The due diligence of a San Diego asset purchase is quite often given less priority and attention than it must warrant. An asset purchase transaction is actually legally quite complex. The buyer agrees to purchase the specific assets and associated liabilities the asset purchase contract specifies will be acquired and/or assumed. The benefit of the asset purchase is the ability to acquire assets (and any associated acceptable liabilities) which appears flexible and simple on the surface. The due diligence of a San Diego asset purchase is actually much more complex than a simple bill of sale and perhaps a loan assumption.
The specifics of the transaction include the nature of the asset to be acquired, specific reference to identifying numbers or characteristics and the condition of the asset to be acquired. The seller should disclose known defects or issues. Usually private asset acquisitions are structured as taxable transactions. In the event of existing liens, lenders should be notified early in the acquisition process. Will the transaction include any financing? What is the best way to structure the financing?
The due diligence of a San Diego asset purchase should verify several important aspects of the transaction. Does the seller have clear title to the asset? What is the value of the asset itself and what are any associated liabilities or financing the buyer will be assuming? The key issue many miss is searching for impediments to the seller’s ability to actually sell the assets. Are there any pending lawsuits or contingent liabilities that may cause issues for the buyer or even the reversal of the transaction by a court or creditor down the road? If the asset to be acquired is part of an operational business such as a customer base or distribution facility substantial investigation must be made to ensure the past, present and future likelihood of success and any unforeseen or undisclosed impediments which might impact the value of the asset(s) in the future.
The mergers and acquisitions attorneys at Allen Barron integrate with our tax, accounting and legal teams on these transactions. This allows a buyer to turn to a single source for every aspect of the transaction. This includes the asset purchase contract, financing documentation, tax implications and advice, clear title and contingent liability investigation, and forensic accounting examination of all past records and important financial reports. If you are considering an asset purchase in San Diego we invite you to contact us or call 866-631-3470 for a free consultation. Learn about the integrated legal, tax, accounting and business advisory services of Allen Barron and how they can help to ensure smooth and successful transactions.