields and warnings on the omissions that cost money.
The Business Sale and Acquisition Toolkit
Business > Buying and Selling a Business | Published 25 June 2026 - Updated 8 August 2026 | UpLaw - uplaw.us
⚠ These are drafting aids, not executed documents. Every deal has facts these forms do not know about, and every state has rules these forms do not recite.
Tool 1 — Adjusted earnings worksheet
| Line | Year -2 | Year -1 | TTM |
|---|---|---|---|
| Reported net income | |||
| + Interest | |||
| + Taxes | |||
| + Depreciation and amortization | |||
| = EBITDA | |||
| ± Owner compensation to market | |||
| + Non-working family payroll | |||
| + Personal expenses (documented) | |||
| ± Related-party rent to market | |||
| + Non-recurring legal / casualty | |||
| ± Discontinued lines | |||
| − Replacement cost of owner labor | |||
| − Deferred maintenance normalization | |||
| − Required capital expenditure run rate | |||
| = Adjusted EBITDA |
☐ ⚠ Every add-back needs documentation. An undocumented add-back is worth nothing at the negotiating table. ☐ Show the calculation to the buyer's accountant early; surprises during diligence cost more than disclosure. ☐ Note the multiple effect: at 4×, a $50,000 disputed add-back is $200,000 of price.
Tool 2 — Risk factor scoring sheet
| Factor | Assessment | Multiple effect |
|---|---|---|
| Largest customer as % of revenue | ⚠ Above 25% is a material discount | |
| Top three customers as % of revenue | ||
| Recurring / contracted revenue % | ⭐ Premium | |
| Owner's role in sales | ||
| Owner's role in operations | ||
| Documented procedures exist | ☐ | |
| Second-in-command in place | ☐ | ⭐ Premium |
| Key employees under agreements | ☐ | |
| Supplier concentration | ||
| Industry trajectory | ||
| Regulatory exposure | ||
| Working capital intensity | ||
| Capital expenditure requirement | ||
| Litigation history | ||
| Systems maturity | ||
| Indicated multiple range |
Tool 3 — Confidentiality agreement outline
MUTUAL CONFIDENTIALITY AND NON-SOLICITATION AGREEMENT
1. Purpose. Evaluation of a possible acquisition of [Company].
2. Confidential Information. All non-public information disclosed, in any form, including financial, customer, employee, pricing, technical, and operational information, and the existence and terms of these discussions.
3. Exclusions. Information that is public through no fault of the recipient; independently developed; rightfully received from a third party without restriction; or required to be disclosed by law, with prior notice to the disclosing party where permitted.
4. Use restriction. Solely for evaluating the transaction. No use in the recipient's business, and no reverse engineering.
5. Representatives. Disclosure limited to those with a need to know, who are bound to these terms; recipient responsible for their breaches.
6. ⚠ No contact. Recipient will not contact any employee, customer, supplier, or lender of [Company] regarding the transaction without prior written consent, and will direct all inquiries through [name].
7. Non-solicitation. For [24] months, recipient will not solicit for employment any employee of [Company] with whom it had contact, subject to a general-advertising carve-out.
8. Return or destruction. On request or termination, with a certificate of compliance; archival copies permitted subject to continuing obligations.
9. No representation. Information is provided without representation or warranty except as set forth in a definitive agreement.
10. Remedies. Injunctive relief without bond, in addition to other remedies.
11. Term. [3] years, and perpetual as to trade secrets.
☐ ⚠ Get this signed before any financial detail leaves the building. ☐ Add a standstill provision if the buyer is a competitor. ☐ Consider a clean-team protocol for competitively sensitive data.
Tool 4 — Letter of intent template
LETTER OF INTENT — [Date]
1. Transaction. Buyer proposes to acquire [all or substantially all of the assets of / all of the equity of] [Company].
2. Purchase price. $[ ], on a cash-free, debt-free basis, subject to a working capital adjustment against a target of $[ ], payable: $[ ] cash at closing; $[ ] into escrow for [18] months; $[ ] seller note; $[ ] earnout as described in Exhibit A.
3. Structure and tax. [Asset purchase with allocation under 26 U.S.C. § 1060 / equity purchase, with the parties to evaluate an election under 26 U.S.C. § 338].
4. Diligence. Buyer will complete diligence within [45] days. Seller will provide the materials listed in Exhibit B.
5. Definitive agreement. Customary for a transaction of this type, including representations, disclosure schedules, indemnification with a [1]% basket and a [15]% cap, [18]-month survival for general representations, and longer survival for fundamental and tax representations.
6. Conditions. Financing; landlord consent; transfer or reissuance of [licenses]; consent of [key customer]; satisfactory environmental assessment; no material adverse change.
