Buying and Selling a Business in Austin, TX

Types of Business Purchase Agreements

Buying and selling a business can be a stressful and overwhelming process. Apart from setting a price, you must also draft a contract specifying the obligations, rights, and other terms and conditions to ensure both parties are on the same page. If you’re buying a business or shares of stocks, you need a skilled attorney to draft a contract to avoid conflicts. Our attorneys can help with the different types of purchase agreements described below. If you have further questions, feel free to get in touch.

Merger Agreements

Companies merge with business owners or other organizations to gain market share or expand their reach. Before a merger takes place, the two companies need to draft a merger agreement specifying the terms and conditions of the merger. Hiring business lawyers to help with negotiations and drafting contracts is crucial. You need a lawyer to ensure both parties understand the terms and conditions of the merger, avoiding conflicts, and other problems.

Shareholder Agreements

Also called a stockholder’s agreement, a shareholder’s agreement is a contract or arrangement that specifies how an organization should be managed. The contract also outlines the shareholders’ responsibilities and rights. You need a business attorney to review the agreement, ensuring all parties understand their responsibilities. Hiring a lawyer can also help identify potential risks that might harm your business. A lawyer can outline how voting will take place, specify ownership and transfers, and outline how issues will be resolved.

Purchase Agreements

A purchase agreement is a legal contract summarizing the details of a business sale or asset purchase. The document outlines all the terms and conditions, including contract governance, limitations and legal disputes. We recommend hiring a lawyer whenever you need legal services for your business. An experienced lawyer can offer advice and help you make an informed decision.

How Business Is Valued

For the purpose of a sale, a business is valued in three ways: fixed price, formula price, and valuation price.

• Fixed Price. The price is set and is fixed. Problems might arise when the price is fixed, as there might be insufficient information on how the business owners set the price. On the bright side, fixed-price agreements offer certainty to both parties. Compared to other types of pricing, this one is easier to administer.

• Formula Price. With formula pricing, taxes, earnings before interest, amortization and depreciation will be considered. Its biggest disadvantage is that it may result in a higher percentage, especially when the market conditions are poor.

• Valuation Price. A valuation professional will discuss all key considerations to be considered when setting the price for a business. Economic conditions and the business will be considered when setting the price. A report detailing how the price was set will also be provided.

Contact Davis Business Law in Austin

Are you planning to buy or sell a business? You need Davis Business Law in Austin to guide you through the entire legal process. Our team can also assist with negotiation, drafting and reviewing legal contracts for your partners. We stand out from the rest because our group only focuses on business law. Our top priority is to ensure your business is protected. Please contact us today.