Are you considering mergers and acquisitions with a stock purchase in San Diego or Southern California? A stock purchase transaction allows you to purchase a company, take ownership of a competitor, or acquire a subsidiary of a large US corporation which might no longer fit into the parent company’s short or long term plans.
What Are a Few of the Reasons to Consider a Stock Purchase
There are several sound reasons to approach mergers and acquisitions with a stock purchase. However, stock purchase business transactions also represent substantial risks as well. A stock purchase allows you to purchase all of a company’s assets including the intellectual property, real property and inventory of a company, as well as existing employees, contracts, customer bases and distribution networks.
A soundly conceived and well-executed stock purchase transaction allows you to “step into the shoes of the seller” and take complete or controlling interest of a corporation. This can provide access to additional product and service offerings as well as new inroads into geographic and vertical markets your business is not presently structured to pursue.
Here in San Diego and Southern California it is quite common to conduct business with the Navy and other branches of the military or US Government. If you are targeting the acquisition of a company with military or government contracts a stock purchase is usually the best strategy to preserve and protect existing contracts.
What are the Risks of Mergers and Acquisitions with a Stock Purchase?
It is also important to be aware of the risks of mergers and acquisitions with a stock purchase. You are not only acquiring the assets of a company with a stock purchase, you are also assuming all liabilities and corporate debt as well as unknown and unforeseen contingent liabilities.
It is important to ensure that the business is not involved (or likely to become involved) in expensive business litigation or other potential exposures which would reduce the value or attractiveness of the mergers and acquisitions with a stock purchase transaction at hand.
The Watkins Firm has more than 40 years of experience in these legally and financially complex transactions. We have proprietary internal due diligence checklists which have been perfected through hundreds and hundreds of these transactions across the decades. We help to verify all of the Representations and Warranties provided by the seller. It is important to validate every aspect of the target acquisition. Has anything changed in the market(s) served by the company such as new competition or product obsolescence? Has there been any issue with critical customers or existing key employees? How will you ensure these existing relationships (internal and external) are passed through to you during the process of “transferring existing goodwill as you take ownership? What proven strategies ensure the seller assists with the transition of ownership? How will unforeseen or undisclosed liabilities be charged back to the seller within a given timeframe?
Experienced, Proven San Diego Mergers and Acquisitions Attorneys
You need experienced, proven San Diego attorneys when approaching mergers and acquisitions with a stock purchase transaction. A merger or acquisition through a stock purchase is an excellent strategy to expand and grow your business. It is important to understand the legal and financial complexities of the transaction, your business risks and potential gains.
Your Watkins Firm M & A attorney(s) protect your interests throughout the transaction, conduct thorough due diligence and provide stock purchase contracts which ensure transfer of ownership while protecting you and your company from unforeseeable risks and contingent liabilities.
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.