One proven strategy to grow your San Diego business is to buy a company through a stock purchase. A stock purchase is a much more complex legal and financial transaction than an asset purchase, which allows you to purchase specific fixed assets or the goodwill of another company. What are a few things you need to know if you are considering a stock purchase transaction?
What is a Business Stock Purchase Acquisition?
A business stock purchase acquisition allows you to buy the business and “step into the shoes of the owner.” When you acquire a small division of a major corporation, or buy out a competitor with a stock purchase you are able to take ownership of every aspect of the business including its real estate, employees, customers and inventory, as well its assets including customers, intellectual property, trademarks and copyrights.
Government contracts are not usually assignable or transferrable without substantial red tape, so a stock purchase allows you to acquire the actual company with whom they were executed so that you can preserve that business.
When you buy a company through a stock purchase you are acquiring the controlling interest (or the entire company) including all of its assets and liabilities.
Buying Out a Competitor is Often a Successful Business Strategy
The idea of buying out a competitor should always be on your mind. This accomplishes several things at once, such as:
- Reduce the competition in the markets you serve
- Increase your own capacity and product offerings
- Acquire needed equipment, office and production facilities or vehicles
- Expand your customer base and the geography you serve
- Bring in fresh, creative minds that generate new ideas and business perspectives
There are Substantial Risks When You Buy a Company Through a Stock Purchase
There are substantial risks when you buy a company through a stock purchase in San Diego or Southern California. The greatest risks to consider include contingent liabilities, accurate valuation and the protection of key customers and employees. When you take over a company through a stock purchase you acquire everything that company is and has, including all debts and contingent liabilities as well as exposure to litigation.
It is important to conduct a comprehensive due diligence to ensure that you know exactly what risk you are assuming and that the liabilities are proportionate to the advantages you will gain. The Watkins Firm has more than 40 years of experience in mergers and acquisitions. We have proven, proprietary processes, contracts and checklists which guide our clients through every step of the process while protecting their interests at every step of the way.
Proven San Diego Mergers and Acquisitions Attorneys with More Than 40 Years of Experience
If you wish to buy a company through a stock purchase or are considering the sale of your own business you will need the proven San Diego mergers and acquisitions attorneys with more than 40 years of experience. 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.
Your Watkins Firm attorney will help you to understand each step of the process, the risks you must consider and the process to mitigate risks while pursuing the profitable acquisition target at hand.
