Mergers & Acquisitions

Purchase and Sale of a Business: Structuring the Transaction

We continue our series on the purchase and sale of a business by exploring the structure of the transaction. These transactions generally fall under one of two categories, an asset sale or a stock sale. Today’s post highlights some of the key features and differences between the two structures.

The Asset Sale An asset sale is the purchase of the individual assets and liabilities of the business. In an asset sale, the seller will retain possession of the legal entity, e.g. ABC Corporation, and the buyer purchases the individual assets of the company, including equipment, inventory, fixtures, licenses, goodwill, trade names, etc. Typically the seller will retain the company cash, and the seller often remains responsible for any long-term debt obligations.

Buyers tend...

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Business Startup

Avoid Unwanted Liabilities When You Buy a Business

Today’s guest blogger is Brian Rogers, a corporate lawyer at St. Louis-based Evans & Dixon. A contracts aficionado, Brian publishes the Contracts Guy blog and he is the editor of his firm’s new project, the Blog for Business Law, which will be launched on April 16.

“Leave the gun. Take the cannoli.” Fictional mobster Peter Clemenza delivers this famous line in The Godfather after a drive into the country with the godfather’s driver Pauli. The driver betrayed his boss and Clemenza has just meted out justice.

Take the good stuff. Leave the bad stuff. That’s the main idea behind buying a business via an asset purchase.

What’s an Asset Purchase?

There are innumerable ways to structure the purchase of a business, but most deals are...

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Business Startup

Considering Your Exit Strategy- It’s Never Too Early to Start Planning Your Business Exit Strategy

When starting a business and creating a business development strategy, many entrepreneurs and business owners forget one of the most important considerations: the exit strategy. Especially at the beginning, it’s not easy to think about how your business will end. However, when your business is just starting out, it is often the best (and least complicated) time to discuss an exit strategy. At this point, your business is small (in number of employees and cash), there aren’t significant liabilities, and the business has only a few contracts with individuals outside the company. It will become increasingly difficult to discuss exit strategies as your company grows in size financially and in the number of employees, investors, and shareholders. Today we’ll lay...

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