The Purchase Agreement: Your New Favorite 30-Page Romance Novel (Sort Of)

Thinking about buying an accounting practice? Congratulations—you’re about to get intimate with one of the most thrilling documents in business law: the Purchase Agreement.

Okay, thrilling might be a stretch. But if you want to avoid costly mistakes, get the deal you actually agreed to, and protect yourself when things go sideways, then yes—it should be thrilling. Or at least required reading.

Let’s break it down.

What Is a Purchase Agreement, Really?

Think of it as the user manual for your newly acquired firm. It tells you what you’re getting, what you’re not, what happens if something goes wrong, and how everyone is supposed to behave before and after closing.

Spoiler alert: you don’t want to be dusting this thing off months later and realizing it doesn’t say what you thought it did. That’s why, even though it’s not beach reading, you need to understand it before you sign.

The Seven Juicy Chapters (aka Sections) of a Standard Purchase Agreement

1. Article One: The Big Stuff

This is where you’ll find the purchase price, what assets are included, what’s excluded, and how you’re paying. Cash? Promissory note? Retention adjustment? It all lives here.

Also important: the “disclosure schedules.” If it says “you’re buying everything unless listed otherwise,” that schedule becomes your real asset list. Pay attention to who’s playing offense here—buyers want a broad list of what they’re getting. Sellers want to limit it.

2. Article Two: Closing Mechanics

This is where the bifurcated closing lives. Translation: you sign now, close later. Your agreement needs to cover both the present and the future. Think of it as drafting for time travel.

I’ll dig into this more in another post, because closing mechanics are a whole topic on their own. (Hint: if closing feels anticlimactic, that’s a good thing.)

3. Article Three: Reps and Warranties from the Seller

Here’s where the seller swears on their QuickBooks file that:

• They own what they’re selling

• Their financials are legit

• No one else secretly owns their client list

• They’re not being sued (or they are, and now you know about it)

It’s not just about trust—it’s about claims. If something turns out to be false, this is where your breach of contract claim lives.

Also, reps and warranties force sellers to disclose the weird stuff. That old wage claim? The former client is threatening a lawsuit? Better here than buried deep in “things we didn’t mention.”

4. Article Four: Buyer Reps and Warranties

Much shorter. Usually just says, “Yes, I exist, and I can enter into this agreement.” If the buyer is being sued, it might show up here, too.

5. Article Five: Covenants (aka Big Future Promises)

This is where we talk about non-competes, non-solicits, non-disparagement—basically, all the “please don’t ruin this for me later” clauses.

If you're the buyer, make sure your non-compete language actually covers the client list you're acquiring. If you're the seller, make sure you're not signing up to be permanently unemployed in your industry.

We’ll also see “further assurances” here, which is a fancy way of saying, “If we need to do another document to make this work, we’ll do it.”

6. Article Six: Indemnification

Ah, yes, the "who pays for what when stuff hits the fan" section.

This is where things get spicy. If a third party shows up suing the business for something that happened six months ago, this article decides who’s footing the legal bill.

Buyers and sellers often haggle here over survival periods, caps, and baskets. I’ll do a deeper dive in another post, because this one is a goldmine for law nerds.

7. Article Seven: Boilerplate (aka Legal Fine Print)

Don't skim this. Yes, it’s full of the classics—severability, integration, amendment clauses—but every so often, someone hides a landmine in here. Read it.

And make sure the right people sign. If you’re the buyer, you want the individual seller on the hook, not just their LLC, that’s about to disappear into the night. You’re not worried about the old firm name competing—you’re worried about Jim Anderson showing up down the block with a new sign and the same clients.

Final Thoughts (and One More Pro Tip)

If you made it this far, you either (a) secretly love contracts or (b) are trying very hard not to get sued after you buy a business. Either way, you’re my kind of person.

The purchase agreement is not just a formality. It’s the blueprint for your entire deal. Don’t treat it like a checklist item on your way to closing.

Need help understanding what you’re signing—or making sure your signature isn’t a future regret? That’s what we’re here for.