Sacramento Business Purchase and Sale Lawyer

Whether you’re buying or selling a business, the contract used for the deal is extremely important. Because it sets up the overall structure of the deal and identifies risk allocation, tax consequences and allocation, and pre- and post-closing obligations. Two common transaction structures are asset purchases and stock purchases. A Sacramento business purchase and sale lawyer is ready to help.

Asset Purchases

In an asset purchase, the buyer purchases selected assets, and sometimes assumes selected liabilities, of the target business. This permits the buyer, subject to negotiation, to pock and choose which contracts, inventory, intellectual property, real estate, or customers the buyer wants to purchase. Sometimes the seller may need to remain liable or enter into third-party consents for the assignment of a contract or sale of a business, such as in the case of franchises.

In an asset sale involving an entity, the stock, membership, or partnership interest as held by the owner of the target doesn’t usually move. Sometimes this results in the target business becoming an “empty shell” of an entity, whereafter it is dissolved or repurposed to a different end. The buyer of assets may already have his or her own entity that they intend to use, or the buyer may choose to do business as a sole proprietorship. A business purchase and sale lawyer in Sacramento is ready

Stock Purchases

In a stock purchase, the buyer acquires shares or membership interests in the target entity, such as a stock corporation or a limited liability company (LLC). The buyer essentially steps into the shoes of the seller and “inherits” all of the assets, liabilities, contracts, and potential liabilities of the target entity. This structure is sometimes simpler than an asset purchase. Because the same business entity will exist under different ownership, there is no need to form a new business or get a new tax identification number. Stock purchases may still require third party consent, such as in the case of the entity being a tenant of a lease which may treat a transfer of ownership as a new tenancy requiring the landlord’s consent and signature on an assignment of lease agreement.

Let a Sacramento Business Purchase and Sale Attorney Assist You Through the Process

Each structure has tradeoffs, so the style of the transaction can itself be the subject of negotiation and significant attention. Key provisions often include:

Which assets, liabilities, and customer/client contracts are included or excluded
Representations and warranties, and how long they survive after the deal closes, relating to the condition of the business
Indemnification mechanisms, such as the circumstances under which the buyer is required to cover the seller for a liability and vice versa
Purchase price adjustments, including working capital targets, net asset adjustments, and earn outs
Conditions of closing, such as regulatory/licensing approvals and the completion of due diligence
Risk allocation provisions, including insurance, limitations of liability, and scoping of liability relative to known and unknown issues

Business & Real Estate Law Firm PC assists clients who are intending to or in the process of buying or selling a business. With our Sacramento business purchase and sale lawyer, you may expect individual attention and a focus customized to the nature of the business and your objectives. Contact us today.