Business Lawyer for Buying or Selling a Small Business in Texas
Many situations can lead to a business sale or purchase. Owners may want to transfer ownership through a business succession plan. Entrepreneurs may want to buy a business already in full operation rather than start a business from the ground up. One business may want to buy another business. For each situation, specific legal requirements should be satisfied. Failure to satisfy applicable legal requirements and deadlines may impede the sale or purchase. Working with a business law attorney can help avoid many of these issues.
I work with startups and seasoned businesses. Whether you want to buy or sell a business, I can guide you through the steps and address legal issues. Send me an email at [email protected] or call me at (713) 984-9400.
The Process to Buy or Sell a Small Business in Texas
Despite its size, buying or selling a small business can be complex. While the specific process varies, some critical steps in the sale process exist.
Both parties may want to obtain an independent valuation of the business before advertising a business for sale or making an offer. It helps the seller price the business appropriately and gives the buyer a basis for negotiations.
Before agreeing on the sale of a business, buyers and sellers enter preliminary negotiations over key terms. This includes price, the transaction structure, and any preconditions of sale.
A vital step of the process for a buyer is due diligence to confirm the commercial value and viability of the business. Legal due diligence involves reviewing the business's commercial documents.
Drafting Necessary Agreements
Buying or selling a business involves a lot of documents, such as:
Letters of intent
Bills of sale
Assignment of leases
Nondisclosure or confidentiality agreements
A business lawyer can advise, draft, and negotiate these documents.
In a pre-closing review, the parties confirm that all the required steps have been taken. This includes ensuring any necessary consents and approvals have been obtained–like those needed from landlords or suppliers.
The sale is typically closed when the buyer pays the agreed amount, and the seller delivers the documents required by the agreement governing the sale and purchase.
What's the Business Worth?
Buyers and sellers may want to obtain an independent business valuation (to ensure they're seeking a realistic price) and the buyer (to make sure they don't overpay).
While it's possible to run general numbers yourself, many people seek the services of a professional business appraiser to value the business. Business valuation can be a complex process with several ways to approach it.
A business valuation typically considers several factors and business operations, including:
Other financial metrics
Business debts and liabilities
An accurate appraisal can help the seller and the buyer.
Three Legal Issues to Consider When Selling a Business in Texas
If you're selling a business, you should know about potential legal issues that may arise. A few of the most common issues often involve these three situations.
Confidentiality agreement. During due diligence, the buyer must have full access to the business's financial and other records. Ask the buyer to sign a confidentiality agreement before letting them view this information.
Indemnification. Buyer may ask seller to indemnify the sale or take financial responsibility for any claims arising from an event occurring before the sale closes.
Continued employment. Buyers will often ask a seller to stay on with the business for some time after the sale and assist with the transition. The specific terms of this should be set out in the sale contract or a separate employment agreement signed at closing.
Three Legal Issues to Consider When Buying a Business in Texas
If you are in the market to buy a business, there are legal issues you should consider. Most involve one or more of these matters.
Non-compete agreement. You may want the seller to sign a non-compete agreement to prevent them from immediately opening a competing business.
Assets in the purchase agreement. All the assets of a business must be listed in the purchase agreement to ensure they form part of the sale.
Due diligence. Due diligence is a complex and potentially lengthy process that a qualified professional should undertake to ensure nothing is missed.
A business lawyer is best placed to provide sound advice on the above matters.
How Will a Business Lawyer in Texas Help When Selling or Buying a Small Business?
Whether you're a buyer or a seller, a business lawyer can help you navigate the transaction and any potential legal issues that arise during it. They can represent your interests during the negotiation process and ensure all sale documents are drafted correctly and legally binding.
A business lawyer can conduct legal, due diligence on the sale.
If you are planning to buy or sell a business in Texas, I can provide legal help for the transaction for your next steps after the transaction. I can help you consider legal matters to be addressed or that may arise in the purchase or sale of a business. Email me or call today at (713) 984-9400.
This informational article from the law offices of Thomas D. Solomon is provided as a courtesy to provide information regarding buying or selling a business. It is not and is not intended to be an exhaustive treatment of its subject matter but an overview of some elements of such transactions. It is not intended to be legal advice or a legal opinion and should not be relied on in making legal or business decisions. If you have questions, please call or email.