Digital Agency Sale and Purchase Agreement

What a good one includes

• A detailed schedule listing all client accounts, proprietary software, active domains, social media profiles, and historical brand collateral being transferred.
• Clear terms outlining how client contracts are assigned to the buyer and who is responsible for securing any necessary client consents.
• Guarantees confirming the seller owns or has the right to transfer all custom code, designs, and digital assets developed for past and current clients.
• A precise breakdown of the purchase price, including upfront cash, seller financing terms, and performance-based earn-out milestones with exact calculation formulas.
• Clauses defining whether agency staff will be terminated and rehired, transferred directly, or if key developers have retention agreements in place.
• Geographically and temporally restricted covenants preventing the seller from starting a rival agency or poaching existing clients and staff.

Common mistakes to avoid

• Many buyers fail to clarify who owns the code for ongoing projects, leading to post-sale disputes with clients over IP ownership.
• Parties often neglect to include a walk-away clause or price adjustment if a major client representing a huge percentage of revenue leaves during the transition period.
• Sellers frequently agree to 'reasonable transition support' without defining the exact hours or scope, resulting in them working for free as an unpaid consultant for months.
• Buyers and sellers often write vague performance metrics for earn-outs, which inevitably leads to disagreements over how net revenue or profit is calculated post-sale.

Frequently asked questions