An excellent expansion strategy for a San Diego business is to acquire a competitor or a portion of their assets through a “stock purchase” or “asset purchase.” Each strategy has pros and cons, but the advice of our seasoned and experienced business attorneys will help you to accomplish your goal.
You can purchase a portion of a competitor’s fixed assets or goodwill through an “asset purchase.” An asset purchase agreement transfers title on specific items including:
- Real Estate
- Goodwill (Customers)
The primary advantage of an asset purchase is it allows one to purchase exactly the portion of a competitor’s business desired, without having to accept any of the other company’s debt or contingent liabilities. However, there are some things you cannot acquire through an asset purchase such as government contracts or intellectual property.
In these cases, a “stock purchase” can make more sense. A stock purchase means you are buying the company, lock, stock and barrel. You take ownership of the business and everything associated with it, but you are also responsible for all of its debts, and for any contingent legal liability or lawsuit that may exist. These agreements must be carefully structured to protect our clients from unexpected expenses (non-disclosed debts or contingent liaibilities) while ensuring that they have complete ownership and voting control of the company.
If you are searching for a way to expand your company we invite you contact the business advisors and mergers and acquisitions attorneys at Allen Barron for a free consultation at 866-631-3470. We have more than 40 years of experience and consultants who have run multi-national organizations and local small businesses. We can help you to identify take-over targets and coach you through the process.