Winston-Salem & Greensboro Asset Purchases and Acquisitions Attorneys
Experienced, strategic guidance for business transactions and purchases
When a company or proprietorship is ready to expand in the form of asset acquisitions or purchases, legal help is almost certainly required. Considerations during the asset acquisition process vary depending on the company’s corporate structure, ownership arrangement and the types of benefits the asset purchase offers. Additionally, owners may be subject to taxes, ownership agreements and regulatory compliance.
The business law attorneys at Hartsoe & Associates, P.C. have over 25 years of experience assisting clients with their strategic business goals, from formation to asset purchasing to dissolution. We also provide skilled litigation and mediation and arbitration services. Call today for a consultation.
What is an asset purchase agreement?
When one company decides to purchase another, it has two primary methods available – buy the company outright by becoming a sole or majority shareholder, or buying the assets held within the company. An asset purchase agreement allows the buyer to take ownership of the tangible and intangible assets of the company, without becoming the owners. This means an asset purchase agreement allows the buyer to leave the seller’s business legally intact – but purchase the desired assets within the company.
The agreement specifies and details matters like the terms of the sale, the assets to be purchased, and the rights and liabilities of the involved parties. A strong asset purchase agreement should consider the following issues:
- Detailed designation of business assets being sold and purchased, and of which assets are not included in the agreement
- Clear definition of any liabilities being assumed by the buyer and which liabilities will remain with the seller
- Purchase price and details on how it will be paid, if a deposit is required, and the details regarding closing
- Warranties from the seller that they have the authority to sell the assets and that those assets are lien-free
- Warranties from the buyer that they have the authority to execute an asset purchase agreement
- Whether the buyer wants to include optional provisions like indemnification clauses, non-competition agreements, or risk of loss clauses
These are only a sampling of the various factors a business owner must take into consideration when making the decision to acquire assets. The knowledgeable attorneys at Hartsoe & Associates provide knowledgeable guidance.
What types of assets can be in an asset purchase agreement?
First, do not confuse asset purchase agreements with a merger or acquisition, where a company is selling all of its assets, or with a stock purchase agreement, where a company is selling all of its shares. After an asset purchase from another business, the seller’s business continues to exist.
Assets can be tangible or intangible. Following are some typical examples of assets in an asset purchase agreement:
- Hospitals purchasing medical equipment and supplies
- IT companies purchasing software or hardware
- Companies purchasing customer lists and “goodwill”
- Pharmaceutical companies purchasing patents and medicines
- Restaurants purchasing liquor licenses and inventory
The Winston-Salem business attorneys at Hartsoe & Associates consult with clients about the specific assets their business wishes to purchase.
What are the benefits of an asset purchase over a stock purchase?
For the buyer, asset purchases provide several benefits over stock purchases. The buyer can choose which assets their business wants to acquire and leave others behind, giving them the freedom to avoid taking over liability for any assets they do not want. In a stock purchase, the buyer is required to take on all assets and liabilities. Additionally, our Greensboro asset purchase attorneys can design an asset purchase agreement that provides tax benefits to the buyer.
What types of terms are in an asset purchase agreement?
Although an asset purchase agreement is quite similar to other business contracts, there are a few key distinctions. Our lawyers ensure the following important provisions and terms are included:
- Assumed liability. This clause establishes which liabilities the buyer assumes, and does not assume, through the asset purchase.
- Assumption and assignment agreements. These include the documents and permits that confirm necessary approvals for the purchase.
- Bills of sale. Individual assets each require a unique bill of sale.
- Closing conditions. This section of an asset purchase agreement details the conditions of closing that must be satisfied before all parties can sign off on the contract.
- Covenants. A covenant ensures the seller continues to operate the business with the same level of care during the gap between signing the agreement and closing, and any other actions that could affect the contract.
- Indemnification. In the event of breaches or misrepresentation, an indemnification clause compels the seller to compensate the buyer.
- Property transfer documents. All tangible property requires individual transfer documents from the seller.
- Purchase price. An asset purchase agreement must specify the price and any possible contingency that may change it, payment plans and the method of payment.
- Schedule of purchased assets. An agreement needs a detailed description of assets, including warranties, condition, liens, liabilities or other limitations.
- Title transfer documents. The title for each asset must be formally transferred to the buyer.
- Warranties and representation. A warranty ensure the quality and condition of the assets being purchased. It also ensures compliance and minimizes fraud.
Protecting businesses during large transactions
When a favorable opportunity comes up for a business, owners must act quickly. However, they cannot bypass due diligence. Performing due diligence allows a business to discover any potential problems before they occur. Our attorneys take due diligence very seriously, including:
- Checking for any back taxes owed on the property or properties
- Confirming all back taxes were properly filed and all past debts properly resolved
- Ensuring all contracts protect the buyer’s best interests
- Searching for any liens on the property or assets
The business law attorneys at Hartsoe & Associates, P.C. perform all of these steps and more, helping our clients avoid pitfalls and risks that would put their asset purchase in jeopardy. We also assist clients with matters like business formation, litigation and operating agreements.
Smart legal representation for business purchase agreements
At Hartsoe & Associates, we have over 25 years of experience providing services and counsel for business transactions and contracts. Our attorneys help with asset purchase agreements between large corporations as well as small businesses. We represent business owners in Winston-Salem and Greensboro, as well as the Piedmont Triad. To schedule a consultation with an experienced attorney, please call 336-725-1985 or fill out our contact form.