How does an asset purchase protect you from liability and why is this often a better option for a buyer than a stock purchase agreement? In a word: liability. There are several mergers and acquisitions transactions that should be structured using an asset purchase agreement. The asset purchase agreement allows the buyer to acquire specific property or assets from the seller without taking on existing or contingent liabilities associated with the purchase.
The asset purchase may apply to many things from inventory to the warehouse itself, and from vehicles and construction equipment to intellectual property. You may acquire a competitor’s trucks, customers and inventory without having to assume all of their debts and liabilities. The asset purchase agreement protects the buyer and ensures clear title passes from the seller to the buyer for each separate asset acquired under the asset purchase. The Watkins Firm are experienced mergers and acquisitions and business contract attorneys. We have decades of service to the San Diego business community and work with our clients to ensure smooth acquisitions.
Part of the acquisitions process is due diligence. You want to make sure you understand exactly what you are purchasing including the quality and condition of any tangible asset or inventory, known mechanical issues or potentially hidden defects. You’ll need to ensure that the items are free from encumbrance when title is passed to you. You also need to thoroughly inspect all aspects of the transaction itself to ensure that you will in fact walk away from the transaction with exactly what you intended to purchase.
Asset purchase agreements are quite legally complex, and it is important to work with the attorneys at the Watkins Firm to protect your interests at every step of the transaction. How does an asset purchase protect you from liability and provide the benefit of the bargain you seek? It will only do so when you work with proven and experienced lawyers at the Watkins Firm to complete due diligence, carefully and comprehensively specify the specific assets to be purchased while ensuring the assets are free of encumbrance. We invite you to contact us for a free consultation at 858-535-1511. Learn how an asset purchase can help you to more rapidly expand your company and increase profitability.