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Validation of Sale Authorization Contract
May 11, 2026
Sale Authorization Contract (SAC)
(between Deal-Maker (DM) & Vendor)
Justification Report (SAC)
Subject: Authority to Deal & Reward
Prepared for: Vendor
Prepared by: BizMerger.com
Prepared for: Vendor
Prepared by: BizMerger.com
Purpose of SAC
The SAC exists to protect DM’s interests while maintaining Vendor’s rights when DM introduces a Buyer. Unlike the Sale & Purchase Agreement (SPA), which is strictly between Vendor and Buyer, DM has no contractual protection under the SPA. SAC is therefore required to:
- Safeguard DM’s entitlement from introductions (direct or indirect).
- Prevent Vendor from bypassing DM once a Buyer is referred.
- Ensure clarity of obligations, timelines, and payments.
- Close gaps and loopholes that could expose either party to risk.
- Demonstrate Vendor’s seriousness in selling the business on pre‑agreed terms.
- Align some material terms that Vendor may expect from Buyer in the SPA.
Key Justifications
- Risk of Non‑Payment
- SAC ensures DM’s entitlement is based on performance, not Vendor’s goodwill.
- Pre‑agreed timelines and late fees provide certainty and fairness.
- Indirect Introductions
- Buyers often emerge through family, executives, or referrals. SAC ensures DM’s reward is preserved regardless of the path.
- Example: CFO inquires, CEO negotiates, owner signs SPA – all trace back to DM’s introduction.
- Market Realities & Economic Uncertainty
- SAC ensures realistic terms, avoiding delays or disputes that risk losing clients.
- In volatile markets, swift execution is critical; delays can erode business value or cause loss of Buyer.
- Goodwill Protection
- DM invests years building client goodwill. Forfeiture terms balance potential losses DM faces if deals collapse.
- Vendor should not gain at DM’s expense when forfeited deposits arise.
- Balance of Interests
- SAC respects Vendor’s ownership rights while protecting DM’s introductions and fees.
- Vendor retains discretion on sale terms, but DM’s entitlement remains safeguarded.
- Company Position – Going Concern
- Sale premium reflects goodwill and operational continuity (curriculum, staff, students, assets, deposits).
- Vendor may withdraw cash but must clear liabilities.
- Reasonable non‑competition clause ensures Buyer confidence.
- Forfeiture of Buyer’s Payment
- If Buyer defaults, DM loses client and goodwill.
- Vendor remains full owner and secures forfeited sums.
- SAC ensures DM receives a fair share (capped at BF), while Vendor retains full sale proceeds thereafter.
Closing Statement
The SAC provides fairness, clarity, and protection for both parties. Vendor retains full control of the business, while DM is safeguarded against loss of clients, goodwill, and rightful fees. By agreeing to SAC before Buyer introduction, both parties act reasonably, ensuring smooth and swift transactions.
Reward under SAC is earned through DM’s effort and introductions—it is not a gift or donation. In today’s uncertain economic climate, prompt action is essential. Better terms later are of no use if the client is lost or the market weakens. SAC ensures both Vendor and DM safeguard each other’s interests and progress swiftly to secure the Buyer.
Q&A Q&A Q&A Q&A Q&A Q&A Q&A Q&A
Vendor: only wants only to state to sell 100%, no compromise.
DM: The SAC likely become incomplete since there dozens of reasons that the deal proceed despite its not 100% sale like (a) Ven offered to keep 5% share (extra from SalePrice) (b) Buyer offers Vendor job for 1-yrs and pays salary of $20k/mth but Ven keeps 10% shares. (c) Ven found a matching that he can't refuse, etc ....
Vendor: I don't want Forfeiture clause; only want genuine Buyer & sell 100%.
DM: Excluding Forfeiture clause can cause
- misuse by Buyer, cost both Ven & DM, loss of opportunity
- can even cause reputation lost, create competitor for our ignorant - increase risk of non-performance, insecurity, etc
Vendor: I want to be paid by Escrow Account
DM: there is a cost, conflict of interest, beneficiary uncertainty when contested, costly to contest, issue of impartiality, policy, interpretation, etc end up unreliable satefy
DM: there is a cost, conflict of interest, beneficiary uncertainty when contested, costly to contest, issue of impartiality, policy, interpretation, etc end up unreliable satefy