Buying and Selling a business (Mergers and Acquisitions)

Properly negotiating and structuring a purchase or sale of a business can be a challenging endeavor.  Having a good team of accountants, legal advisers, valuation experts, tax advisers, lenders or investors is crucial to successfully buying or selling a business.   There are a variety of considerations in buying or selling a business, but there are two major ways to structure a deal: an asset purchase or a stock purchase. 

An advantage of an asset purchase is that it allows the buyer to be selective in terms of the assets that it wants to acquire from the target company.  Also, the buyer is generally not liable for the seller’s liabilities, unless the asset purchase agreement has such language.  Some disadvantages of an asset purchase are that the bill of sale must be comprehensive enough to ensure that no key assets are overlooked and third party consents will likely be required.  

Some advantages of a stock purchase are that the business identity, licenses, permits can be preserved, and continuity of the business may be maintained.   However, the buyer may be liable for unknown or contingent liabilities, and may be forced to contend with the seller’s minority shareholders. 

 Also, there are variety of employment and intellectual property law considerations that go into structuring a proper purchase or sale of a business. Such as the following:

 a) negotiating key employee agreements and non-competition restrictions;

 b) contending with collective bargaining agreements;

 c) resolving anticipated or outstanding claims by employees;

 d) acquiring the desired intellectual property (business name or marks, copyrights, patents or trade secrets);

 e) restricting the other party from using the intellectual property (business name or marks, copyrights, patents or trade secrets); and    

 f) recording assignments or transfers of intellectual property (business name or marks, copyrights, patents or trade secrets). 

Properly, structuring a purchase or sale of a business can often mean the success or failure of the venture.  If you have any concerns or questions regarding the purchase or sale of a business, then please feel free to contact us.

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