buy and sell a business: purchase agreement
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When deciding to buy or sell a business, drafting a purchase and sale agreement (PSA Agreement) is essential. Here are some key points to include:

  1. Purchase Price/Object: Will it be purchasing company assets or acquiring shares?
  2. Earnest Money and Closing Date: Initial deposit and date of the final transaction.
  3. Due Diligence Period and Contents: Investigating the business thoroughly.
  4. Contingencies: Tax clearance (no tax due certificate), lease assignment, Certificate of Occupancy, loans.
  5. Representations from Both Parties: Confirming transaction authority, liabilities, any pending lawsuits, “As is” condition.
  6. Activity Restrictions in Similar Industries.
  7. Miscellaneous: Solutions for breach of contract, jurisdiction, cost allocation.

A contract is a written agreement between two parties, capturing their understanding of the deal. In Texas, the emphasis is on interpreting the “intent” of the parties.

The need for a PSA:

  • The PSA helps both parties understand the transaction.

Without a PSA:

  • Buyers may end up with unexpected debts, tax issues, or lease problems after paying.
  • Sellers may face claims of fraud or lawsuits after the transaction.

The role of attorneys:

  1. Closing agents and ancillary professionals are not the buyer’s attorneys and cannot provide legal advice.
  2. Brokers are the seller’s agents, and sellers cannot fully avoid responsibility.

Final advice: Buyers must conduct due diligence before purchasing to avoid potential issues. Sellers should ensure a clean and transparent transition. Remember, the responsibility ultimately lies with the individuals involved, and seeking legal advice is crucial throughout the process.

Sul Lee Law Firm | Phone: 214.206.4064
3030 Lyndon B Johnson Freeway, Suite 220, Dallas, TX 75234