The Lone Star State is known for its hospitality, football, and business-friendly tax rates, creating perfect conditions for out-of-state companies looking to get a foothold in this market by purchasing a Texas business. Texas has become attractive to business buyers worldwide with its diverse economy and company-friendly environment.
If you are a Texas entrepreneur considering selling your Texas business, you will want to understand business conditions, financial and legal risks, and what to look for in a potential buyer before you sell. In this guide, The Curley Law Firm team explains the vital considerations to make when selling a business. If you have any questions, don’t hesitate to contact us today.
Become Familiar with Current Business Conditions in Your Area
Selling your business is an excellent way for a Texas entrepreneur to achieve their evolving business goals. Some things to consider when selling a business include understanding the business environment in your area and industry conditions.
For instance, your business may be doing well, but your three competitors may be struggling. Before entering into a sale, be sure you know the ins and outs of your company, industry, and geographic location. This knowledge can help you sell quickly and get top dollar for your company. It can also help you prevent roadblocks that may arise at the due diligence stage of your sale.
Buyers will conduct thorough due diligence to assess the risks and opportunities associated with your business. Be prepared to provide financial statements, customer contracts, employee information, and other relevant documents. The more you know about the business conditions in your area, the better equipped you are to provide thorough due diligence to a potential buyer.
Additionally, transparency and honesty during the due diligence help build trust with potential buyers. Being well-educated about your business and general market conditions can help avoid questions and issues later in the process. Hiring a skilled business lawyer can also help you navigate the due diligence process quickly and carefully.
Before putting your business on the market, it is essential to determine its fair market value. Various methods, such as the income approach, market approach, and asset-based approach, can be used to assess the value of your business. Consulting with a business appraiser or a financial professional experienced in business valuations is crucial for obtaining an accurate estimate.
Timing is a critical factor in selling a business. The state of the economy, industry trends, and market conditions can significantly impact the sale price and the ease of finding a buyer. Monitor economic indicators and market trends to gauge the optimal time to sell. You can use what you learned when exercising due diligence to help guide you.
Find the Right Buyer
Identifying the right buyer is one of the most important things to consider before selling a business. Consider whether you want to sell to a competitor, a strategic buyer, a private equity firm, or a family member. Each option carries different risks and rewards. A skilled business lawyer can help you prepare the documents you need to ensure confidentiality from potential buyers, whether you choose a competitor, a family member, or anything in between.
Understand the Legal Implications of Selling Your Business
When determining what to consider when selling a business, you can save time and money by consulting an attorney knowledgeable about business transactions. Your attorney will review contracts, leases, and other legal documents to comply with Texas law. An attorney can also help you understand federal tax implications. Texas does not have an individual income tax, but state capital gains tax may apply to any sale.
Attorney input is also instrumental in drafting a sale agreement. The Curley Law Firm has been helping Texas business owners sell their businesses for over a decade. Contact us to find out how we can help you sell your business.
Consider Different Types of Sales Transactions
Consider many different types of transactions when selling your business. For instance, you could consider an asset sale or a stock sale. Each has unique tax implications and legal requirements.
An asset sale involves selling individual business assets, while a stock sale involves selling ownership shares of the company.
Prepare Yourself for an Exciting Change
While selling a business has many legal, financial, and logistical aspects, it can also be an emotional journey, especially if you have invested years of hard work. Take whatever steps you need to mentally prepare for the transition and the potential lifestyle changes that accompany it. This will also help you to approach the transaction with a clear head and open mind.
Speak with a Texas Business Lawyer Today
When you are ready to sell your Texas business, contact The Curley Law Firm. Lead attorney Adam Curley has been practicing business law for over ten years. Adam is known for his attention to detail and personalized client service. Contact us today to schedule a consultation with The Curley Law Firm.