Questions on buying or selling a Texas business.

Escamilla Law Office is a Texas law firm focused on mergers and acquisitions and related ownership transactions involving privately held companies. The firm represents individual and strategic buyers, sellers, founders, family owners, investors and operating companies in acquisitions, divestitures and other negotiated changes in ownership or control.

Representation may begin with transaction structure and the letter of intent and continue through legal due diligence, definitive documentation, financing coordination, closing and post-closing matters. When a transaction requires a broader advisory group, the firm works with lenders, accountants, tax advisors, investment bankers, wealth advisors and other specialists.

Escamilla Law Office primarily advises on private-company transactions with values of approximately $1 million to $25 million. These matters include asset purchases, equity acquisitions, full and partial company sales, majority and minority investments, partner buyouts and internal ownership transitions.

The firm also handles bank-financed and seller-financed acquisitions and transactions involving earnouts, escrows, holdbacks or retained ownership. The $1 million to $25 million range describes the firm’s principal market rather than a rigid limit. A transaction outside that range may still be appropriate depending on its structure, financing, industry, complexity and legal requirements.

Escamilla Law Office advises buyers, sellers and privately held companies on mergers, acquisitions and related ownership transactions throughout Texas — including the Houston, San Antonio, Dallas and Austin markets.

The firm can advise on a Texas transaction regardless of whether the business, counterparty, lender or other advisors are located in the same city. Matters are handled through a combination of in-person meetings, video conferences and electronic coordination.

A buyer or seller should ideally involve M&A counsel before signing a letter of intent or committing to other preliminary terms. The letter of intent often establishes the transaction structure, purchase-price mechanics, financing framework, exclusivity period, diligence process and important transition obligations, even when much of the document is described as nonbinding.

Early legal review allows those terms to be evaluated while the parties still have meaningful leverage and flexibility. If negotiations have already begun — or a letter of intent has already been signed — counsel should be engaged as soon as possible before diligence and definitive documentation advance.

Escamilla Law Office generally structures M&A fees as a fixed or staged fee for a defined scope, with the amount determined after an initial discussion and review of the proposed transaction.

The fee structure may vary based on the stage of the transaction, acquisition structure, financing, anticipated diligence, number of related agreements, negotiating complexity and expected timeline. Work that cannot reasonably be defined at the outset may be billed hourly or addressed through an additional agreed scope. Before substantive work begins, the engagement letter identifies the services included, the payment schedule and how work outside the original scope will be handled.

Before beginning a sale process, a business owner should clarify the desired outcome, assemble the appropriate advisors and determine whether the company is ready for buyer review. Important early decisions include the preferred transaction structure, acceptable forms of consideration, anticipated timing, ownership approvals and the owner’s desired role after closing.

The company should also organize its governing documents, ownership records, financial statements, tax returns, material contracts, licenses, leases, debt, liens, employee information, intellectual property and pending disputes. Existing documentation problems and contracts requiring consent should be identified before diligence begins whenever possible.

A prospective buyer should not receive sensitive business information merely because it has expressed interest. Confidentiality protections and a controlled disclosure process should be established before detailed financial, customer, employee or operational information is shared.

Before submitting an offer, a buyer should understand the acquisition objective, likely financing and the assumptions supporting the proposed purchase price. Initial review commonly includes the company’s financial performance, operations, ownership, key customer and supplier relationships, material assets and expected transition needs.

The buyer should also consult M&A counsel, financial and tax advisors, and any prospective lender regarding transaction structure. Whether the acquisition is structured as an asset purchase or equity purchase can affect assumed liabilities, taxes, financing, required consents and the documents needed to close.

A buyer does not need to complete full diligence before delivering a letter of intent. The proposal should, however, identify the assumptions on which it is based and preserve appropriate conditions for financing, due diligence, internal approvals and definitive documentation. This allows the parties to establish a negotiating framework without treating unresolved matters as settled.

The principal advisory team for a private-company transaction commonly includes M&A counsel, an accountant or tax advisor and, when appropriate, an investment banker or other financial advisor. A lender should become involved early when the acquisition will be financed. Depending on the business and transaction, additional expertise may be needed in areas such as employee benefits, insurance, environmental matters, real estate, cybersecurity or regulatory compliance.

Each advisor serves a different role. Financial advisors address valuation, process and transaction economics; accountants and tax advisors evaluate financial information, tax consequences and purchase-price mechanics; lenders establish financing and closing requirements; and legal counsel conducts legal diligence and translates the negotiated terms into enforceable documents.

The advisors should work from the same transaction structure, financial assumptions and timetable. Purchase-price adjustments, tax allocations, financing terms, earnouts, seller notes and transition arrangements can create problems when negotiated in isolation or reflected inconsistently across the transaction documents.

