Business Purchase-Sale Attorneys in California
There are various ways of acquiring a business. The San Francisco lawyers at the Zurada Law Group are very knowledgeable about conducting due diligence, sales negotiations and formalizing written contracts that will be most beneficial to business clients. We area based in the California Bay Area.
One way of acquiring a business in California is through an asset purchase. Under this scheme, the buyer typically acquires from the seller only certain assets of the business but not the liabilities. The buyer and seller typically sign an asset purchase agreement that defines which assets are included and excluded from the transaction. An advantage of this type of transaction is that the Seller can avoid buying the liabilities of a business, but a disadvantage is that the buyer is not acquiring a “turn key business” and significant assets such as goodwill may be excluded from the purchase.
Another way of structuring a business purchase-sale is through purchasing all of seller’s ownership interest in the business. This is referred to as a stock purchase or a stock acquisition when the business to be acquired is a corporation, but the principles are the same for acquisition of partnerships and limited liability companies. A stock acquisition involves the purchase of all or substantial outstanding shares of stock of a corporation. An advantage of this transaction is that it simplifies the business purchase-sale transaction and merely transfers ownership control of the entire business to be acquired to the purchaser. A disadvantage is that the buyer will be taking over not only the assets but also the liabilities of the business.
Business purchase-sale transactions can also be done through mergers. Generally, a merger is the union of at least two companies which can take place in various ways. The company being purchased can merge into the buyer or become its subsidiary, or both buyer and seller can merge into a newly formed company controlled by the buyer. Although the reasons for merging in a particular manner are complex, the effect is that the buyer acquires control over all of the assets and liabilities of the seller.
Regardless of how a business is acquired, it is essential that you get a knowledgeable business attorney to draft the asset purchase agreement or a stock purchase agreement. There are many issues that must be considered in such agreements including:
- identification of assets or shares being transferred
- payment terms
- representations and warranties being made
- due diligence parameters
- dispute resolution procedures,
- venue, and
- governing law.
Merger agreements are significantly more complex.
Each contract to acquire a business must be specifically tailored to the transaction and the attorney must push for inclusion of different clauses and language depending on whether the attorney is representing the buyer or the seller. Typically one of the sides draft the initial contract and includes as many favorable clauses and language as possible for the party they represent, and it is then up to the opposing attorney to change any unfavorable language and skew the contract in favor of the other party.
Whether you are selling or purchasing a business, the Zurada Law Group’s attorneys based in the San Francisco / California Bay Area are ready to guide you through the process and will represent you to negotiate favorable terms. Please call us for a FREE initial consultation, at 415-637-8483 or fill up the Free Consultation space provided on this website.