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March 28, 202106477000
Non-Disclosure and Other Preliminary Agreements in Business Transactions
A Confidentiality Agreement (also sometimes referred to as an Non-Disclosure Agreement) is typically the first stage for the due diligence process in a transaction. These agreements can effectively act as a standstill agreement and can take many different approaches including disclaiming reliance or being non-binding. Letters of Intent are an intermediate step between NDAs and definitive binding agreements. The Texas Supreme Court’s opinion in Energy Transfer Partners, L.P. v. Enterprise Products Partners, L.P. makes clear that Texas embraces the principles of freedom of contract among sophisticated businesses, and that they can trust that their legal documents will be enforced as written. This means that in Texas companies can rely on conditions precedent to avoid an unintended partnership or joint venture, and those conditions precedent can be set forth in a confidentiality agreement, letter of intent or other preliminary agreement. This article includes a seller oriented confidentiality agreement and letter of intent.
November 8, 202406477000, J. Machir Stull, Cliff Ernst
Divisive Mergers
These presentation slides discuss the statutes that govern divisions of entities in Texas and Delaware; the legal effect of division transactions; general tax implications; how creditors are affected inside and outside of bankruptcy; application of fraudulent transfer law; and discussion of relevant case law. The authors provide a sample Plan of Divisive Merger for use with Texas entities.
May 18, 2017Byron F. Egan
Choice of Entity and Acquisition Structure Decision Tree
These are the presentation slides.
May 21, 2016Byron F. Egan
Acquisition Structure Decision Tree
Buying or selling a closely held business, including the purchase of a division or a subsidiary, can be structured as (i) a statutory combination such as a statutory merger or share exchange, (ii) a negotiated purchase of outstanding stock from existing shareholders or (iii) a purchase of assets from the business. The transaction typically revolves around an agreement between the buyer and the selling entity, and sometimes its owners, setting forth the terms of the deal.
May 21, 2016Daryl B. Robertson
Comparison of Limites Partnership Laws of Texas and Delaware
Choosing the applicable law under which to form the modern day limited partnership can be a crucial decision, and many lawyers and business people fail to appreciate the impact that the choice of law can have on future operations and transactions involving the limited partnership. Incorporating under the Delaware General Corporation Law has long been the dominant choice for public corporations. It is wise to examine the differences between Delaware and Texas law applicable to limited partnerships before automatically deferring to the choice of Delaware law for formation. The statutory provisions governing limited partnerships in Texas are located in the Texas Business Organizations Code (the “TBOC”). Title 1 of the TBOC contains 12 Chapters that are generally applicable to all types of domestic entities formed under Texas law, including limited partnerships. The provisions of Chapters 151, 153 and 154 of the TBOC are applicable to limited partnerships. Chapters 151 and 154 of the TBOC also apply to general partnerships, which are separately governed by Chapter 152 of the TBOC. The provisions of Chapter 151, 153 and 154 and the provisions of Title 1 and Chapter 152 to the extent applicable to limited partnerships may be cited as the “Texas Limited Partnership Law.” The statutory provisions governing a Delaware limited partnership are found in the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”). The DRULPA constitutes Chapter 17 of Subtitle II of Title 6 of the Delaware Laws. While I have attempted to prepare a fairly comprehensive comparison of what I view as the more important aspects of these limited partnership laws, the comparison is not complete. There are other provisions in each of the statutes that I have not attempted to address and compare. Any reader, of course, should review the statutory provisions himself or herself in order to make his or her own analysis and to compare other provisions that I have not addressed.
May 17, 2015Byron F. Egan
Acquisition Structure Decision Tree
Buying or selling a closely held business, including the purchase of a division or a subsidiary, can be structured as (i) a statutory combination such as a statutory merger or share exchange, (ii) a negotiated purchase of outstanding stock from existing shareholders or (iii) a purchase of assets from the business. The transaction typically revolves around an agreement between the buyer and the selling entity, and sometimes its owners, setting forth the terms of the deal.
