Thomas P. Finley Jr

Attorney and Counselor at Law
Thomas Finley

Drafting Agreements and Contracts for the Purchase or Sale of Businesses in Dallas and waco, TX

The purchase or sale of businesses in Dallas and Waco, TX, can be highly complex and can involve many issues. The complexity of the sale or purchase of a business will depend on its legal status and the buyer and seller’s conditions. These complexities are on top of the issues and agreements regarding how the sale or purchase is structured.

The parties to a sale or purchase agreement might have special considerations, including covenants not to compete, intangible property rights, employment contracts, retirement plans, and indemnification provisions that are needed to name a few. Dallas and Waco business contract lawyer Thomas P. Finley, Jr. drafts agreements for the sale and purchase of businesses. The client will provide the information based on terms previously agreed upon by the seller and buyer. Contact us for a consultation on buying or selling a business in Dallas and Waco Texas. 

The following is a summary and general overview of some considerations in the purchase and sale of the business, considering its particular form.

Sale and Purchase of a Corporation

Suppose a company is incorporated; a sale or purchase of an incorporated business may be accomplished either by buying or selling the corporation’s assets or the stock owned by individual shareholders. The corporation’s purchaser may be one or multiple individuals, another corporation, a partnership, or other business entities.
Suppose you are considering the purchase or sale of a corporation. In this case, specific corporate approvals and possibly government approvals may be needed when another corporation is the buyer. Close corporations usually have stock certificates with restrictions and a shareholders’ agreement that may have restrictions on the sale or purchase.
Subchapter S corporations have certain conditions under the Internal Revenue Code provisions. Additionally, the sale may trigger rights under the corporation’s related agreements. The sale and purchase of a corporation can be achieved by the purchase and sale of the corporation’s stock or assets.

Purchase and Sale of Shares of Stock

Buying or selling the shares of stock means all or part of the corporation’s shares might be sold. The sale of all the corporation’s shares of stock at the same time to the same purchaser/s makes up a sale of the business. The buyer/s becomes the owner/s of all the corporation’s assets and usually assumes known and unknown liabilities of the company.

Purchase and Sale of Assets

In buying or selling the corporation’s assets, the shareholders may agree to sell some or all of the business’ assets and not their stock. Suppose all the assets were sold to a buyer, and the transaction is not in the usual and regular course of business. In that case, the sale will need the board of directors’ approval and at least two-thirds of the shareholders’ vote, unless provided otherwise in the certificate of formation, under Tex. Bus. Orgs. Code 21.457.

Minority shareholders may have the right to dissent to the sale and force the selling corporation to value their shares and buy them at the established amount, according to Tex. Bus. Orgs. Code 10.354. A sale of a corporation’s assets subjects the purchaser to the corporation’s liabilities only if he or she specifically assumes the liabilities or as provided by statute Tex. Bus. Orgs. Code 10.254(b).

Purchase and Sale of a Sole Proprietorship

In selling or buying a sole proprietorship, the owners who sell it or other business that is not a corporation or partnership normally sell both the business’ assets and liabilities, if any. During negotiation, the parties determine whether the seller will sell all or only certain assets to the buyer and whether the purchaser will assume all or only particular liabilities as part of the transaction.
The sale and purchase agreement should contain a detailed list of the parties’ agreement on the sold assets and assumed liabilities. The sale and purchase of a sole proprietorship sometimes contain a covenant or agreement not to compete, indemnification agreements, and other agreements that are specific to the sole proprietorship business.

Purchase and Sale of a Partnership

A partnership’s sale or purchase may be accomplished by either one or multiple partners selling the partnership itself or their individual partnership interest, as an entity, sells the partnership assets. The seller and buyer of a partnership should agree on what specific liabilities the buyer will assume as a part of the sale and purchase of the partnership. It is always crucial to review the partnership agreement and its purchase and sale agreement terms.

FAQs When Buying or Selling a Business

Dallas business lawyer Thomas P. Finley, Jr. drafts agreements for the sale and purchase of a business using the information provided by the client based on terms previously agreed upon by both the seller and buyer. Contact Thomas P. Finley for a consultation.
A prospective business seller or buyer can also consider the following information, which summarizes some general questions, FAQs, and information to consider when drafting an agreement for the sale and purchase of a business:
  1. What is/are the name/s, telephone number, and address of each person authorized by the seller to be contacted concerning terms of the sale, collection of information, negotiations, and final approval of the contract for purchase or sale of the business?
  2. What are the business’ name and address?
  3. What type of business is being sold or purchased, and what kind of business is it engaged in doing?
  4. How many employees does the business have, if any?
  5. What is the federal employer’s identification number (FEIN)?
  6. Does the business being sold have a Texas Workforce Commission (TWC) account number?
  7. Are there permit and license numbers held by the business that are being sold, such as alcoholic beverage licenses and/or sales tax permits?
The buyer and purchaser’s agreement should include details on the purchase price, including the total purchase price and consideration being paid for the total purchase price, such as stock, exchange of property, cash, promissory notes, etc.
  1. Is the agreement for the sale and purchase of stock in the business?
  2. Is the purchase and sale of the assets in the business?
  3. Is there an agreed proposed closing date for purchase and sale?
  4. What is the seller’s legal status? For example, is the seller a corporation, individual seller, partnership, LP, or LLC?
  5. What is the legal status of the purchaser? For example, is the purchaser a partnership, corporation, LP, individual purchaser, or LLC?
  6. What is the financial status of the parties and businesses being sold? Have the seller and buyer discussed the financials of both parties?
  7. What is the purpose of the business’ proposed purchase or sale? Is it distress or business opportunity?
  8. Does the business have any threatened or pending litigation or claims against it?
  9. Is there a value, description, and tax basis for each asset? Have the parties retained a CPA?
  10. Does the business being sold have a list of liabilities and a description and nature of each liability?
Name, telephone number, and address of any escrow agent and/or broker proposed to be involved in the sale.
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