It is important to know when to use an asset purchase to acquire an existing San Diego business. The asset purchase is the most effective tool for reducing risk and contingent liabilities associated with the acquisition or merger with an existing business. The other option is a “stock purchase agreement.” If you wish to acquire an S-corporation or a C-corporation you can use either option. If the business you wish to acquire is a Limited Liability Company (LLC), partnership or sole proprietorship the stock purchase will not be an option. These entities simply do not have stock. While it is possible to purchase the ownership interest, partnership interest or membership interests in these entities, this option may expose you to liabilities and risks you will not have to assume by simply purchasing the assets you wish to obtain.
You should consider an asset purchase to acquire an existing San Diego Business or a portion of it. The “assets” to be purchased can include (but are not limited to) equipment and vehicles, inventory, real estate or facilities, intellectual property, some contracts and even goodwill. If you are purchasing a “going concern” or an active business and the assets you intend to purchase require employees to support them, you may be exposed to additional regulations, especially if the transaction involves a business with UK or European interests.
The primary advantage of an asset purchase is the ability to control debt and liabilities. You may choose to accept or assume existing loans and obligations on the assets to be acquired, or you may wish to ensure that all encumbrances are cleared by the purchase prior to the transfer of title or ownership. The due diligence associated with these transactions ensures that the buyer knows the condition of the assets they are acquiring and all pertinent historical records and information that may be associated with those assets (such as maintenance records, depreciation schedules, etc.).
The attorneys at the Watkins Firm have decades of experience and expertise supporting our clients in asset purchase transactions. Using an asset purchase to acquire an existing San Diego business can be an excellent strategy to expand your own company and increase profits. If you are interested in learning more or require assistance with an asset purchase we invite you to contact us for a free consultation at 858-535-1511.