May 25, 2013Byron Egan
Acquisition Structure Decision Tree
Buying or selling a closely held business, including the purchase of a division or a subsidiary, can be structured as (i) a statutory combination such as a statutory merger or share exchange, (ii) a negotiated purchase of outstanding stock from existing shareholders or (iii) a purchase of assets from the business.1 The transaction typically revolves around an agreement between the buyer and the selling entity, and sometimes its owners, setting forth the terms of the deal. Purchases of assets are characterized by the acquisition by the buyer of specified assets from an entity, which may or may not represent all or substantially all of its assets, and the assumption by the buyer of specified liabilities of the seller, which typically do not represent all of the liabilities of the seller.2 When the parties choose to structure an acquisition as an asset purchase, there are unique drafting and negotiating issues regarding the specification of which assets and liabilities are transferred to the buyer, as well as the representations, closing conditions, indemnification and other provisions essential to memorializing the bargain reached by the parties. There are also statutory (e.g., bulk sales and fraudulent transfer statutes) and common law issues (e.g., de facto merger and other successor liability theories) unique to asset purchase transactions that could result in an asset purchaser being held liable for liabilities of the seller which it did not agree to assume.
May 23, 2013Byron Egan
Confidentiality Agreements are Contracts with Long Teeth
A confidentiality agreement (also sometimes called a non-disclosure agreement or “NDA”) is typically the first stage for the due diligence process in a business combination or joint venture transaction (collectively, “M&A”) as parties generally are reluctant to provide confidential information to the other side without having the protection of an NDA. The target typically proposes its form of NDA, which may provide that it makes no representations regarding any information provided, and a negotiation of the NDA ensues. Some NDAs contain covenants restricting activities of the buyer after receipt of confidential information. The recent cases discussed below highlight that possible consequences of an agreement to maintain the confidentiality of information can be far reaching and are evolving. These cases also teach that, in addition to the importance of having contractual provisions sufficient to accomplish the intended objectives, director awareness of the effects of provisions in NDAs their companies enter into can have fiduciary duty implications.
May 26, 2012Byron F. Egan
Acquisition Structure Decision Tree
Buying or selling a closely held business, including the purchase of a division or a subsidiary, can be structured as (i) a statutory combination such as a statutory merger or share exchange, (ii) a negotiated purchase of outstanding stock from existing shareholders or (iii) a purchase of assets from the business. The transaction typically revolves around an agreement between the buyer and the selling entity, and sometimes its owners, setting forth the terms of the deal.
November 2, 2012Ladd A. Hirsch, James D. Sheppard
Am I My Brother's Keeper: The Rights and Duties that Co-Owners Owe to Each Other in Private Companies under Texas and Delaware Law
This article focuses on conflicts among minority and majority owners of privately-held companies. As the national economy has suffered since at least 2008, lawsuits by minority owners in private companies appear to be increasing. This article does not include a statistical analysis of this trend, but the common sense explanation is that a down economy eliminates, or sharply reduces, the prospect for minority owners in private companies to cash out. As a result, many investors/owners in private businesses have become frustrated by their inability to monetize their investments.
October 22, 2010Byron F. Egan
Merger & Acquisitions
Buying or selling a business in Texas, including the purchase of a division or a subsidiary, revolves around a purchase agreement between the buyer and the selling entity and sometimes its owners. Purchases of assets are characterized by the acquisition by the buyer of specified assets from an entity, which may or may not represent all or substantially all of its assets, and the assumption by the buyer of specified liabilities of the seller, which typically do not represent all of the liabilities of the seller. When the parties choose to structure an acquisition as an asset purchase, there are unique drafting and negotiating issues regarding the specification of which assets and liabilities are transferred to the buyer, as well as the representations, closing conditions, indemnification and other provisions essential to memorializing the bargain reached by the parties. There are also statutory (e.g., bulk sales and fraudulent transfer statutes) and common law issues (e.g., de facto merger and other successor liability theories) unique to asset purchase transactions that could result in an asset purchaser being held liable for liabilities of the seller which it did not agree to assume.