A confidentiality agreement used in an M&A transaction should limit confidential information to evaluating the proposed transaction, restrict who may receive it and require appropriate safeguards against unauthorized use or disclosure.

The agreement should address what information is protected, permitted disclosures to advisors and financing sources, responsibility for representatives, legally required disclosures, and the return or destruction of information if negotiations end. Appropriate exclusions generally apply to information that is publicly available, already known, independently developed or lawfully obtained from another source.

Depending on the process, the agreement may also protect the identity of the parties and the existence or status of negotiations, restrict unauthorized contact with employees, customers or suppliers, and confirm that neither party is obligated to complete a transaction. Particularly sensitive customer, employee, pricing or trade-secret information may require staged disclosure or additional safeguards. A confidentiality agreement is important, but it does not replace careful control over what information is disclosed and when.

A letter of intent should establish the principal business terms and negotiating framework for the proposed transaction while clearly distinguishing between binding and nonbinding provisions.

The LOI commonly addresses transaction structure, purchase price and form of consideration, included and excluded assets or liabilities, treatment of cash, debt and working capital, financing, diligence, seller transition, restrictive covenants, required approvals and the anticipated timeline. Any proposed earnout, seller financing, escrow, holdback or retained ownership should be described with enough precision to identify the material economic terms.

Confidentiality, exclusivity, access to information, expenses, publicity, governing law and dispute procedures may be binding even when the proposed acquisition itself remains nonbinding. The LOI should identify those provisions expressly and state whether either party has any obligation to complete the transaction before a definitive purchase agreement is executed and delivered. Under Texas law, clear language establishing that requirement can determine whether preliminary negotiations create an enforceable acquisition agreement.

In an asset purchase, the buyer acquires selected assets of the business and assumes specified liabilities. In an equity purchase — often called a stock purchase or membership-interest purchase — the buyer acquires ownership of the company itself.

An asset purchase agreement identifies the assets being purchased, the assets the seller will retain, the liabilities the buyer will assume and the liabilities that will remain with the seller. Contracts, leases, permits, licenses, vehicles, real property and intellectual property may require separate assignments or transfer documents.

In an equity purchase, the acquired company generally continues to own the same assets, employ the same personnel and remain subject to its existing obligations. Although fewer individual transfers may be required, contracts and licenses can still contain change-of-control restrictions.

The structure can materially affect liability exposure, taxes, financing, required consents and post-closing operations. Neither structure is inherently preferable in every transaction. The parties should evaluate the alternatives before signing the letter of intent because changing structure later can alter the negotiated economics.

In an equity acquisition, the acquired company ordinarily retains all of its liabilities because the legal entity itself remains in place. The buyer acquires ownership of that company and, as a practical matter, exposure to its known, unknown and contingent obligations.

In an asset purchase, the buyer generally assumes only the liabilities identified in the purchase agreement. Texas law generally provides that an asset purchaser is not responsible for the seller’s obligations unless the purchaser expressly assumes them or another statute provides otherwise. Certain tax, environmental, employment, benefit and regulatory liabilities may nevertheless follow the business or its assets under applicable law.

The purchase agreement can allocate financial responsibility between the buyer and seller, but that allocation does not necessarily eliminate the rights of customers, employees, taxing authorities, regulators or other third parties. Legal due diligence, carefully defined assumed and excluded liabilities, disclosure schedules, indemnification provisions, escrows or holdbacks, and appropriate payoff and release documents are therefore important in either structure.

Legal due diligence examines the ownership, authority, obligations and legal risks of the business being acquired. Its purpose is to confirm what the buyer will receive, identify matters that could interfere with closing or future operations, and determine how identified risks should be addressed in the transaction.

The review commonly includes organizational and ownership records, material contracts, debt and liens, real estate, employment and benefit matters, intellectual property, licenses and permits, litigation, regulatory compliance, insurance, data-security issues and related-party arrangements. The scope should be tailored to the company’s industry, operations and transaction structure rather than treated as the same checklist for every acquisition.

A diligence issue does not automatically prevent a transaction. Depending on its significance, the parties may resolve it before closing, adjust the purchase price, exclude an asset or liability, obtain a consent, require a closing condition, or address the risk through a representation, covenant, indemnity or escrow. Effective diligence converts information into transaction decisions.

Acquisition financing affects the transaction’s structure, timing and documentation because the lender conducts its own underwriting and imposes separate conditions to funding.

A lender may require an equity contribution, personal guaranties, collateral, insurance, appraisals, lien searches, payoff letters, landlord or contract consents, and specific organizational and closing documents. SBA-financed acquisitions may also be subject to program requirements governing changes of ownership and the borrower’s eligibility and financing structure.

