Key takeaways for “5 Things You Need To Know About Selling A Business in Texas”:
- Hire an attorney to help plan, negotiate and execute the sale of your business
- Be precise about the way you want to sell your business (asset vs entity)
- Make sure to complete and sign a purchase agreement
Are you ready to sell a business in Texas?
Selling a business is a lot of work. If you’re looking to sell, chances are you still have your hands full trying to run and operate your business during this process.
This article is designed to give you helpful tips that can help make this process simpler and more efficient for you.
5 Things You Need To Know About Selling A Business in Texas
There are a series of steps you have to take if you want to sell a business in Texas. They include:
- Ascertaining The Value Of The Business
- Gathering The Needed Documents And Records
- Handling Cash And Financing
- Taking Care Of Your Lease
- Doing Your Due Diligence
A business owner planning on selling a business in Texas should plan to spend a few months preparing to finalize the sale. The process requires careful preparation and an understanding of the legal concepts associated with selling a business in Texas.
Speak With An Attorney?
To ensure you have all the records and documents necessary to sell the business, you may want to get expert legal advice from an attorney who has experience dealing with all the intricacies selling a business.
An attorney well versed in corporate law can provide you with all the information you need for legally selling a business in Texas. They can help you to plan, negotiate and execute the sale of your business in the most profitable and expeditious way possible.
1. Ascertaining The True Value Of Your Business
It can be difficult to figure out how much your business is actually worth. To estimate the value of your business, research what businesses of similar size in your industry sold for recently. Consider hiring an expert in business valuation to review your business records and provide a qualified appraisal that’s based on what the current market conditions reflect. Having a professional appraisal of your business done will make you aware of the accurate value of your business, strengthen your bargaining position with buyers and help you get the best price possible.
2. Gathering The Needed Documents And Records
To sell your business in Texas, you need certain key documents and records. That includes critical incorporation paperwork and corporate filings, reports filed with the Secretary of State, as well as all other essential documents. An experienced attorney who specializes in business sales and ownership transfers can help you identify and gather the documents and records you need. They can tell you if you need to do an entity sale or an asset sale and make sure you have all the pertinent documents to complete the sale of your business.
Assets Sale Versus Entity Sale
When selling your business, it’s essential you be precise. You must decide whether you simply want to sell the assets of the business or the entire corporate entity that includes the business. With an asset sale, you just transfer your company’s property to the buyer for cash, stock or some combination of the two. In an entity sale, the buyer gets both the company’s assets as well as the company as a legal entity along with both its assets and its liabilities.
3. Handling Cash And Financing
When selling your business, you can either receive cash from the buyer or the buyer can finance the purchase of the business over a period of time. The buyer may also decide to use a bank or some other third-party lender to finance the purchase. The seller can also arrange financing to close the sale. However, should you decide to set up the financing to complete the sale of your business, it’s essential you have a promissory note or some other type of proper documentation that verifies the financial arrangement. The buyer can also provide collateral of some type. In some cases, it can be the assets of the business.
4. Take Care Of Your Lease
If you are selling a business that leases manufacturing, retail or office space, you should work closely with the landlord during the sales process. You should make sure the landlord is willing to let the buyer transfer the existing lease into their name. If not, as a part of the contract closing the sale, you may have work with the landlord in order to negotiate a sub-lease that enables the buyer to continue to use the property. In most cases, if you had been on good terms with the landlord, they are usually willing to agree to allow the buyer to take over the lease on the property.
5. Do Your Due Diligence
In order to ensure the sale of your business goes smoothly, you have to do your due diligence. This means giving the buyer an opportunity to closely inspect the premises and processes of your business. They must also have adequate time and free access to conduct a detailed physical inspection of the manufacturing, retail and office space. Once you are sure they are the right buyer, you will have to allow them to go over your books and other financial information. Once the sale of the business is imminent, you should give the buyer the opportunity to speak with your business partners, vendors and major customers. This ensures they know exactly what they are buying.
The Purchase Agreement
When you are selling a business in Texas, the final step is completing and signing a purchase agreement. The purchase agreement is a written contract which contains all the details as well as relevant terms of the sale of the business. It includes the purchase price, whether its an asset or entity sale, the closing date and obligations the buyer and seller must take care of prior to closing. The bill of sale, financing agreement, stock transfer certificates as well as the purchase agreement are the key documents needed to complete the sale of a business in Texas.