7. Covenants. Seller will operate in the ordinary course and will not make extraordinary distributions or commitments.
8. ⚠ BINDING PROVISIONS. Paragraphs 8 through 12 are binding. All other paragraphs are non-binding expressions of intent and create no obligation to negotiate or close.
9. Exclusivity. Through [date, 60–90 days], Seller will not solicit, negotiate, or provide information to any other prospective buyer, and will notify Buyer of any unsolicited approach.
10. Confidentiality. The agreement dated [ ] remains in effect.
11. Expenses. Each party bears its own.
12. Governing law. [State].
Accepted: [signatures and date]
☐ ⚠ Paragraph 8 is the whole letter. Say plainly what binds. ☐ Do not agree to exclusivity without an end date. ☐ Name the closing conditions now; adding them later reads as retrading.
Tool 5 — Working capital definition and sample calculation
WORKING CAPITAL means, as of the Closing, (a) the sum of the Included Current Assets, minus (b) the sum of the Included Current Liabilities, in each case determined in accordance with the Accounting Principles and calculated consistently with the Sample Calculation attached as Exhibit [ ].
| Included Current Assets | Excluded |
|---|---|
| Accounts receivable, net of the reserve computed as in the Sample Calculation | Cash and cash equivalents |
| Inventory, valued as in the Sample Calculation | Related-party receivables |
| Prepaid expenses transferring to Buyer | Income tax receivables |
| Deposits transferring to Buyer | Insurance claim receivables |
| Included Current Liabilities | Excluded |
|---|---|
| Accounts payable | Indebtedness |
| Accrued payroll and payroll taxes | Transaction expenses |
| Accrued vacation | Income taxes |
| Customer deposits and deferred revenue | Related-party payables |
| Accrued expenses | Amounts included in the Excluded Liabilities |
☐ ⭐ Attach a sample calculation using an actual historical month. This one exhibit prevents most post-closing disputes. ☐ State that the Accounting Principles control over any later change in methodology. ☐ Set the target as a trailing twelve-month average adjusted for seasonality, and show the months. ☐ Provide for an estimate at closing and a true-up within [60] days. ☐ Provide a dispute mechanism: a neutral accountant, deciding only the disputed line items, within the range of the parties' positions, with fees allocated by outcome. ☐ ⚠ Calendar the objection deadline. Silence makes the other side's statement final.
Tool 6 — Earnout term sheet
| Term | Entry |
|---|---|
| Measurement period(s) | |
| ⭐ Metric (prefer revenue or units over EBITDA) | |
| Definition of the metric, with worked example attached | ☐ |
| Baseline / threshold | |
| Payment formula | |
| Cap | |
| Payment timing after each period | |
| Accounting principles; ⚠ no changes affecting the metric | ☐ |
| ⭐ Ordinary-course operating covenant during the period | ☐ |
| Prohibition on diverting customers or costs to affiliates | ☐ |
| Seller's information and reporting rights | ☐ |
| Seller's audit right and cost allocation | ☐ |
| Acceleration on sale of the business | ☐ |
| Acceleration on termination of seller's employment without cause | ☐ |
| Right of set-off against indemnity claims | ☐ |
| Dispute mechanism | |
| Tax characterization of earnout payments |
⚠ Earnouts produce more litigation than any other term. The three provisions that prevent it are a metric the buyer cannot manipulate, an ordinary-course covenant, and an audit right.
Tool 7 — Indemnification term sheet
| Term | Buyer proposal | Seller proposal | Agreed |
|---|---|---|---|
| Survival — general representations | |||
| Survival — fundamental representations | |||
| Survival — tax representations | |||
| Survival — covenants | |||
| Basket amount | |||
| Basket type (deductible / tipping) | |||
| Mini-basket per claim | |||
| Cap — general | |||
| Cap — fundamental | |||
| Escrow amount and term | |||
| Exclusive remedy; fraud carve-out | |||
| ⚠ Sandbagging (pro / anti / silent) | |||
| Materiality scrape for damages | |||
| Third-party claim: notice, control, settlement consent | |||
| Set-off against earnout or note | |||
| ⭐ Specific indemnities (list, each with its own escrow and survival) | |||
| Representation and warranty insurance |
⭐ Fill in the specific-indemnity row before anything else. Known, quantified exposures — misclassification, unremitted sales tax, a defined environmental condition, a pending case — belong outside the basket and cap, with dedicated escrow and a survival period matched to the underlying limitations period.
