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Ten Traps to Avoid When Buying a Business

Ten Traps to Avoid When Buying a Business

If you are in the early stages of the process of buying a business, there are a few typical issues that always come up in negotiations. I have written previously about the use of a Letter of Intent, which will get the basics in place for the final actual purchase and sale documents. The Letter of Intent (or LOI) is a short document that spells out the important terms and conditions of the sale such as the price, how and when the price will be paid, the assets that will be sold to the buyer (and those the seller will keep), and other terms such as the seller’s noncompete agreement. The LOI allows that parties to put in place a signed document for the basics of the deal so the process…
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Steps to Buying a Business

Steps to Buying a Business

If you’re starting out on the path towards purchasing an existing business, the steps are relatively simple when put in general terms. Below are a few guidelines for the stages. RESEARCH This should be the stage when you dig into the company. It is likely you will have to sign a non-disclosure or confidentiality agreement prior to receiving most of the materials as they are private. Look beneath the surface of any broker representations or if you found the business online and read a glowing description of its potential, its time to look for yourself. You need to investigate. We already know you need to verify the financials. You also need to look into the employment issues such as making sure wages and taxes are in order, as well as…
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Letter of Intent – The First Step to Buying a Texas Business

Letter of Intent – The First Step to Buying a Texas Business

The letter of intent outlines the purchase of a business. The letter provides a summary of the terms and guides the deal after the letter is signed. If you are considering purchasing a business in Texas, contact Tim Sutherland so the firm can guide you through the steps from start to finish. We can protect your interests and make sure the deal is done right. You need an attorney to review a proposed letter of interest from the seller or broker as these are often one sided and not favorable to the buyer. You probably don’t know what to look for and in fact each deal is unique due to the nature of the specific business and the seller and buyer. If you are the buyer and drafting the letter…
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CONSIDERATIONS FOR SETTING UP A TEXAS LIMITED LIABILITY COMPANY

CONSIDERATIONS FOR SETTING UP A TEXAS LIMITED LIABILITY COMPANY

While I always recommend hiring a lawyer to organize a Texas start-up, a few considerations merit mentioning whether you are heading into a consultation to begin working with an attorney and even if you decide to do it yourself. If you are operating or considering a Texas LLC in Houston or Austin, contact me by email to set up a consultation about the requirements and best practices for setting up the business and doing business with the public in a way that minimizes risk to you and your business. I draft Articles of Organization, Operating Agreements, and handle intellectual property and employment matters (employees, independent contractors, freelancers). I also draft custom contracts for your business including terms and conditions. DECIDE ON A NAME FOR YOUR TEXAS LLC THAT ISN’T TRADEMARKED OR IN USE…
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STARTING A TEXAS FOOD BUSINESS

STARTING A TEXAS FOOD BUSINESS

Food service establishments such as restaurants and food trucks (mobile food units and food carts) are heavily regulated with permitting requirements, registrations, and random inspections (and inevitable fines) by the health department. There is an exception to these requirements which pertain to smaller-scale Texas food businesses. By law, a person can produce food in their own home kitchen to be sold directly to customers. In Texas (and in every State but New Jersey), you can operate a home-based food business based on the  “Texas Cottage Food Laws.”  If you are operating or considering a start-up food business, contact me by email to set up a consultation about the specifics of the food laws and best practices for setting up the business and doing business with the public in a way that minimizes risk to you…
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WHAT IS A LETTER OF INTENT AND HOW IS IT DIFFERENT FROM AN ASSET PURCHASE AGREEMENT

WHAT IS A LETTER OF INTENT AND HOW IS IT DIFFERENT FROM AN ASSET PURCHASE AGREEMENT

When purchasing a business in Texas, a letter of intent is a first step to putting some of the discussed terms in writing in order to move forward with the process. At this early phase, not all of the terms have been discussed or agreed. Potentially, the price is discussed but contingent on the results of due diligence to substantiate the value requested from the seller of the business. A LETTER OF INTEREST DOES NOT MEAN THE DEAL IS DONE. It is still very possible that the seller is shopping the business to other buyers, just as it is possible that the buyer is also considering other businesses. The LOI can include provisions for exclusivity, and depending on the parties this may be a negotiated term in order to proceed with…
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BUYING A BUSINESS IN TEXAS

BUYING A BUSINESS IN TEXAS

4 TIPS FOR BUYING AN EXISTING BUSINESS IN TEXAS Every deal is different, reach out to Tim Sutherland on the contact page if you are looking into purchasing a business and want to discuss the steps involved and the process. Working with a Texas business attorney can save you money in the future from headaches that can be avoided and ensure the deal goes as smoothly as possible. 1. HAVE THE SELLER AGREE TO EXCLUSIVITY WHILE NEGOTIATIONS ARE ONGOING If you are negotiating, you don’t want the seller shopping around. While initial negotiations are progressing, negotiate a window and have a signed agreement in place to allow time to make the right deal. You don’t want to be rushed or pressured with a hard sell and the seller claiming there is another…
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ATTORNEY’S FEES PROVISIONS IN CONTRACTS

ATTORNEY’S FEES PROVISIONS IN CONTRACTS

If you are reviewing or drafting a contract, one thing to consider is attorney’s fees. The general rule is that each side pays its own fees. For (oral or written) contract cases, a party may be able to recover its reasonable and necessary attorney’s fees. Texas has a statute which governs so long as a party prevails on the claims for breach and recovers damages (money). If the parties negotiate a written contract, they should take care to consider how attorney’s fees should be handled if there is a lawsuit if the deal goes south. THE PARTIES CAN DECIDE THE REQUIREMENTS FOR RECOVERY OF ATTORNEY’S FEES The parties to a contract can provide for either stricter or looser requirements for the recovery of fees. For example, maybe you don’t recover any money…
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EVEN A SINGLE MEMBER LLC SHOULD HAVE AN OPERATING AGREEMENT

EVEN A SINGLE MEMBER LLC SHOULD HAVE AN OPERATING AGREEMENT

When clients ask me whether they should go ahead and get an Operating Agreement, I always say ‘yes’ even when I am forming a single-member LLC. Before you go accusing me of an upsell or add-on, I have my own reasons and I will lay them out below. If you’d like to speak with me about your business and my thoughts on what kind of Operating Agreement is right for you, send me a quick email from the Contact Us page and we can set up a time to talk. First, let’s get a basic definition of an Operating Agreement.  It is essentially, at its most basic level, a contract signed between all of the members of the LLC agreeing how the company will be run, including management structure, member authority,…
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AN ASSUMED NAME IN TEXAS IS NOT A TRADEMARK OR A BUSINESS ENTITY

AN ASSUMED NAME IN TEXAS IS NOT A TRADEMARK OR A BUSINESS ENTITY

A TEXAS ASSUMED NAME GIVES THE PUBLIC A WAY TO FIND OUT WHO OWNS THE BUSINESS. An assumed name is a way to notify the public who they are doing business with when an individual or a company is doing business under a name other than the individual’s name or the entity name. The assumed name is likely more brandable than an entity name, especially in the situation of a sole proprietor. In the event someone needs to contact the true owner of a business, including for a lawsuit such as a personal injury or intellectual property issue, they can look up the owner who is using an assumed name. HOW TO FILE AN ASSUMED NAME. An assumed name is filed with the county clerk where you are doing business…
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