Maximize Advantage And Minimize Liability When Buying Or Selling A Business

Texas business lawyer Steven E. Clark welcomes the opportunity to advise investors or business owners preparing to buy or sell businesses. Early legal advice can help ensure that dealing for profit will keep risks at a minimum at the same time.

Keep in mind several key points when preparing to buy or sell a Texas business:

  • When real estate is involved, purchase and sale of the property may or may not be a component of the overall sale of the business.
  • Purchase or sale of a business may or may not involve transfer of all assets (possibly including raw materials, finished goods, equipment and/or employees, for example), location, expansion rights, intellectual property such as trademarks, goodwill, client lists, licenses, stock options and other components. Attempting to buy or sell a business without conducting a thorough inventory of what is included can lead to conflict, rude surprises, illusions of fraud and souring of the deal in general.
  • Due diligence, regardless of which side of the transaction you are on, will likely include paying for analysis and advice from professionals such as CPAs, property appraisers and brokers.
  • Determining the nature of your entity as you are going to buy a business is an essential part of planning: Will you operate the business as an LLC, a C corporation, an S corporation, a partnership or some other organizational structure? Clarifying your own business model will have an impact on negotiations and assumption of the business's operations.
  • Beware of taking on or passing on invisible liabilities without full disclosure: If you are going to buy or sell a business, a knowledgeable lawyer should do a thorough search for legal problems such as lawsuits or unpaid sales tax burdens that may go along with the acquisition.
  • The sale price is, of course, foundational in either a purchase or sale. Obtaining financing and structuring payments in cash or payment over time are examples of money matters that may form part of the purchase and sale agreement. Who will pay the cost of inspections? Which side will submit payroll taxes and sales taxes for the month of the transaction? Transparency goes a long way in preventing conflict or even litigation in connection with the sale.
  • Contingency clauses in the contract to buy or sell a business can provide a safety valve in case of the unexpected. What if the seller reneges on a pledge to include some key feature of the business? What if the buyer's financing collapses at the last minute?
  • Confidentiality is key to profitability in many cases. Include nondisclosure agreements, noncompete agreements and other safety features in the transaction to protect your interests, whether you expect to be the buyer or seller of the business.

Before Buying Or Selling A Business In Texas, Consult With An Experienced Transactional Attorney

Buying a business is risky at best. Selling a business should ensure release of liabilities as well as guaranteed receipt of funds. Be as proactive as you can through involvement of an experienced business lawyer from the early stages of scoping out the potential purchase of a business or preparing to sell. Prevent lawsuits and maximize financial advantages through careful planning and prospecting - including legal analysis.

Clark Firm PLLC in Dallas can guide you confidently through the steps involved in buying or selling a business in Texas with peace of mind. Call 469-513-1711 or inquire through an email message submitted through this website.