What is the difference between an asset sale and a stock sale?
In an asset sale, the buyer purchases specific assets (equipment, inventory, contracts, goodwill, sometimes accounts receivable) and generally does not assume the seller's undisclosed liabilities. The seller retains the entity. In a stock sale (or membership-interest sale for an LLC), the buyer purchases the ownership interests of the target entity and takes the company with everything in it — including its historical liabilities. The tax consequences are also very different — asset sales generally favor buyers (step-up in basis, allocation to depreciable assets), while stock sales generally favor sellers (single level of tax at capital-gains rates for a C-corp; treatment varies for an S-corp or LLC). We evaluate which structure applies to your specific facts and negotiate accordingly.
Should I sign a Letter of Intent before hiring an attorney?
Ideally no. The LOI sets the economic and structural anchors of the transaction — purchase price, deal structure, exclusivity period, key rep-and-warranty positions, escrow amount, non-compete duration. Once those anchors are set in the LOI, they are very hard to move in later drafts of the definitive agreement. Buyers and sellers who engage counsel before signing the LOI consistently produce better economic outcomes than those who wait until definitive-agreement drafting begins.
What is due diligence in a Texas M&A transaction?
Due diligence is the buyer's investigation of the target company before closing — reviewing corporate records, contracts, employment matters, litigation history, tax filings, intellectual property, real estate, licenses and permits, insurance, and financials. Findings feed the definitive agreement, the rep-and-warranty package, the escrow amount, and sometimes the purchase price. Sellers who preemptively organize this material (a 'reverse due diligence' or clean-room review) close faster and at better terms than sellers who respond reactively.
How long does a Texas M&A transaction take?
Most closely-held Texas M&A transactions close 60 to 120 days after signing the Letter of Intent. Simpler transactions with cooperative parties can close in 45 days. Complex deals with regulated industries, financing contingencies, real estate, or multiple entities can take six months or longer. We provide a written timeline as part of every engagement so the parties know what to expect.
What is an earn-out and should I agree to one?
An earn-out is a portion of the purchase price contingent on the target company hitting specified financial or operational targets after closing (often 12 to 36 months). Earn-outs bridge valuation gaps between buyer and seller, but they are also a leading source of post-closing dispute. If you are the seller, the answer depends on how much control you retain post-closing, how the earn-out is measured (revenue vs. EBITDA, GAAP vs. as-adjusted), what the buyer's incentive is to hit the targets, and how disputes are resolved. We counsel sellers to accept earn-outs only when the structure meaningfully protects the seller from post-closing manipulation of the measurement.
Does Continuum Counsel represent private equity buyers?
We represent Texas-headquartered closely-held companies and their owners primarily. We routinely represent sellers in transactions where the buyer is a private-equity fund or a PE-backed platform, and we occasionally represent independent-sponsor and search-fund buyers acquiring a Texas target. For a private-equity fund itself engaging in a large-cap platform transaction, we typically defer to a firm specialized in that market.