The purchase agreement should address whether financing is a condition to closing, what efforts the buyer must make to obtain it, what cooperation the seller must provide, and what happens if financing is unavailable by the scheduled closing date. Any seller note, earnout, retained ownership or other deferred consideration must also be coordinated with the lender; a seller note, for example, may need to be subordinated or placed on standby.

Because a signed purchase agreement does not obligate a lender to fund, a buyer should engage prospective financing sources early and avoid negotiating transaction terms that conflict with likely loan requirements.

Third-party consents or regulatory approvals may be required when a transaction transfers a contract, lease, permit or license; triggers a change-of-control provision; changes the ownership of a regulated business; or requires existing liens to be released.

Asset purchases commonly require more individual assignments because assets and contractual rights move from one legal entity to another. Equity acquisitions may avoid some assignments because the company remains the contracting party, but change-of-control provisions can still require consent or permit termination.

Relevant third parties may include landlords, lenders, customers, suppliers, franchisors and government agencies. Industry-specific approvals can be particularly important for healthcare providers, professional practices, financial-services businesses, energy companies, government contractors and other licensed or regulated operations. Some licenses and permits cannot be assigned and require the buyer to submit a new application.

Potential consents should be identified during structuring and diligence — not immediately before closing. The purchase agreement should establish who is responsible for obtaining each consent, when it must be obtained and whether the transaction can close without it.

The purchase price may be adjusted through agreed closing mechanics that compare estimated financial amounts at closing with final amounts determined afterward. Common adjustments account for cash, indebtedness, seller transaction expenses and net working capital. Depending on the business, the parties may also address inventory, taxes or other transaction-specific items.

A working-capital adjustment typically compares the company’s actual closing working capital with an agreed target representing the normalized amount needed to operate the business. The buyer or seller may prepare an estimated closing statement, followed by a final post-closing calculation and an opportunity for review and objection.

The purchase agreement should define the accounts included, applicable accounting principles, calculation procedures, access to supporting records, deadlines and dispute-resolution process. These provisions are intended to deliver the business in the negotiated financial condition — not to give either party a second opportunity to renegotiate its value.

An escrow or holdback reserves a portion of the purchase price after closing to secure specified obligations. In an escrow, the funds are generally held by a neutral third party. A holdback is an amount otherwise payable to the seller that is withheld at closing, sometimes by the buyer rather than an escrow agent.

The reserved funds may support a post-closing purchase-price adjustment, indemnification claims or a known risk involving taxes, litigation, customer obligations or another identified matter. The amount and duration should correspond to the obligation being secured.

The purchase agreement and any escrow agreement should address permitted claims, notice requirements, disputed claims, release procedures and the treatment of remaining funds. The parties should also state whether the reserved amount is the buyer’s exclusive recovery source or whether additional remedies remain available. An escrow or holdback does not automatically cap the seller’s liability unless the transaction documents expressly provide otherwise.

An earnout is contingent purchase consideration payable after closing if the acquired business achieves agreed financial or operational results. Earnouts are often used to bridge a valuation gap, address uncertainty about future performance or tie part of the purchase price to customer retention, revenue, gross profit, EBITDA or another milestone.

The purchase agreement should define the performance measure, measurement period and applicable accounting principles with precision. It should also address operational control, integration costs, shared expenses, changes in the business, reporting and access to records, review and objection rights, dispute resolution, setoff rights and what happens if the business is resold or discontinued.

If payment depends on the seller remaining employed or providing transition services, that condition should be stated separately and coordinated with the seller’s employment or consulting agreement. Earnout disputes frequently arise not from the percentage or headline target, but from unclear definitions and unexpressed assumptions about how the business will be operated after closing.

Seller financing occurs when the seller accepts a promissory note for part of the purchase price rather than receiving the entire amount at closing. Unlike an earnout, the principal amount of a seller note is generally fixed and payable according to an agreed schedule rather than contingent on future performance.

The note should address interest, payment dates, maturity, prepayment rights, events of default, cure periods, acceleration and available remedies. The parties should also determine whether payment will be supported by collateral, a personal guaranty or other credit protection and whether the buyer may offset indemnification or other claims against amounts owed.

When a senior lender finances the acquisition, the seller note may need to be subordinated, placed on standby or made subject to restrictions on payment and enforcement. Those requirements should be understood before the transaction documents are finalized. Seller financing can help close a funding gap, but it also makes the seller a post-closing creditor without the ownership control the seller previously possessed.

Representations and warranties are statements about the business, the parties and the transaction. Disclosure schedules provide required details and identify exceptions to those statements. Indemnification provisions determine whether and how one party may recover losses if a representation proves inaccurate, a covenant is breached or a specified liability arises.

