An asset purchase is a common business acquisitions tool in San Diego and throughout California. The Asset Purchase Agreement or APA allows your business to acquire the specific business assets, intellectual property, inventory, real estate and even customers of a competitor or complimentary business. This is one of the fastest and most effective mergers and acquisitions strategies to expand your business and increase profitability.
3 Key Takeaways of Why an Asset Purchase is a Common Business Acquisitions Tool in San Diego and Throughout California:
- an Asset Purchase Agreement or APA allows a business to acquire the specific assets, intellectual property (IP), customers, inventory, or real estate of an existing business or competitor.
- Look for experienced business and mergers and acquisitions attorneys who can protect your interests, provide proven transactional documents and services, and guide you through the asset purchase process in California.
- The seller wants to be paid; the buyer has several risks including the need to secure clear title and asset(s) without hidden flaws or contingent or successor liabilities
Proven San Diego Business and Acquisitions Attorneys
The proven business attorneys at the Watkins Firm have almost four decades of experience in the negotiation, creation and review of asset purchase agreements, and completion of successful APA transactions here in San Diego and throughout California. We understand the “energy” surrounding these types of transactions, and work to foster and protect a positive and constructive working environment. The asset purchase agreement protects you from contingent and/or successor liabilities associated with the “seller.” It ensures that you receive clean title to the specific assets you wish without exposure to external debts, obligations or liabilities the seller may carry.
An asset purchase is a common business acquisitions tool in San Diego and throughout California. In some cases, the asset purchase agreement is very straight forward. You wish to purchase three specific bucket trucks, and simply need to ensure that the transaction is properly structured and executed, you receive clean title, and the assets are free of any liens or claims.
In other cases, it may be important to ensure that certain performance benchmarks are met, that customers transition smoothly while maintaining existing goodwill. In many of these cases a “hold-back” or escrow may be created to offset unforeseen complications, mechanical issues, production differences or other complications.
Pro-Tip: “What are some of the key aspects of an APA (Asset Purchase Agreement) transaction. You’re transferring title to an asset. The reason you want to do an asset purchase is because you intend to buy the actual assets that are being described, and they’re being sold to you in a manner where you don’t have to worry about all the other problems or secrets this corporation and its shareholders may have. An asset purchase will often entail an escrow. We help to create an escrow for the transaction, and send out a notice that you have bought a company’s assets. And if you’re a creditor, you have 60 days to come and make a claim. Otherwise, after that you’ll own not only the equipment, you’ll own any associated Goodwill, own the name, the IP, every asset associated with the transaction free and clear.
What happens when an asset is encumbered? Is it the responsibility of the seller to disclose that? And how do you handle transactions when there are UCCS and encumbrances against an asset?
This is quite common. We’ve done literally thousands and thousands of these transactions. When that happens, you provide for what we call ‘carve outs’ or clauses in the agreement where the money comes in, goes into an escrow account, whether it’s our trust account or an actual commercial escrow company, like Chicago Title of First American Title. And then you put escrow instructions in and say, ‘okay, when the money comes in, the escrow, officer is instructed to pay off this creditor or that creditor, or you also have a carve out, and/or you’ll enter into a new agreement with the vendors or the creditors to keep doing business with them. So all those types of things are included when you do an asset purchase.
In each of these transactions, the buyer and the seller each have advantages and disadvantages. It’s harder to be a buyer. It’s easy to be a seller. A buyer has the harder task because the buyer gives money and the buyer has to verify what they’re acquiring. And that’s when we come up with what are called schedules, depending on how expensive or large a transaction is, you’re going to have more schedules (if you’re represented by an experienced Watkins Firm APA and M&A attorney). We have a proprietary library of proven transaction schedules and documents we custom tailor to the transaction at hand in order to organize and identify the assets within the transaction at hand. For example, you have your real estate schedules, you’ll have a disclosure by the seller of what they own and all the contracts they’ve signed with respect to real estate. You’ll have equipment schedules, and all transaction assets will be listed, and and the seller will have to provide full, accurate disclosures. We account for cash value, and you’ll have accounts and good will and taxes and all the things that you want to do as a buyer in an organized fashion to review a) to make sure you know what you’re getting and b) to make sure you get representations from the seller that this is what (the seller is) giving you in case later on, it turns out they weren’t telling the truth.” – Dan Watkins, Founding Partner
An Asset Purchase Agreement is a Powerful Acquisitions Tool in San Diego and Throughout California
An asset purchase is a common business acquisitions tool in San Diego and throughout California. As a buyer, you want to make sure that you receive clear title to the specific assets you are targeting, and that if there is any issue with the acquisition that you have a method to hold the seller accountable. As a seller, the primary objective is to complete a transaction, as-is, for a fixed price and walk away. The two points of view are obviously not always in harmony with one another, and that is where the art and legal skill of our experienced mergers and acquisitions lawyers becomes evident. We work to accomplish your goals efficiently, while reducing or eliminating risk and protecting your short and long-term interests.
If you are interested in acquiring the assets of another business we invite you to review our podcast Episode 13 – Mergers and Acquisitions, as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Meet Daniel Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through. Dan enjoys digging into the facts and finding creative solutions to problems. He contributes his insights candidly and constructively.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
