PURCHASING A BUSINESS (MERGER / ACQUISITION)

 Business Sale  -  Equipment  -  Buy-Out  -  Leasing  -  Financing  -  Amalgamation  -  Corporate Rollover  -  Expanding into Canada

Contact Neufeld Legal PC at 403-400-4092 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 really 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.

Readiness for a Merger / Acquisition

If you are considering engaging in a merger or acquisition so as to increase your business' results through expansion, you need to thoroughly determine if your business is truly ready for a merger or acquisition. Factors to consider include the following:

(i) SWOT Analysis. A SWOT [strengths, weaknesses, opportunities and threats] analysis of your business will provide the foundation from which you can determine how your business shall be building upon its strengths, resolving its weaknesses, optimizing its opportunities and avoiding threats.

(ii) External Factor Analysis. Undertaking an assessment of external factors as to how they will impact your business, the amalgamated or merged business going forward and the cost of the contemplated transaction. If is also important to determine how external factors can be curtailed or limited, so as not to impede the transaction and the future growth of the business.

(iii) Availability of Financing. Ascertaining if you have the financing available to complete the proposed transaction and insuring that such financing will be made available on commercially reasonable terms.

(iv) Objective Assessment. Be clear and realistic about your expectations from the proposed transaction. The contemplated merger or acquisition should be consistent with the overall strategic direction of your business.

For knowledgeable and experienced legal representation when purchasing a business, contact corporate business lawyer Christopher Neufeld at Chris@NeufeldLegal.com or 403-400-4092 / 905-616-8864.