Flat-fee representation for buyers and sellers of small and mid-sized businesses — asset purchase agreements, stock purchase agreements, due diligence, escrow structuring, indemnification, and post-closing transition. NY and Delaware entities.
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Selling a small or mid-sized business — or buying one — is one of the most legally complex transactions a business owner will go through. The deal documents (asset purchase agreement, stock purchase agreement, or merger agreement) typically run 60-150 pages. Due diligence is extensive: financial records, contracts, real estate, employees, IP, tax returns, environmental issues, litigation, regulatory matters. Negotiation focuses on representations and warranties, indemnification provisions, escrow arrangements, post-closing transition obligations, and what happens if something turns out to be wrong after closing. The work is substantive on both sides.
The first major decision is structure: asset purchase or stock purchase. Asset purchases give the buyer specific named assets and let them choose which liabilities to assume; sellers prefer them less because they're typically taxed as ordinary income rather than capital gains. Stock purchases (or LLC interest purchases) transfer the entire entity — assets, liabilities, contracts, history — and are typically taxed as capital gains for the seller. Buyers prefer asset structures; sellers prefer stock structures. The negotiated outcome often involves a structure with offsetting financial concessions.
The second major decision is what gets warranted. Sellers represent and warrant facts about the business — financials are accurate, contracts are valid, no undisclosed litigation, IP is owned, taxes are paid. Buyers rely on these representations in setting the purchase price. If a representation turns out to be wrong, the seller is liable for the resulting damage, subject to limits (caps, baskets, time periods) the parties negotiate. The representations and warranties section is typically the most heavily negotiated part of the agreement.
The third major decision is what survives closing. Some obligations terminate at closing (the seller delivers the business, the buyer pays). Others continue: indemnification for breached representations, non-compete and non-solicit covenants binding the seller, transition services where the seller helps the buyer for a defined period after closing, escrow holding back a portion of the purchase price to fund potential indemnity claims. We draft these provisions with attention to both sides' interests.
The LOI is a non-binding (mostly) agreement between buyer and seller outlining the deal's main terms — purchase price, structure (asset vs. stock), key conditions, exclusivity period during which the buyer can do diligence, basic indemnification framework. The LOI isn't the deal but it sets expectations for the deal documents. We review or draft the LOI before the parties commit further.
Buyer's diligence typically takes 30-90 days depending on business complexity. Areas covered: financial statements (typically 3 years), tax returns, contracts (with customers, vendors, employees, lenders), real estate, IP (registered and unregistered), employee matters (compensation, benefits, classifications, disputes), litigation (current and threatened), regulatory matters, insurance, and environmental issues for businesses with physical operations. We work with the buyer's diligence team or, on the seller side, prepare the diligence package and respond to buyer questions.
The asset purchase agreement (APA) or stock purchase agreement (SPA) is the deal document. Drafting typically begins after diligence is well underway (sometimes during diligence to keep the timeline moving). The agreement includes: purchase price and payment structure, asset transfer or stock transfer mechanics, representations and warranties from both parties, covenants (pre-closing and post-closing obligations), conditions to closing, indemnification provisions, and miscellaneous provisions. Negotiation typically takes 2-6 weeks of back-and-forth between counsel.
Most M&A transactions involve ancillary documents in addition to the main agreement: bills of sale and assignments for asset transfers, employment agreements or transition agreements for key employees, non-compete and non-solicit agreements binding the seller, escrow agreements with the escrow agent, lease assignments or new leases for real estate, lender consents and payoff letters, and consents from third parties whose contracts are being transferred. Coordinating these documents alongside the main agreement is part of the work.
Most M&A closings happen via electronic signature exchange and wire transfers rather than in-person meetings. The parties exchange signed documents, the buyer wires funds, and the seller delivers the assets or stock. Some closings involve more elaborate mechanics (multi-step closings with conditions to be satisfied between signing and closing, escrow disbursements, etc.).
The post-closing period involves transition work — the seller helps the buyer take over operations, certain pre-closing obligations are completed, indemnification claims (if any) are made within agreed time periods, and escrow funds are released according to the schedule. Most post-closing periods are uneventful; we work through any issues that come up.
M&A pricing varies more than other practice areas because the work scales substantially with deal size and complexity. Small transactions ($250K-$1M deal value) involve straightforward APA or SPA drafting and price modestly. Mid-market transactions ($1M-$10M deal value) involve more substantive negotiation, more diligence interaction, and more ancillary documents — pricing scales accordingly. Larger transactions ($10M-$50M+) are priced as substantial engagements.
We typically quote M&A engagements as flat-fee project work rather than hourly billing. The flat fee is set after initial conversations about deal structure, complexity, and the parties involved. Some clients prefer fixed-fee structure with defined scope and clear additional-work pricing for items that fall outside the original scope.
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Generally, buyers prefer asset purchases (cleaner, can pick which liabilities to assume) and sellers prefer stock purchases (simpler, typically better tax treatment). The negotiated outcome depends on leverage and tax considerations. Asset purchases work better when the business has known liabilities the buyer wants to avoid, when only a portion of the business is being sold, or when the entity itself has issues (regulatory, litigation, tax). Stock purchases work better when the business's contracts are non-assignable (transferring the entity preserves the contracts), when the seller insists on stock structure for tax reasons, or when the business is regulated and operating licenses are entity-specific.
Statements the seller makes (and warrants to be true) about the business — financial statements are accurate, all material contracts are disclosed, no undisclosed litigation exists, taxes are paid, IP is owned by the company, etc. Buyers rely on these representations in setting the purchase price. If a representation is breached, the seller is liable for the resulting damage, subject to limits negotiated in the indemnification section (caps, baskets, time periods). The representations and warranties section is typically the most heavily negotiated part of the agreement.
A portion of the purchase price held by an escrow agent for a defined period after closing, available to fund indemnification claims if breaches of representations and warranties are discovered. Standard escrow is 5-15% of purchase price held for 12-24 months. Provides the buyer with a specific source of recovery rather than having to chase the seller after closing. We negotiate escrow size, period, and release mechanics.
Typically 60-120 days for small and mid-sized transactions. Diligence takes 30-90 days. Definitive agreement drafting and negotiation takes 4-8 weeks (often overlapping with diligence). Closing happens after diligence is complete, the agreement is finalized, financing is in place (for buyer-financed deals), and any closing conditions are satisfied. Some deals close faster; deals with complex regulatory or financing requirements take longer.
Not necessarily. Many businesses use the same attorney for ongoing corporate work and for the eventual sale. The advantage of continuity is that the attorney already knows the business, the historical contracts, and the entity structure. The advantage of separate M&A counsel is specialization. For most small and mid-sized transactions, an attorney with M&A experience can handle the sale even if they didn't form the entity originally. We've handled both situations.
Flat fee project pricing, set in writing before substantive work begins, scaled to deal size and complexity. Small transactions price modestly; larger and more complex transactions price proportionally. Get a free quote in under an hour by submitting the contact form.
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