The headline number in a business sale — the price — is rarely the part that determines whether the deal protects you. The structure and the terms are.
Whether you're acquiring a company to grow or selling the business you built, the transaction involves far more than agreeing on a price. How the deal is structured, what the diligence uncovers, and how the agreement allocates risk can matter just as much as the number on the term sheet. Here's a plain-English look at what's actually involved.
Asset Deal vs. Stock Deal
One of the first structural questions is whether the buyer purchases the company's assets or its equity:
- Asset purchase — the buyer acquires specific assets and liabilities, often leaving unwanted obligations behind. Buyers frequently prefer this.
- Stock (or membership-interest) purchase — the buyer acquires the entire entity, including its liabilities. Sellers often prefer this.
The choice has significant legal and tax consequences for both sides, which is why it's negotiated early.
Considering a purchase or sale? The structure of the deal shapes everything that follows. We guide buyers and sellers across Arizona, California, and Texas through it.
Book a Free Consultation →Due Diligence
Before closing, the buyer investigates what they're actually buying — contracts, finances, litigation, intellectual property, employee matters, and more. For sellers, getting your records and contracts in order before going to market makes the process smoother and protects your valuation. Diligence is where deals get repriced, delayed, or occasionally called off.
The Terms That Protect You
Much of the real negotiation happens in the agreement's terms, not the price:
- Representations and warranties — the promises each side makes about the business.
- Indemnification — who covers what if something turns out to be wrong.
- Escrow and holdbacks — money set aside to cover post-closing issues.
- Non-competes and transition terms — what the seller can and can't do afterward.
Why Counsel Matters Early
The best time to involve an attorney is before the term sheet is signed — not after. Early guidance shapes the structure in your favor and surfaces risks while they're still negotiable. Our mergers & acquisitions practice works with buyers and sellers from first conversation through closing.
Frequently Asked Questions
It depends on tax treatment, liabilities, and what each side wants. Buyers often prefer asset deals to leave liabilities behind; sellers often prefer stock deals. The right choice is specific to your transaction and worth analyzing early.
It varies widely with the size and complexity of the deal, the depth of due diligence, and how prepared the seller's records are. Getting your contracts and finances organized in advance speeds things up considerably.
Before signing a term sheet or letter of intent. Early involvement lets counsel shape the structure and flag risks while terms are still being negotiated, rather than reacting after key points are set.