Are you searching for a San Diego Asset Purchase Agreement or APA attorney who can generate contracts and guide you through the process? The mergers and acquisitions lawyers at the Watkins Firm bring 40+ years of experience to your side of the equation, and to help to protect your interests, reduce inherent risks and ensure a smooth and effective asset purchase transaction.
3 Important Takeaways when Searching for a San Diego Asset Purchase Agreement or APA Attorney:
- An asset purchase is one of the most common non-customer focused business transactions. It is an excellent strategy for expanding business capacity and opportunities.
- There are inherent risks and gains for both the seller and the buyer. Each must be protected while maximizing the value of the transaction from their point of view.
- The quality of your asset purchase agreement will affect the success of any business asset purchase transaction.
Expand Your Business Through an Asset Purchase
If you are looking for a strategy to increase capacity or expand your San Diego business an asset purchase could be an excellent strategy. You don’t have to buy an entire company or competitor, and you don’t have to take on unnecessary risk and liability in order to grow. Perhaps the answer lies in a piece of another company’s business. As corporations grow and markets change there may be a product line or an entire corporate division that is either no longer competitive or simply doesn’t fit into the long term corporate goals of the parent company. There may be surplus assets or equipment that is no longer needed, or that has become less of a principle business focus for the seller. In other cases, the seller may simply need to raise capital for an important business purpose.
Consider an asset purchase when you are looking for capital to invest in your company. What assets are no longer providing a return on investment? What equipment or inventory is no longer the primary focus of your company? Are there assets within your business you intend to upgrade or enhance (or have already done so)? If so, how do you properly, legally, and prudently sell a business asset? Ask your Watkins Firm San Diego Asset Purchase Agreement or APA attorney for ideas, and how to structure the transaction to protect your legal and financial interests while providing the capital you need.
What Can Be Purchased in a Business Asset Purchase?
What types of assets can be purchased in this form of business transaction and how can a San Diego asset purchase attorney at the Watkins Firm save you time and money while reducing risk?
Generally speaking, almost any business asset can be acquired in an asset purchase transaction. Your company may wish to acquire
- equipment
- intellectual property
- vehicles
- machinery
- facilities
- operation
- inventory
- real estate, or even
- customers
- accounts receivable
- accounts payable
- employees
An effectively structured asset purchase transaction provides the specific assets your company needs without assuming the underlying liabilities associated with purchasing seller’s business.
How Can A San Diego Asset Purchase or APA Attorney Reduce Your Risk and Save Money on the Transaction?
How can a Watkins Firm San Diego Asset Purchase Agreement or APA attorney help to reduce your risks in this transaction while actually saving money? The keys to any asset purchase are due diligence and an effective transactional contract. An asset purchase agreement must establish many specifics about the assets to be acquired, their condition, unique identifiers (such as serial numbers) as well as their ability to be purchased. If another lender has an encumbrance or secured interest in the property you intend to acquire you’d like to know before handing the seller your money wouldn’t you?
There are other contingent risks associated with an asset purchase, especially if you are acquiring a substantial portion of or all of the assets of another company. Creditors can allege wrongdoing and tie up you and your target assets for a long period of time resulting in extensive and expensive litigation. Shareholders or members in the seller’s company may dispute the ability to sell an asset or group of assets.
The due diligence of the Watkins Firm ensures the asset(s) are free of encumbrance and that the owner has genuine title and ability to sell. We have a proven library of successful asset purchase contracts developed over more than four decades. You don’t have to try to save money downloading a form or risking your business on hand crafted contracts.
Pro-Tip: “Transferring title to an asset. Well, first of all, the reason you want to do an asset purchase is because they’re buying the actual assets they’re 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. You create an escrow for the company and you send out a notice that I bought this company’s assets. And if you’re a creditor, you have 60 days to come and make a claim. Otherwise, after that I’ll own not only the, the equipment I’ll own, the Goodwill, I’ll own the name, the, uh, IP, everything free and clear. If any creditors claims, when you buy the shares, then you end in a situation where you’re not buying the assets, you’re buying, whatever the shares have power over, and that can be complicated and hard to understand or even know what you’re getting. So from that point of view, and also for the tax advantages of depreciating assets and other things, most people prefer an asset purchase.
Pro-Tip: “Transferring title to an asset. Well, first of all, the reason you want to do an asset purchase is because they’re buying the actual assets they’re 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. You create an escrow for the company and you send out a notice that I bought this company’s assets. And if you’re a creditor, you have 60 days to come and make a claim. Otherwise, after that I’ll own not only the, the equipment I’ll own, the Goodwill, I’ll own the name, the, uh, IP, everything free and clear. If any creditors claims, when you buy the shares, then you end in a situation where you’re not buying the assets, you’re buying, whatever the shares have power over, and that can be complicated and hard to understand or even know what you’re getting. So from that point of view, and also for the tax advantages of depreciating assets and other things, most people prefer an asset purchase.So when an asset is encumbered, is it the responsibility of the seller to disclose that? And how do you handle selling an asset when there are UCCs and encumbrances against it? Well, that happens a lot and 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 attorney trust account or an actual commercial escrow company, like Chicago Title, or 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, 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 has advantages and disadvantages, as does the seller, what’s the advantage to the buyer in an asset purchase?
It might surprise you to learn that 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 are getting. And that’s when we come up with a term called schedules, depending on how expensive, or large transaction is. Larger transaction – you’re going to have more schedules. Transaction schedules are what we use to organize and identify the assets of a company. 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 they’ll be listed. The seller will have to disclose important facts and issues about each asset. The buyer needs to establish a fair cash value for any assets. Or, you may have accounts, and good will, and taxes, and all the things that you need to evaluate as a buyer in an organized fashion to review. 1 – you want to make sure you know what you’re getting, and 2, you want to make sure you get representations and warranties from the seller that ‘this is what I’m giving you’ in case later on, it turns out they weren’t disclosing the entire picture.” – Dan Watkins, Founding Partner
Proven, Experienced San Diego Mergers and Acquisitions Attorneys with 40+ Years of Experience
Are you searching for a San Diego Asset Purchase Agreement or APA attorney with extensive experience and a proven track record of success in business asset purchase transactions? We will custom tailor a proven agreement to the specifics at hand in a cost-effective and timely manner. This provides assurance that your asset purchase will be successful while precluding almost every aspect of risk associated with an asset purchase transaction. asset purchases can be easier to accomplish – especially if there is a minority interest that is blocking the sale of a company. It takes business savvy and expert legal advice and contract structuring to accomplish an asset purchase. If you are interested in learning more, or are considering an asset or stock purchase 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. Watkins Firm attorneys have assisted with thousands and thousands of asset and stock purchases over the more than four decades we have served the San Diego and California business community. We can help you to avoid the risks, save money, acquire needed assets and implement successful strategies to grow your business.
