Are you considering a San Diego or Southern California business acquisition through a stock purchase transaction?  Acquiring a business through a stock purchase offers tremendous opportunity for profit and business growth as well as exposure to genuine risk.

The Watkins Firm mergers and acquisitions attorneys have more than four decades of proven experience helping San Diego entrepreneurs and business owners with Stock Purchase Agreements and every important step of a merger and/or acquisition.  We support our clients through every critical step of the process from negotiations through due diligence, contract creation and review, escrow, and transition following the completion of the sale.

The Risks and Benefits of a Stock Purchase Transaction

What are the risks and benefits of a stock purchase transaction?  A well-strategized and executed stock purchase acquisition allows you to “step into the shoes of the owner” assuming all assets, debts, profits and liabilities of the business or corporation you acquire.  This acquisition can provide the assets, people and products to expand your existing company into new and profitable vertical and geographic markets.  It can make you more valuable to the customers you serve.

However, according to the Harvard Business Review and the Wall Street Journal the vast majority of stock purchase transactions in the United States fail within two to three years.  Why?

Ask Dan Watkins, our founding partner and an experienced San Diego and Southern California mergers and acquisitions attorney what percentage of our firm’s acquisitions succeed.  The answer is – the vast majority… “almost all of them.”

Why?  Why to most of these transactions nationally fail and what advice and services can the Watkins Firm provide to protect your interests, help you to avoid issues and complete a successful and profitable business acquisition through a stock purchase transaction?

What are the Greatest Sources of Risk?

What is the biggest risk associated with acquiring a business through a stock purchase in San Diego?  In a word: liability.  Unlike an asset purchase, where the buyer acquires specific assets, the greatest risk in a stock purchase lies in contingent liabilities that may be unknown or not fully developed prior to the closing of the transaction.  While this may not represent a failure to disclose on the part of the seller, it is a genuine risk assumed by the buyer.  There may be an unknown defect in one of the target products or corporate processes.  An existing customer issue may escalate to an expensive and resource consuming lawsuit down the road.

These transactions are all about extensive, successful due diligence.  Some of most important steps required to complete the stock acquisition including (but not limited to):

• Identification of all assets, customers, intellectual property, existing contracts and potential new business contracts in process
• Disclosure and associated encumbrances for all loans, debts, liabilities and contingent liabilities
• Access to and inspection of corporate books and corporate records
• Negotiation, creation, review, modification and approval of the Stock Purchase Agreement
• Terms including purchase price, disbursement of funds, responsibilities of seller to ensure transfer of Goodwill
• Hold-back or reserve for unforeseen liabilities

 

Proven Partners for a San Diego or Southern California Business Acquisition Through a Stock Purchase

If you are considering a San Diego or Southern California business acquisition through a stock purchase transaction you need the experienced, proven attorneys at the Watkins Firm.  Ask about our proprietary, proven library of checklists and acquisition documents developed over our 40 years of experience.  We tailor an existing, proven contract and supporting documents which have been battle tested and proven in many successful acquisition transactions.

We provide insight, analysis, review and supporting legal services at every step of this legally and financially challenging process.  We invite you to review our podcast Episode 13 – Mergers and Acquisitions, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.