San Diego Asset Purchase Agreement or APA Contracts

Asset Purchase Agreement or APA

San Diego Business Mergers and Acquisitions Attorneys

An Asset Purchase Agreement or APA can be a very effective strategy for acquiring the assets, facilities or business operations of a competitor or business entity.  The purchase of a company’s assets allows you to acquire specific inventory, real estate, facilities, equipment, customers, trade names, as well as “goodwill” and other less tangible assets.  The seller usually retains existing cash and liabilities as well as the legal business entity itself.

Important Things to Know About a California Asset Purchase Agreement or APA:

• An asset purchase transaction is a common business transactions here in San Diego, and throughout California and across the United States.
• An asset purchase presents several genuine risks for both the buyer and the seller.
• It is important to work with an experienced asset purchase and mergers and acquisitions attorney to protect your interests as a buyer or seller, and to ensure the Asset Purchase Agreement or APA is well-conceived and properly executed

What are the Primary Applications and Elements of an Asset Purchase Agreement or APA?

An Asset Purchase Agreement or APA can be used to purchase a variety of business-related assets.  This includes, but is not limited to:

• Real estate – including raw land, buildings, store(s), facilities, and even fixtures
• Vehicles – everything from company cars to heavy equipment
• Machinery and equipment – specific machines, production lines, office equipment and furnishings, and shelving.
• Inventory – packaged goods and finished products, raw materials, and everything in between.
• Intellectual property – copyrighted materials, copyrights, patents, trademarks, trade names and brands, ads, logos, and software.
• Contracts – any type of valued business contract including customers, employees, service agreements, supply and distribution agreements, and/or partnership or joint venture contracts.
• Financial assets – Accounts receivable and payables; security deposits

Risks for the Seller and the Buyer in an Asset Purchase Transaction

There are genuine business and financial risks for both the seller and the buyer in an asset purchase transaction in California.  This is why the quality of the Asset Purchase Agreement or APA is so important.

The Watkins Firm has more than 40 years of experience in asset purchase and mergers and acquisitions transactions here in San Diego, across California, and throughout the United States.  Based upon thousands and thousands of successful asset purchase transactions, we can tell you it is important to have a carefully crafted, thorough Asset Purchase Agreement or APA.

The Watkins Firm maintains our own proprietary, battle-tested library of proven mergers and acquisitions and asset purchase contracts.  We do not need to take the time or expense to create anything from scratch.  We cost efficiently tailor an existing, proven APA to meet your unique requirements and applications based upon the transaction at hand.  This ensures you have a strong contract guiding the acquisition process from start to finish, and reduces both financial and legal risks associated with any business asset purchase transaction.

The Buyer’s Perspective:

An asset purchase provides specific advantages to the buyer in the form of increased business capacity, and a potentially more favorable tax position without contingent liabilities that would come along with a traditional stock purchase.  The resulting restructuring of tax “basis” allows the acquired assets to provide a better return on investment in a shorter period of time.  There are assets that may present more intricate challenges for buyers including intellectual property, leases, and existing contracts with customers and suppliers.  These assets may require releases, transfers or modification extending the timeframe of the purchase and its attractiveness to the buyer.

Your experienced Watkins Firm M & A attorney will ensure the Asset Purchase Agreement or APA reduces or eliminates aspects of legal and financial risk associated with these transactions.  A buyer should be particularly concerned with:

• Obtaining clear title, free of liens, successor liabilities, rights of other business partners, members, or shareholders, taxes, or lien holders;
• If existing financing is to be assumed or transferred, or the seller provides financing, contracts must be carefully crafted, and the potential for assumed liabilities must be mitigated.
• An accurate valuation is one of the primary considerations of any successful asset purchase transaction.

The Seller’s Perspective:

The seller in a business asset purchase transaction can benefit in many ways.  An asset purchase may provide the opportunity to divest the company of technologies and inventory that is either less profitable or a distraction from the primary focus of the business.  Asset purchase agreements allow the seller to generate operating capital or retire debts or contingent liabilities.  While they may be taxed at a higher rate than other forms of revenue, asset sales can be structured in such a way (such as carrying a percentage of the transaction back in a high yield note) as to increase the overall profitability or yield for the transaction.

Watkins Firm attorneys represent sellers in M & A transactions such as an asset purchase to protect their own legal and financial risks and responsibilities.  The seller’s primary concerns in an Asset Purchase Agreement or APA include, but are not limited to:

• The right to sell the asset(s) – are there any lien holders, parties, partners, members, shareholders, tax agencies, or even employee benefit interests that might have a right to object to the sale?
• Undisclosed liens or liabilities – failure to make full, accurate representations and warranties, issues regarding the condition, functionality, or value of the asset(s), retained liabilities, tax liens or UCCs, and other contingent liabilities.
• Payment concerns – ensuring prompt payment, limitation of risks associated with “earnouts” (pricing based on future performance or value), complications with seller financing or installment agreements; Ensuring the buyer has the capacity and financial resources to complete the transaction.

Other Important Mergers and Acquisitions Content Pages and Blogs:

Stock Purchase Agreements
Asset Purchase Agreement or APA
Membership Interest Purchase Agreement or MIPA
The Difference Between a MIPA and an APA
What is the Difference Between a Merger and an Acquisition?
California Mergers and Acquisitions Require a Skilled Attorney
The Challenges of Mergers and Acquisitions in California
Eliminate a Lot of the Risk of a San Diego Asset Purchase

Listen to our Recent Sound Business Insights Podcast:
“Episode 13 – Mergers and Acquisitions”

Contact Experienced California Asset Purchase Agreement Attorneys with Decades of Proven Experience

An asset purchase transaction in California is only as good as the quality of the Asset Purchase Agreement or APA that governs the transaction.  Business asset purchase transactions can present extremely complex legal and financial issues. Your choices regarding which process to follow, due diligence and effective transactional contracts and documents can have a substantial impact on the timeliness and success of the asset purchase, as well as your business and personal interests.

Our experienced mergers and acquisitions attorneys will protect your interests while providing sound counsel and guidance at every step of the transaction.   You can place your trust in the Watkins Firm for any asset purchase or stock purchase, merger, joint venture, or transactional opportunity.  We have more than 40 years of proven experience facilitating successful and profitable complex business purchase and sale transactions.

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 substantive, complimentary consultation today to discuss how we can help you achieve a positive outcome in your transaction.