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Types of Texas business transactions

When most people think of a business transaction, they think of a simple one. Businesses actually engage in several different types of transactions, which range in complexity. In the context of commerce, businesses engage in transactions with their customers, vendors, other companies, agencies and banks.

The types of business transactions can be broadly described as falling into three main categories. The first type of business transaction is a simple transaction, such as when a customer pays a restaurant for a meal. These transactions are normally a single event, which may or may not be repeated in the future.

Complex transactions involve a series of events. Examples include purchasing inventory or other items with a line of credit. The steps necessary in order to complete a complex transaction normally involve multiple events, such as applying for and receiving credit approval, booking flights and hotels for business travel and obtaining mortgages, prior to the actual transaction. Ongoing transactions, the third broad category, are ones that continue and involve multiple individual transactions. Examples include a business's ongoing relationship with its banking institution or an ongoing contractual relationship with a vendor.

When a company is considering mergers with or acquisitions of an existing business, it is important that the potential acquiring company investigate the target business's financial transactions. Complex business transactions can offer a picture of the overall financial health of a company. Anytime a company is considering a merger or acquisition, it is important to understand the business's finances and to conduct a thorough analysis. Failing to appropriately investigate can lead to losses rather than profits. Business clients often choose to seek the assistance of a business law attorney who practices in mergers and acquisitions in order to ensure that the transaction goes smoothly while profits are protected.

Source: The Chronicle, "Business Transaction Definition & Examples", Jane Doyle, November 11, 2014

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