Houston is a thriving market for business buyers and sellers. Countless businesses change hands every year, so there is a never-ending flood of opportunities for entrepreneurs. However, the sale process is fraught with legal intricacies, and no one should approach a business transaction without legal representation. For anyone hoping to buy or sell a business, Houston business lawyers are a source of valuable advice. The bottom line is that when you’re buying or selling a business in Houston, legal guidance is essential. Here’s a closer look at key legal aspects of buying a business or selling one.
Business lawyers help clients navigate business sales on an almost daily basis, and their familiarity with the process makes them well-equipped to ensure you get the maximum value out of the sale while avoiding potential pitfalls.
Key Legal Aspects of Buying a Business
Buying a business is a complex process, and every detail is essential if you want to ensure a successful sale.
Due Diligence
Every major purchase should be a well-researched one, and a business is no different. That research process is known as due diligence. Business sale due diligence should involve a thorough investigation that includes looking at the following:
- Financial records
- Existing customers
- Policies and other legal documents
- Contracts with vendors
- Licenses and permits
- The status of any pending litigation.
Don’t rush this step. If there are any major issues, you should know about them as soon as possible.
Purchase Agreements
Business purchase agreements involve many different clauses. If you decide to go ahead with the purchase, make sure to discuss the following with the seller:
- Total purchase price
- Payment terms
- Closing conditions
- Indemnification clauses
- Allocation of assets
- Representations and warranties.
This isn’t an exhaustive list, but your business lawyer can help guide you through what to discuss before buying.
Financing
Unless you’re purchasing the business outright, you’ll need to arrange financing. These are some of the options you may choose from:
- Small Business Administration (SBA) loans
- Bank loans
- Seller-provided loans
- Venture capital financing.
Some financing options may include a clause holding you liable for payment if your business defaults. Make sure you fully understand the terms of any financing agreement before you sign.
Transfer of Ownership
When you take over a business, the process of ownership transfer is rarely a quick handover. The seller will need to transfer any licenses or permits to you. Different licensing agencies have different procedures for this transfer.
Considering buying or selling a business? Call Weisblatt Law Firm at (713) 666-1981 to book a free phone consultation.
Key Legal Aspects of Selling a Business
Selling a business comes with its own considerations. Here’s an overview:
Valuation
Before selling, an accurate valuation is essential. Undervaluing your business means you may lose out on thousands of dollars, but overvaluing means selling may be a challenge. The best way to ensure your business is accurately valued is to hire a business appraiser.
Non-Disclosure Agreements (NDAs)
You likely will give would-be buyers more information than you’d give the general public. To protect your business interests, you may want to consider asking them to sign NDAs.
Negotiating Offers
While you may want to make some concessions to secure a sale, that doesn’t mean you need to neglect your own interests. With a planned negotiation strategy, you can strike a balance.
Compliance With Legal Requirements
Before selling, make sure you fully understand the tax implications of a sale. You should also be familiar with the existing laws and regulations surrounding the sale of a business.
Benefits of Having a Lawyer Throughout the Process
Whether You’re Buying or Selling, the Right Representation Makes a Difference
Even if you have purchased or sold a business in the past, there are many benefits to working with an attorney. Here’s how your lawyer can assist with the process.
Protecting Your Interests
Business lawyers have a keen eye for potential issues with a sale, and they can identify risks and help you mitigate them.
Negotiating Favorable Terms
With a business purchase agreement, there is ample room for negotiation. Your lawyer can advocate for you and attempt to negotiate terms that are in line with your best interests.
Ensuring a Smooth Transaction
Unless you have extensive experience buying and selling businesses, you need a business lawyer to help you navigate legal complexities and ensure the sale goes smoothly.
Avoiding Costly Mistakes
In a business transaction, there are many possible mistakes that may lead to unexpected financial losses. Your lawyer can help you avoid them.
Peace of Mind
Business sales can be highly stressful. However, when you have a knowledgeable advocate, you can enjoy peace of mind throughout the process.
How a Houston Business Lawyer Can Help
If you’re looking to sell or buy a business, Houston business lawyers can handle a significant portion of the legwork for you and ensure the sale is properly completed.
Conducting Due Diligence
Your attorney can conduct due diligence and inform you of any potential issues with the business.
Drafting and Reviewing Contracts
A business sale should never involve a standard contract template. Your lawyer can draft a contract tailored to your specific sale.
Advising on Legal and Tax Implications
Purchasing or selling a business can create significant tax and legal liability. A skilled business lawyer can help you minimize both.
Representing You in Negotiations
The negotiation process is a critical one, and having a skilled negotiator on your side may help you save a considerable amount of money.
Facilitating the Closing Process
The closing process comes with complex legal requirements. Business lawyers handle closings regularly, and they can ensure you have a smooth transfer of ownership.
Getting Ready to Buy or Sell a Business?
Weisblatt Law Firm Is Here for You
Whether you are selling or buying a business, you shouldn’t risk navigating a transaction yourself without legal guidance. A business lawyer may be able to negotiate a deal structure that is favorable to you, and they can also help ensure you stay compliant with relevant laws and avoid costly mistakes. Andrew Weisblatt, the founder of Weisblatt Law Firm, has been assisting Houston business owners with even highly complex business transactions since 1992. Let his team put their experience to work for you.
Don’t begin the process of buying or selling a business without legal guidance. Call Weisblatt Law Firm at (713) 666-1981 for a free phone consultation.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
