Wondering as how one can sell a business entity as a going concern in India ? Usually a businessman seek for an opportunity to revive business by selling it through a franchise or a trademark agreement rather than offering the whole concern in a slump sale agreement. But for an investor to invest in a franchise or through a trademark agreement is not as profitable as acquiring the original entity in full.
Even after making a huge payment to franchisor or for trademark approvals, an uncertainty still persist that upon receiving a better deal, the first owner might sell his idea to some other investors also or he might be trapped in some other legal issues from the seller.
Getting into a Slump Sale agreement of business is much safer and profitable, than acquiring rights of any business through other means. Slump Sale agreement is a transfer agreement of a business undertaking, wherein possession and the rights over all assets as well as liabilities are transferred to other person/entity and the whole concern/undertaking/division as a single unit is sold for the lumpsum consideration. This specifically means that the entity will remain in the business as such and the ownership/stake of the owners is transferred as a whole without ascertaining the individual values to available assets and resources.
Slump sale of an entity/business can be done to any corporate or non-corporate entity ; it can be a sale agreement of single undertaking or multiple undertakings ; the consideration in such an agreement is paid in lump sum not specifying any particular asset or allocating value to individual asset and is paid in consideration either by cash or by issuing ownership rights in the business of transferee. When the consideration is paid by issuing rights in corresponding business instead of cash then the transaction is called slump exchange and not slump sale.