Sales of Businesses In Texas
A sale or purchase of a business in Texas usually involves a purchase-sale contract, a due-diligence period, and a closing. While the heart of the transaction is governed by the purchase-sale agreement, other documents used in the sale might include deeds for real property, bill of sale for personal property, non-compete agreement for the seller, and various UCC (Uniform Commercial Code) forms.
Purchase of Assets or Entity
One of the most important decisions when conducting a business purchase/sale is whether the assets themselves are being conveyed or the entire business entity. Buyers generally prefer to purchase just the assets of the business as opposed to the entity itself. Purchase of the assets alone minimize the risk in acquiring undisclosed liabilities associated with the entity. However, some advantages to purchasing the entity might include acquiring an established credit rating, business lines with a bank, and current vendor accounts.
Due Diligence Period
One of the most critical aspects of buying a business is the period where a buyer has the opportunity to inspect and investigate the operations, records, and functions of the business being purchased. Common steps of the due diligence process include:
- Facilities Inspections
- Shareholder, partner or member Involvement
- Financial and Accounting Audits
- Tax Return Audits
- Customer and Vendor List Inspection
- Applicable Licensing and Regulatory Checks
- Environmental Tests
All purchase and sale agreements will include a date for closing when all the documents are signed and the consideration for the sale is provided by the buyer. Should the transaction involve the sale of real property, the closing would usually take place at a title company office. Should the sale of a business involve no real property, it is often more efficient for the closing to take place at a lawyer's office.
Use a Business Lawyer
Because of the complexities associated with a business sale in Texas, it is important to use a business lawyer to facilitate the sale. Feel free to use the form below to request a free consultation with a lawyer or call our office during regular business hours.