The Watkins Firm provides sound legal counsel for a stock purchase agreement here in San Diego or anywhere in California.  One of the most common ways to acquire a company and all of it’s contracts and assets is a stock purchase.  A stock purchase is quite complex from a legal perspective.  There are substantial risks for the buyer as well as the seller.  The stock purchase agreement is a contract which guides the parties through the transaction and in the months (and sometimes years) that follow.  It basically allows the buyer to “step into the shoes” of the seller.

This is extremely important when protecting existing assets such as government contracts, intellectual property and established financing and credit lines.

The primary goal of the Watkins Firm in these transactions is to facilitate the deal while protecting the interests of our clients.  The Watkins Firm provides sound legal counsel for a stock purchase agreement to ensure due diligence is completed and all potential risks are identified and quantified.  The stock purchase agreement establishes the “Status Quo” of the entity being purchased as well as specific details on the assets to be acquired and debts to be assumed.

In many cases it is in all parties best interests for the seller (or existing executive management) to remain in place for a period of time to ensure a smooth transition.  This provides the best opportunity for existing goodwill and customer relationships to be preserved and operations to continue in a smooth, productive and profitable manner.

There may be discrepancies with details provided by the seller, especially when it comes to the company’s books and assets.  We work with the parties in these cases to develop a “hold back” or “reserve” for a period of time.  This allows the buyer to offset unexpected anomalies or financial developments while providing additional incentive for the seller to facilitate a smooth transition.

Pro-Tip: “Well, part of the reason a stock purchase is mor challenging is because the larger the transaction, the more professional due diligence happens. I’ve been in transactions where you’re in the warehouse and the bean counters come in and they have this gizmo on their hip that’s tied to their belt, and it flips up and they scan and they count and they scan and they count and they go through massive warehouses with inventory, and they go through it all, and then they put it into their software programs and identify it and age it and all these things that go into it. And so sometimes when a seller is selling and then a buyer spends the time and money for the millions of dollars they’re going to spend, the due diligence won’t match the paperwork that they’re selling, and then there’s a renegotiation or there’s a cancellation of the deal.

We will help you and guide you with preparation of schedules and all the items that you have done in your due diligence to comply with the due diligence request. We’ll put those together in organized fashions. We’ll work with our sellers and say, okay, the buyer wants this. The buyer wants that. We’ll help them put it together and create the schedules for our due diligence. But most of the time, 99% of the time, it’s the seller or the seller’s CPA or the seller’s consultants that get these documents to us, and then we make sure that they’re organized and they’re presentable, and we send them over after they’re approved by the seller, and then we close the deal.” – Dan Watkins, Founding Partner

The purchase of an existing company is fraught with risk.  The Watkins Firm provides sound legal counsel for a stock purchase agreement to ensure a smooth transaction, reduction of risk for all parties and the completion of the transfer of ownership from buyer to seller.

We invite you to review our podcast Episode 40 – Keys to a Successful Stock Purchase Acquisition as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.