San Diego Business Mergers and Acquisitions Attorneys
An asset purchase 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.
There are two primary methods for buying a corporation or business: asset purchase or stock purchase. Each method has advantages and disadvantages to both the buyer and the seller. The asset purchase provides specific advantages to the buyer in the form of increased assets 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 provide 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.
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.
Contact Experienced San Diego Asset Purchase Lawyers
Asset purchase agreements and transactions are quite complex, and require a unique blend of legal and business skill, as well as the ability to foster and protect working relationships and a “positive” atmosphere for the completion of a successful deal. If you are interested in discussing the acquisition of a business or its assets contact the proven merger and acquisition attorneys at the Watkins Firm at 858-535-1511 or contact us to schedule a date for a personal meeting in our offices in San Diego. Our clients value that we go much further than a simple 30 minute conversation or consultation. We will develop a detailed strategy and budget and discuss all your available options so that you can enter the transaction with confidence and with a clear understanding of the projected costs.