What is an effective strategy to rapidly expand and grow your company’s business opportunities? An asset purchase can grow your business while preventing exposure to contingent liabilities. The experienced business attorneys at the Watkins Firm have more than 40 years of experience in thousands of asset purchase transactions here in San Diego and Southern California. You’ll need an experienced mergers and acquisitions attorney to protect your interests in this legally and financially complicated transaction.
What is a Business Asset Purchase?
A business asset purchase contract or agreement is used to purchase the assets, real estate, customers, intellectual property, equipment, inventory or real estate of another company without exposing your business to additional liabilities associated with the other company. An asset purchase allows you to target the specific assets you need to acquire to expand your own opportunities and move forward with profitable business.
The keys to a successful asset purchase are achieving a clear transfer of title free of encumbrance or lien and an understanding of any associated retitling and permitting process. For the majority stockholders and controlling interests, an asset purchase reduces the likelihood of potential complications with minority stockholders while allowing one to influence potential tax ramifications. The buyer will also gain tax advantages with a well structured “basis.” The buyer needs to make sure there are no specific liens on the asset(s) and not general contingent liabilities that may arise after the transaction is completed.
Once completed, an asset purchase can grow your business by providing the necessary equipment, facilities, inventory or even customers to reach new markets or increase market share.
The Difference Between an Asset Purchase and a Stock Purchase
When it comes to acquiring part or all of a competitor or a division of a corporation who may be downsizing there are two primary tools: an asset purchase agreement and a stock purchase agreement. A stock purchase agreement is used to purchase an entire company. This vehicle is used when you wish to take over every aspect of the business including existing government contracts, subsidiaries and employees. The disadvantage of a stock purchase is that you also must assume all debts and liabilities of the company you acquire. This additional exposure may not be necessary if you only need to purchase specific assets to accomplish your business goals.
An asset purchase allows you to purchase the specific equipment, facilities, inventory or customers you need without the challenges of combining your organization with another and integrating existing employees and financial challenges of another company into your organization.
An Asset Purchase Can Grow Your Business – Experienced Mergers and Acquisitions Attorneys
An asset purchase can grow your business allowing you to expand capacities and even reach new markets. The experienced mergers and acquisitions attorneys at the Watkins Firm have decades of experience advising our business clients in all aspects of buying part or all of a business, as well as selling your company. We help you to negotiate the asset purchase contract and perform due diligence to ensure that you know exactly what you are acquiring, any encumbrances that you would assume and that you receive clear title to those assets as part of the transaction.
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.