Updated April 2026
A merger or acquisition is one of the most consequential transactions a business owner will navigate. Done well, it creates new markets, capabilities, and value. Done poorly, it exposes buyers and sellers alike to liability, disputes, and financial loss that can outlast the deal itself. Whether you are acquiring a competitor, selling a business you have built, or merging with a strategic partner, the steps below apply regardless of deal size.
This article covers the full M&A process from strategy through integration. For buyers and sellers in business transactions in the $3 million to $10 million range, see our follow-on articles: Buying a Small Business in Texas: What to Know Before You Sign, How to Sell Your Small Business in Texas, and What Is a Letter of Intent in a Small Business Acquisition?
Define your strategy before approaching any target
Every successful M&A transaction begins with a clear answer to a simple question: why are you doing this deal? The answer shapes every decision that follows. Buyers may be seeking to increase market share, enter a new geography, acquire technology or talent, eliminate a competitor, or vertically integrate a supply chain. Sellers may be planning retirement, responding to an unsolicited offer, resolving a partner dispute, or capitalizing on favorable market conditions.
Without a defined strategy, buyers overpay for targets that do not fit, and sellers accept terms that undervalue what they have built. Before any outreach or engagement, document the strategic rationale, the financial parameters, and the non-negotiable deal terms. That clarity will guide every negotiation that follows.
Conduct thorough due diligence
Due diligence is the process by which the buyer investigates the target company before committing to the final purchase price and terms. It covers financial statements, tax returns, contracts with customers and vendors, intellectual property ownership, employment agreements and liabilities, pending or threatened litigation, regulatory compliance, real estate leases, and environmental matters.
At the small business level, due diligence is often less structured than in large corporate deals, which makes it more dangerous, not less important. Common problems discovered during due diligence include customer concentration risk, undisclosed tax liabilities, contracts that cannot be assigned without third-party consent, and key employees who are not bound by non-compete or non-solicitation agreements. Each of these affects value and risk. Identifying them before signing protects the buyer and gives both parties the opportunity to address them in the deal terms.
Sellers benefit from conducting their own pre-transaction legal review before going to market. Problems discovered by a buyer during due diligence become negotiating leverage. Problems you find and resolve in advance do not.
Negotiate the letter of intent before drafting the purchase agreement
The letter of intent (LOI) is the first binding commitment in most transactions. It establishes the proposed purchase price, deal structure, exclusivity period, key conditions to closing, and a projected timeline. While the LOI is generally described as non-binding on the final transaction, its exclusivity and confidentiality provisions are typically enforceable, and the economic terms agreed to in the LOI anchor the purchase agreement negotiations that follow.
Buyers and sellers who sign LOIs without legal review frequently discover that the terms they agreed to informally are much harder to renegotiate once both parties have invested time and money in the process. Having counsel review or draft the LOI is one of the highest-return investments in any transaction.
Choose the right deal structure
The structure of a transaction determines how purchase price is taxed, what liabilities transfer to the buyer, and how the deal is financed. The two most common structures are asset purchases and stock purchases.
In an asset purchase, the buyer acquires specific assets of the business and generally assumes only the liabilities it agrees to take on. This structure is more common in small business transactions because it gives buyers cleaner protection from the seller’s pre-existing liabilities. In a stock purchase, the buyer acquires the legal entity itself along with its full history of obligations.
Each structure carries different tax consequences for both parties. Sellers typically prefer stock sales for tax reasons. Buyers typically prefer asset purchases for liability protection. Negotiating the right structure requires coordination between legal and tax advisors on both sides.
Secure financing early
For many transactions, financing is the variable most likely to delay or kill a deal. Whether the buyer is using bank debt, SBA financing, seller financing, private equity, or a combination, financing terms should be confirmed as early in the process as possible. A buyer who signs an LOI without confirmed financing exposes the seller to weeks or months of exclusivity with no guarantee the deal closes.
Seller financing is common in transactions in the $3 million to $10 million range. If part of the purchase price is deferred, the terms of that arrangement, including the interest rate, security, and what happens on default, must be carefully documented in the purchase agreement and supporting instruments.
Draft and negotiate the purchase agreement
The purchase agreement is the governing document of the transaction. It sets out the final purchase price, payment terms, deal structure, representations and warranties made by both parties about the condition of the business, indemnification obligations, closing conditions, and post-closing obligations.
The representations and warranties section deserves particular attention. A seller who makes inaccurate representations in the purchase agreement can face post-closing claims for damages. A buyer who accepts broad representations without the right to seek indemnification if they prove false has limited recourse. Every representation carries potential liability, and every indemnification provision determines how that liability is resolved.
Plan integration before you close
Post-closing integration is where the value promised by an M&A transaction is either captured or lost. Operational systems, employee roles, customer relationships, vendor contracts, and brand identity all require deliberate decisions. In transactions in the $3 million to $10 million range, the departure of key employees or the loss of a major customer in the weeks after closing can materially affect the value the buyer paid for.
Integration planning should begin well before closing. The transition period, what the seller is required to do, how long it lasts, and how it is compensated, should be documented in the purchase agreement rather than left to post-closing negotiation.
Understand what happens after the deal closes
Closing is not the finish line. After closing, there are practical and legal steps that are often overlooked: transferring licenses and permits, notifying customers and vendors, updating contracts and bank accounts, completing state and local filings, and satisfying any post-closing conditions in the purchase agreement. In Texas, commercial leases typically require landlord consent to assignment, which must be secured before or at closing.
Deals that close without a clear post-closing checklist frequently result in disputes, missed deadlines, and preventable costs.
Filippov Law Group, PLLC advises buyers and sellers throughout Texas and Utah at every stage of the M&A process, from initial strategy and LOI review through due diligence, purchase agreement negotiation, and closing. If you are considering an acquisition or have received an offer for your business, contact our Houston office at (832) 305-5529 or visit filippovlaw.com/contact to schedule a consultation.