Are you anticipating a substantial business transaction and growing through a merger or acquisition? Mergers and Acquisitions (M & A) generate new opportunities for business growth in San Diego and across regional, national and international markets.
The Two Primary Tools of M & A
The two primary tools for the acquisition of another company or a portion thereof are an “asset purchase and a “stock purchase.” What is the difference between these two strategies of acquisition?
An asset purchase allows you to select and acquire only the specific assets or division of a company or competitor which help you to accomplish your business goals, without the need to take on that company’s liabilities or other products, facilities or services.
Asset purchase contracts cover everything from inventory to vehicles, real estate to customer bases and even intellectual property. The primary concerns in an asset purchase are clear title, and assets without unknown encumbrance. Purchasing the assets of a corporation may involve the interests of shareholders other than the “owner” of the company. The Watkins Firm will work with you to help you to sell corporate assets or to properly and successfully acquire the assets of another business or entity.
In a stock purchase the buyer is known to “steps into the shoes of the seller.” This strategy allows all assets to maintain their existing tax basis and the acquisition target to maintain existing permits and otherwise non-assignable licenses and contracts. There is a significant risk of contingent liability requiring the buyer to conduct thorough due diligence.
If you are working on plans for growing through a merger or acquisition the experienced mergers and acquisitions attorneys at the Watkins Firm help to structure to the transaction to ensure a smooth transition while providing a way to recoup unforeseen liabilities, damages or discrepancies in the books.
There may be tax consequences, customer goodwill, key employees, government contracts or other complications or sound business strategy which dictate a “stock purchase” transaction. This is the primary method for acquiring an entire company and all of its assets but requires you to assume all debt and existing and contingent liabilities of the acquired business as well.
A stock purchase transaction can be one of the most legally and financially complex transactions you will take part in. It is important to work with the experienced M & A attorneys at the Watkins Firm who have more than 40 years of experience in thousands and thousands of these transactions.
Growing Through a Merger or Acquisition Requires a Strong, Experienced Legal Partner
Growing through a merger or acquisition requires a strong, experienced legal partner who can guide you through each step in this complex process. While mergers and acquisitions generate new opportunities there are risks and rewards to balance.
Each merger or acquisition strategy has advantages and potential disadvantages, and you should consult with our experienced legal team with deep business acquisition insights gained through thousands and thousands of M & A transactions.
Mergers and acquisitions generate new opportunities for business growth. The attorneys at the Watkins Firm have served the San Diego business community for more than four decades. We have helped thousands of businesses to expand and grow and have substantial experience in stock purchase agreements and asset purchase contracts.
If you are considering buying out a competitor, or need advice on mergers and acquisitions we invite you to review our recent 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.
