The experienced mergers and acquisitions attorneys at the Watkins Firm can help your management team to understand how to structure an asset purchase transaction in order to grow your San Diego business while protecting against unexpected liabilities.

What is an Asset Purchase?

An asset purchase agreement is a powerful strategy to help your company to expand it’s product and service offering with fairly minimal exposure to risk.  Business opportunity often arises when least expected.  A competitor is selling bucket trucks or inventory or going out of business completely.  A major corporation has decided to de-emphasize a product line that doesn’t fit into their overall corporate strategy but aligns perfectly with yours.  A company without the strength and resources of your organization is perfectly positioned to serve a new geographic region or vertical market niche outside of your existing markets.

The three primary questions one should as when considering an asset purchase are:

“do you have the financial resources to complete the transaction?” and

“how will this acquisition increase your business opportunities and/or profitability?” and

“how do you ensure you have clear title to the assets you purchase once the transaction is completed?”

Do You Know How to Structure an Asset Purchase in San Diego?

Structure an asset purchase to expand your San Diego business by allowing you to purchase the inventory, equipment, intellectual property or even customers of another business. If you have the required capital investment it is important to ensure that you know the condition of what you are buying and you receive clear title to any asset you intend to purchase, free of encumbrance or liability.

The experienced lawyers at the Watkins Firm help you to complete the process from initial negotiations, through due diligence and inspection to drafting of a well-crafted asset purchase contract.  We work to ensure the contract provides the important details regarding the item(s) you are purchasing and that your ownership of the item(s) in question is clearly established and title is appropriately transferred, free of encumbrance.

Pro-Tip: “Well, first of all, the reason you want to do an asset purchase is to acquire the actual assets as they are being described, and they’re being sold to you in a manner where you don’t have to worry about all the other problems or secrets this corporation and its shareholders may have.

An asset purchase, will often entail an escrow. You create an escrow for the company and you send out a notice that basically says “I bought this company’s assets.” And if you’re a creditor, you have 60 days to come and make a claim. Otherwise, after that you will own the specified equipment, the Goodwill, the name, the IP, whatever is covered by the asset purchase contract, free and clear.

How do you handle an asset purchase when there are UCCS and encumbrances against the asset(s) you intend to acquire?  In those situations you may need what we call “carve outs” or clauses in the agreement where the money comes in, goes into an escrow account, and then you put escrow instructions in and say, okay, when the money comes in, the escrow, officer’s instructed to pay off this creditor or that creditor. Or, you may also have a carve out, where you’ll enter into a new agreement with the vendors or the creditors to keep doing business with them. So all those types of things must be considered in order to complete a successful asset purchase.” – Dan Watkins, Founding Partner

It is important to work with the experienced mergers and acquisitions attorneys at the Watkins Firm to help you properly and thoroughly structure an asset purchase.  Asset purchase contracts expand your San Diego business opportunity by providing the resources necessary to expand in your own market or to grow into new geographic or vertical markets.  In some cases it may be necessary to consider a stock purchase – the purchase of a company or controlling interest therein.  This may be necessary to protect existing contracts and customer relationships, preserve branding and maintain employees during the transfer.

If you are considering an asset purchase 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.

Learn how we can help your company to acquire the needed assets and expand your capacity and profitability.