A stock purchase allows you to buy a company outright, but there are risks associated with these transactions. The stock purchase agreement must be carefully negotiated and meticulously prepared to ensure that you actually receive all of the benefit you anticipate, while preserving access to key personnel and customers. What will the transition plan look like? How long will the former owners be required to maintain an active role or be available as consultants? What percentage of existing sales and customer base must be preserved through the transaction to ensure a transfer of genuine value?
Unlike an asset purchase, a stock purchase allows you to buy a company outright, acquiring all of a competitor’s or existing company’s business assets including government contracts and intellectual property. However, a stock purchase exposes you to all debts and liabilities of the company as well. If there are any potential disputes or contingent liabilities, the stock purchase agreement needs to address how these costs or losses are to be offset, and the period of time former ownership can be held liable.
Due diligence in these transactions is crucial to long term success. The experienced mergers and acquisitions attorneys at the Watkins Firm have decades of experience in these transactions. We will guide you through the process step-by-step and ensure that the transaction is well structured based upon your own goals and objectives. Our dedicated team will help with every aspect from valuation, through due diligence, contract negotiations and preparation of the stock purchase agreement. If you are considering the purchase of another company, we invite you to contact our experienced business attorneys or call us for a substantive and complimentary consultation at 858-535-1511. We will discuss the transaction you are considering, the steps required to accomplish it, the risks you face and the strategies that will protect your interests while allowing you to capitalize on a tremendous opportunity to grow your own business.