What are the most important terms in a business purchase agreement?

Price and deal structure, the representations and warranties, and the indemnification provisions that decide who pays if something is wrong after closing — along with closing conditions, escrow, and the seller’s non-compete.

What is the difference between representations and indemnification?

Representations and warranties are the seller’s factual statements about the business. Indemnification is the contractual remedy that requires the seller to compensate the buyer for losses if one of those statements turns out to be untrue.

What is an indemnification cap and basket?

A cap is the maximum a seller can be required to pay on indemnification claims, often a percentage of the price. A basket (or deductible) is the threshold of losses the buyer absorbs first, so minor issues don’t trigger a claim. Both are heavily negotiated.

Are non-competes enforceable in a Texas business sale?

Generally yes. Texas enforces non-competes connected to the sale of a business when the time, geographic area, and scope of restricted activity are reasonable and tied to protecting the goodwill the buyer purchased. The purchase agreement is where a fair price can still become a bad deal through risk allocation. Reidel Law Firm drafts and negotiates business purchase agreements for Texas buyers and sellers on a flat fee. Get help with your purchase agreement.

TEXAS BUSINESS LAW

Business Purchase Agreement: Key Terms (Texas)

Schuyler 'Rocky' Reidel July 16, 2024 4 min read

The purchase agreement is the document that actually transfers a business, and