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Structuring And Reviewing Complex Asset Purchases

Mergers and acquisitions (M&As) that involve substantial or complex corporate assets require knowledgeable counsel. With so many fine details involved, the stakes are exceptionally high if an error or oversight is made.

At DeCandido & Azachi, PLLC, our lawyers have an extensive track record of helping small businesses and midsized companies, entrepreneurs and startups purchase the corporate assets necessary to expand their markets. We offer the personalized and strategic counsel you need to effectively complete these transactions in Queens, Nassau and throughout New York State.

The M&As Process With Corporate Assets: What To Know

Due diligence is the cornerstone of this process, encompassing financial, legal and operational examinations of the target company. Financial analysts scrutinize the books to ensure that the assets are worth the proposed investments while legal teams pore over contracts, compliance issues and potential liabilities associated with the assets. Additionally, operational experts assess how the assets will fit into the acquirer’s current business model and whether they align with long-term strategic goals.

Negotiations between the entities involve agreeing on a fair valuation, which can be complex due to differing valuation methods and projections of future asset performance. Once they agree on the terms, the transaction moves toward closure. This includes obtaining approvals from regulatory bodies and shareholders, finalizing the legal transfer of assets and integrating them into the acquiring company’s operations. Throughout the process, both parties must navigate potential obstacles, such as cultural mismatches, integration challenges and regulatory hurdles, to ensure a successful transaction.

How Is An Asset Purchase Different From A Stock Purchase?

When purchasing an existing business, there are two methods for structuring the sale: asset purchases and stock purchases. Asset purchases involve the specific sale of tangible assets, such as customer lists, inventory, equipment or the business’s name. Stock purchases occur when the buyer purchases a company’s stock.

What Are The Advantages Of An Asset Purchase?

While there is no inherently better method for structuring the purchase of a business, asset purchases do offer several advantages when compared with stock purchases:

  • Limit liabilities: When conducting an asset purchase, the buyer can specify which liabilities, if any, they are willing to assume. When purchasing stock, the buyer is vulnerable to acquiring a significant amount of uncertain liabilities.
  • Tax advantages: Asset purchases may allow the buyer to receive a step-up in cost basis. They may also receive tax deductions for depreciation, and they can amortize goodwill across a 15-year period.
  • Avoid minority shareholders: If you are looking to fully purchase a business, minority shareholders who are reluctant to sell can make that difficult. By purchasing the assets, you may be able to bypass this potential problem altogether.

What Are Some Common Considerations?

The scale and stakes of these M&As mean that there are countless aspects for each party to consider. Some of the most common – and critical – include:

  • Due diligence
  • Corporate governance
  • Antitrust issues
  • Tax considerations
  • Employees, culture and Labor law
  • Technology systems

With so many things to contemplate, you need robust counsel from a team that has collaborated with outside professionals across many kinds of M&As.

What Is Included In Due Diligence?

When purchasing a business’s assets, it is critical to fulfill your due diligence by conducting a thorough analysis of the sale. With more than 30 years of business law experience, our attorneys can assist with all elements of an asset purchase, including:

  • Compiling a comprehensive list of a company’s assets
  • Outlining the financing options available
  • Assisting with raising additionally needed capital to complete the purchase
  • Drafting noncompete, confidentiality and other binding agreements associated with the sale

Why Is It Important To Have An Attorney?

We cannot overstate the significant role that your corporate attorneys will play in your company’s short-term and long-term success during and following a merger or acquisition. When you have a lawyer with strong contract negotiation skills, you can feel assured that you are signing a contract that protects your rights to the fullest extent. Your attorney can reduce your liability and your risk of exposure to litigation: two things that every business should avoid. And, put simply, hiring a corporate asset lawyer means that your business venture has a stronger chance of long-term viability for many years to come.

Working Collaboratively With Your Business

Our team understands the importance of completing your asset purchase in a timely and cost-efficient manner. Our attorneys work closely with our clients to develop clear strategies that seek to obtain outcomes that are reflective of their underlying goals.

For more information or to speak with an attorney about your upcoming asset purchase, please call us in Forest Hills at 718-690-7715. We also welcome your questions through our contact form.