After a buyer completes the due diligence process in an agreement, an individual will now have enough information in making a final decision in whether or not to fully close out a buying transaction. Questions often arise of what exactly is involved in the closing of a transaction regarding the purchase of a business. Many times it is dependant upon what is discovered through the diligence process. The Letter of Intent (which is included in the process of buying a business in Texas) will have listed the basic information such as the deliberation for the purchase, the date the transaction will close, the people who are equipped to close the sale, and the location of the closing. Some of the documents that are used in agreements at the time of closing a business deal are as follows:
Purchase Sale Agreement
This document is an agreement that legitimately consummates the transaction and includes the main information of the whole deal. This document will consist of terms settled upon by both parties which include representations and warranties, a security clause, a list of assets, special conditions and agreements, and the most important – the cost and value of the business.
Some individuals who are buying a business take advantage of seller financing, rather than using their own money or taking out a loan. This type of agreement ensures the seller with a security interest in the assets set forth in the business until the buyer pays back the money that has been financed.
In the case that a buyer is purchasing a business in which they have no or little experience in, the buyer may find it useful to keep the seller as an employee for a certain amount of time or until they fully learn how to run the business. The buyer may find this agreement useful as well as the seller due to securing the services provided.
Change In Ownership Forms For Franchises
If an individual purchases a franchise that has been previously owned, there will be forms required by the franchise to ensure that the buyer qualifies for the purchase. All franchises have different forms and requirements for selling to a buyer.
Change In Operating Agreement
Many times when a business is shared by multiple individuals, it is not unusual for an individual to sell his share of the business. This share can be sold to any new or existing owner.
Secretary Of State Forms
When a new owner takes over a business, certain entities are obligated to update all new information regarding the business. They must file this information with the Secretary of State.