Tool 8 — Consents and approvals tracker
| Item | Authority | Owner | Requested | Received | Blocking? |
|---|---|---|---|---|---|
| Landlord consent to assignment | Lease | ⚠ | |||
| Landlord estoppel certificate | Lease | ||||
| Lender payoff letter and per diem | Loan documents | ⚠ | |||
| UCC-3 terminations | Filing office | ⚠ | |||
| ⚠ Personal guarantee releases | Lender / landlord | ⚠ | |||
| Key customer consent | Contract | ⚠ | |||
| Supplier consent | Contract | ||||
| Franchisor consent and transfer fee | Franchise agreement | ||||
| License transfer or reissuance | Agency | ⭐ ⚠ | |||
| Professional ownership eligibility | Board | ||||
| Premerger notification | 15 U.S.C. § 18a; 16 C.F.R. part 801, 16 C.F.R. part 802, 16 C.F.R. part 803 | ||||
| Substantive antitrust review | 15 U.S.C. § 18; 15 U.S.C. § 1; 15 U.S.C. § 2 | ||||
| Sales and use tax clearance | State | ⚠ | |||
| Employment tax clearance | State | ⚠ | |||
| Bulk sale notice | State | ||||
| WARN notice | 29 U.S.C. § 2101, 29 U.S.C. § 2102, 29 U.S.C. § 2103, 29 U.S.C. § 2104, 29 U.S.C. § 2105 | ⚠ | |||
| Health continuation allocation | 29 U.S.C. § 1161 | ||||
| Environmental site assessment | 42 U.S.C. § 9601, 42 U.S.C. § 9607 | ⚠ | |||
| Title commitment and survey | Title company | ||||
| Insurance binder and tail coverage | Broker |
⭐ Put a name in the Owner column for every row in week one. Unowned rows are why closings slip.
Tool 9 — Landlord consent request
[Date] — [Landlord], Attn: [ ]
Re: Request for consent to assignment — Lease dated [ ], Premises [ ]
[Tenant] has agreed to sell [its business / the assets of its business] to [Buyer], with closing scheduled for [date]. Section [ ] of the Lease requires Landlord's consent to assignment, not to be unreasonably withheld.
Enclosed for Landlord's review: [Buyer]'s financial statements; a description of [Buyer]'s business and experience operating [ ]; the proposed Assignment and Assumption of Lease, under which Buyer assumes all obligations arising from and after closing; and [Buyer]'s proposed [guaranty / security deposit].
[Tenant] also requests an estoppel certificate confirming the current rent, the expiration date, the security deposit held, the absence of any default, and any options.
[Tenant] requests that Landlord release [guarantor] from the personal guaranty dated [ ] effective at closing, given [Buyer]'s assumption and [the replacement guaranty / the increased deposit].
Please respond by [date]. We are available to answer questions and to meet with Landlord.
[Name, contact]
☐ ⚠ Send this in week one. Landlords use consent as leverage and are rarely fast. ☐ Anticipate a request for a term extension, a rent increase, or a new guaranty. ☐ ⚠ The guarantor release must be a signed document, not a promise.
Tool 10 — Tax clearance and guarantee release letters
TAX CLEARANCE REQUEST
[Date] — [State Department of Revenue]
Re: Request for tax clearance certificate — [Company], Account No. [ ]
[Company] is selling [its assets / its equity] to [Buyer], with closing scheduled for [date]. Pursuant to [state statute], [Company] requests a certificate stating that all [sales and use / employment / franchise] taxes have been paid or, if not, the amount required to be withheld from the purchase price.
Enclosed: [powers of attorney; returns for the periods requested; account identifiers].
Please direct correspondence to [name].
GUARANTEE RELEASE REQUEST
[Date] — [Lender / Landlord]
Re: Release of personal guaranty — [Guarantor], dated [ ]
The obligation guaranteed will be [paid in full at closing on [date] / assumed by [Buyer] with your consent]. Enclosed is the payoff quote / assumption agreement.
Please execute and return the enclosed Release of Guaranty, effective on [payment / closing]. [Guarantor] requires the executed original at closing.
[Name, contact]
☐ ⚠ Hold back purchase price until clearances issue. Successor liability for the seller's unpaid tax is a common statutory rule. ☐ ⚠ A guarantee is not released by paying the loan. Get the paper.
