PURCHASING A BUSINESS (ACQUISITION)
Business Purchase - Letter of Intent - Due Diligence - Negotiations - Asset vs Share - Purchase Agreement - Closing
Contact Neufeld Legal PC at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com
Acquiring an existing business is rarely, if ever, a straightforward process; instead, it tends to require considerable investigation and analysis, so as to identify and address existing issues and potential concerns that have the very real possibility of devaluing the merger or acquisition, among a range of immediate and latent effects that might well arise from undertaking the transaction improperly. And even with considerable due diligence, scrutiny and investigation, combined with intense negotiations and the drafting of very decisive legal agreements, there is still no certainty that the proposed business target will in fact perform as intended. Nevertheless, that is the challenge with almost every corporate merger and acquisition, such that the appropriate investigation needs to be undertaken, followed by its integration and advancement within your own business efforts, that will hopefully result in the realization of the intended potential that was the very basis for undertaking the original merger or acquisition.
Asset Purchase Transaction
Acquiring merely the assets of a corporation, and not the corporate entity itself, is the premise for an asset purchase and sale. It is a process that strives to reduce the assumption of risks and liabilities, by attempting to acquire only specific components of the business. But in undertaking such a partial cleansing of the acquisition, there is invariably a reduction in the purchase price, as the risk has been reduced (as it is intended to remain with the vendor), yet the underlying work still awaits.
Although not necessarily with the frequency associated with share purchases, asset purchases can be quite complex and challenging, especially when they are allowed to become bogged down by differing perspectives and interpretations of the transaction's form and objectives. This can make the process and/or the results extremely expensive, especially when legal counsel is incapable of managing and navigating the process so as to effectively achieve the client's objectives. This is a critical element that is all too frequently in short supply, unless the lawyer has the capacity to understand business and transform theory into a workable and profitable reality.
Share Purchase Transaction
Retaining the corporate entity, while facilitating the transference or acquisition of the company's stock, is the premise for a share acquisition or merger. Acquiring a company's shares presents an inherent challenge not associated with asset purchases - the fact that the bad comes along along with good, such that all the liabilities (both known and unknown) flow to the acquiring company. This presents many inherent challenges, which can be adddressed in part through the due diligence process and in the negotiation of the terms and conditions of the merger or acquisition agreement - operations from which parties will greatly benefit from the involvement of the appropriate legal counsel.
Share purchases can be exceedingly challenging and complex, especially when they are allowed to become convoluted by alternate perspectives and interpretations of the transaction's form and objectives. This can make the process and/or the results exceedingly costly, especially when legal counsel is incapable of managing and navigating the process so as to effectively achieve the client's objectives. This is a critical element that is all too frequently in short supply, unless the lawyer has the capacity to understand business and transform theory into a workable and profitable reality.
Acquiring an existing business is almost always undertaken at significant cost, and demands a long-term commitment, such that it is imperative that any business acquisition is undertaken with proper counsel, analysis and legal protections. And should there be an issue with the proposed business acquisition, it must be properly dealt with, and where necessary halted, as bad business acquisition can be exceedingly harmful, on so many fronts [more on bad business acquisitions].
For knowledgeable and experienced legal representation when purchasing a business, contact corporate business acquisition lawyer Christopher Neufeld at Chris@NeufeldLegal.com or 403-400-4092 / 905-616-8864.
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Purpose of a Share Purchase Agreement. A Share Purchase Agreement is a legally binding contract that outlines the terms and conditions for the sale and transfer of shares in a corporation from its current shareholders (the Vendor) to the Purchaser. The functional purpose of a Share Purchase Agreement includes . . . Read more. |
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10 Key Aspects of an Asset Purchase Agreement. An Asset Purchase Agreement is the contractual document between the purchaser and the vendor that sets out the legal terms and conditions of the transaction of purchase and sale of specific assets of a corporation or business. The following represents 10 key aspects of consideration . . . Read more. |