For example, a seller may represent that the company has no pending litigation except as identified on a disclosure schedule. A properly disclosed matter may qualify that representation, but disclosure does not necessarily resolve the underlying issue or eliminate the need to evaluate it during diligence.

The purchase agreement should establish how long representations survive, any materiality or knowledge standards, claim procedures, deductibles or baskets, liability caps and treatment of fraud, specified liabilities and other negotiated exceptions. These provisions should be read together. Representations define the factual allocation of risk, disclosure schedules clarify that allocation, and indemnification establishes the remedy if the agreed allocation proves incorrect.

Noncompetition and nonsolicitation covenants in a Texas business sale are generally used to protect the goodwill, customer relationships and workforce included in the acquisition. A noncompetition covenant restricts specified competitive activity, while nonsolicitation provisions may restrict efforts to divert customers or employees from the acquired business.

The transaction documents should identify the parties bound, the acquired business being protected, the prohibited activities, applicable territory and duration. They should also address appropriate exceptions for passive investments, disclosed existing businesses and services the seller will perform for the buyer after closing. The parties signing the restrictions should include the individuals or entities capable of redirecting the goodwill being purchased.

Under Texas law, a covenant must be connected to an otherwise enforceable agreement and contain reasonable limitations that do not restrain more activity than necessary to protect the buyer’s legitimate business interests. A court may reform an overbroad covenant, but overbreadth can affect available remedies. Transactions involving healthcare professionals or operations in multiple states may require additional analysis under profession-specific or other state laws.

Once the buyer and seller have signed a letter of intent, a relatively straightforward private-company acquisition often takes approximately 60 to 120 days to close. A complete sale process that begins with preparing the company and identifying prospective buyers may take several months longer.

The timeline depends on the readiness of the company’s financial and legal records, the scope of due diligence, financing requirements, third-party consents, regulatory approvals and the time needed to negotiate the purchase agreement and related documents. Real estate, licensing, ownership, employment or unresolved diligence issues can extend the process.

The letter of intent should establish realistic target dates for diligence, financing and definitive documentation, with an exclusivity period that supports the anticipated process. A proposed closing date remains a planning target until the closing conditions are satisfied or waived.

Some private-company transactions are signed and closed simultaneously. When the purchase agreement is signed before closing, the parties use the interim period to satisfy the closing conditions and complete the required deliverables.

Depending on the transaction, the buyer may need to finalize financing and obtain internal approvals. The parties may need to secure contract, landlord or regulatory consents; complete remaining diligence; obtain payoff letters and lien releases; and finalize employment, consulting, escrow, transition and other related agreements. During this period, the seller is commonly required to operate the business in the ordinary course and obtain the buyer’s consent before taking specified extraordinary actions.

At closing, the parties confirm that the representations remain accurate under the negotiated standards, required covenants have been performed and the closing conditions have been satisfied or waived. The purchase agreement should also explain what happens if a condition remains unsatisfied by the outside closing date. An unsatisfied condition does not necessarily constitute a breach; that depends on the related covenants and efforts obligations.

Post-closing transition obligations commonly require the seller to transfer the knowledge, relationships and operational access needed for the buyer to continue the business. These obligations may include customer and vendor introductions, employee handoffs, access to historical records, assistance with permits or licenses, transfer of accounts and technology, release of personal guaranties, and cooperation regarding retained receivables or liabilities.

A seller may also remain involved under an employment agreement, consulting agreement or transition-services arrangement. The applicable document should define the services, availability, authority, term, compensation, expenses, performance expectations and termination rights. A general promise to \"assist as needed\" can create different expectations about the seller’s continuing responsibilities.

The transaction documents should distinguish transition assistance included in the purchase price from professional or operational services requiring separate compensation. Confidentiality, restrictive covenants, tax cooperation, earnout reporting, purchase-price adjustments and indemnification obligations may also continue after the operational transition ends.

Post-closing disputes are handled under the procedures established in the purchase agreement and related transaction documents. Different types of disputes frequently require different resolution mechanisms.

A purchase-price adjustment commonly requires an initial calculation, a written objection within a specified period, negotiation between the parties and submission of unresolved accounting items to an independent accounting firm. Earnout disputes may follow a similar process for accounting calculations, while disputes involving contractual interpretation or the operation of the business may be resolved through litigation or arbitration.

Indemnification claims generally require written notice describing the basis of the claim and may involve separate procedures for third-party claims. The agreement determines applicable survival periods, baskets, liability caps, escrow rights, setoff rights and other recovery limitations. It should also address access to records, deadlines, the decision-maker’s authority, governing law, venue and allocation of dispute costs. Clear procedures can narrow a disagreement before it becomes full-scale litigation, but only if the parties follow the negotiated notice and claim requirements.