Tool 11 — Purchase price allocation schedule
Prepared under 26 U.S.C. § 1060; both parties must report consistently.
| Class | Assets | Allocated amount | Seller treatment | Buyer recovery |
|---|---|---|---|---|
| I | Cash and equivalents | None | None | |
| II | Marketable securities | Capital | Basis | |
| III | Accounts receivable | Ordinary, generally | Collection | |
| IV | Inventory | ⚠ Ordinary | COGS | |
| V | Equipment, furniture, vehicles, real property | ⚠ Recapture ordinary; 26 U.S.C. § 1231 for the balance | Depreciation | |
| VI | Intangibles other than goodwill, including the non-compete | ⚠ Ordinary for the covenant | ⭐ 15-year, 26 U.S.C. § 197 | |
| VII | Goodwill and going concern value | Capital | 15-year, 26 U.S.C. § 197 | |
| Total |
☐ ⚠ Negotiate this schedule; do not accept it as an afterthought. It moves real money between the parties. ☐ Confirm the entity's structure and any election under 26 U.S.C. § 338, and whether stock qualifies under 26 U.S.C. § 1202 or permits rollover under 26 U.S.C. § 1045. ☐ For equity consideration, review 26 U.S.C. § 368 and 26 U.S.C. § 351; distributions of appreciated property are governed by 26 U.S.C. § 336.
Tool 12 — Closing document checklist
☐ Purchase agreement, executed, with all schedules and exhibits ☐ Disclosure schedules, dated as of closing ☐ Bill of sale ☐ Assignment and assumption agreement ☐ Intellectual property assignments, in recordable form ☐ Deed, transfer tax filings, and title policy ☐ Vehicle title transfers ☐ Lease assignment with landlord consent and estoppel ☐ Non-compete and non-solicitation agreement ☐ Consulting or transition services agreement ☐ Escrow agreement, with the escrow funded ☐ Seller note and security agreement, if applicable ☐ Payoff letters; lien release authorizations; UCC-3s ready to file ☐ ⚠ Executed personal guarantee releases ☐ Officer's and secretary's certificates; resolutions ☐ Good standing certificates ☐ Resignations of officers and directors, if an equity deal ☐ Legal opinions, if required by a lender ☐ FIRPTA certificate, if real property is involved ☐ Closing statement and flow of funds, agreed in writing ☐ Estimated working capital certificate ☐ Purchase price allocation schedule ☐ Employee offer letters and new restrictive covenant agreements ☐ Insurance certificates, including tail coverage ☐ Keys, credentials, banking access, and records ☐ ⚠ Wire instructions confirmed by voice to a known number
Tool 13 — Working capital true-up worksheet
| Line | Estimate at closing | Actual | Difference |
|---|---|---|---|
| Accounts receivable, net | |||
| Inventory | |||
| Prepaid expenses | |||
| Deposits | |||
| Total included current assets | |||
| Accounts payable | |||
| Accrued payroll and taxes | |||
| Accrued vacation | |||
| Deferred revenue / customer deposits | |||
| Other accrued expenses | |||
| Total included current liabilities | |||
| Working capital | |||
| Target | |||
| Adjustment owed to Buyer / Seller |
☐ Compare to the Sample Calculation exhibit, line for line. ☐ ⚠ Calendar the objection deadline the day the statement is delivered. ☐ Object in writing, itemizing each disputed line and the amount. ☐ Follow the neutral accountant procedure exactly; ad hoc negotiation outside it can waive rights.
Tool 14 — Indemnity claim notice
[Date] — [Seller / Buyer] and [Escrow Agent]
Re: Notice of Indemnification Claim — Purchase Agreement dated [ ]
Pursuant to Section [ ], [Party] gives notice of a claim for indemnification.
1. Basis. Breach of the representation in Section [ ], which stated: "[quote]."
2. Facts. [Describe what was discovered, when, and how.]
3. Damages. $[amount], comprising [itemize]. [If not yet determinable: "The amount is not yet fully determinable; a good-faith estimate is $[ ] and this notice is given within the survival period to preserve the claim."]
4. Survival. This claim is asserted within the survival period, which expires [date].
5. Escrow. [Party] requests that the Escrow Agent hold $[amount] pending resolution.
6. Third-party claim. [If applicable: identify the claim, attach the pleading or demand, and state whether the indemnifying party elects to assume the defense within the period required.]
[Name, contact]
☐ ⚠ Give notice before the survival period expires, even if the amount is unknown. ☐ Follow the notice provisions exactly — address, method, and copies. ☐ Tender third-party claims promptly; failure to tender can forfeit indemnity. ☐ Contract enforcement generally: contracts and drafting, reviewing, and enforcing a contract.
Tool 15 — Routing table
Closing card
⭐ Three exhibits prevent most post-closing litigation: the sample working capital calculation, the worked earnout example, and the excluded-liabilities schedule. None of them is hard to write. All of them are routinely omitted.
⚠ Three items delay most closings: licenses, landlord consent, and lien releases. Assign an owner to each in week one.
⭐ One rule for sellers: nothing is released until you hold the signed release. Payoff letters, guaranty releases, and lien terminations are documents, not intentions.