Are you looking for ways to grow your business or expand into new markets? The experienced business consultants and attorneys at Allen Barron can guide you in a merger or acquisition through an asset purchase agreement. There are two ways to purchase a company or competitor: an asset purchase or a stock purchase. Which is better?
The answer to this question lies in the “liabilities” associated with the transaction. In a “stock purchase” the buyer may take an ownership interest or control of a company, including all assets and liabilities of the business itself. This can expose a buyer to a heavier debt burden as well as contingent liabilities that are avoided with an “asset purchase.”
The easiest and least risky way to purchase part or all of a company is an asset purchase. An asset purchase agreement specifies specific “property” or assets to be transferred from one party to another including title to the acquired asset. This strategy is especially useful when you wish to purchase specific vehicles, real estate or buildings, inventory, machinery, technology or intellectual property. These transactions require substantial due diligence so that the buyer is well informed regarding the quality and condition of the asset(s) to be purchased. Allen Barron guides our clients through each step of the process including the negotiation of all aspects of Intellectual Property (IP) transfers to include representations and warranties, covenants and any ancillary agreements or licensing arrangements that may exist.
An asset purchase agreement that includes technology or software must be carefully crafted to specify the extent of branding, code, support materials and other electronic assets associated with those assets as well as licenses and IT agreements with other parties. The sale of intellectual property or technology/software assets including patented or copyrighted materials involves a more substantial investigation and due diligence with documented conditions and the transfer of the assets in question. Tax considerations associated with the transaction should be balanced by the value of the assets and contribution they will make to the present and future success of your business.
Accomplishing a merger or acquisition through an asset purchase protects the buyer and limits the liabilities associated with the transaction. If you are considering an asset purchase we invite you to contact us or call 866-631-3470 for a free consultation.