Atlanta Asset Purchases and Sales Attorney
Sometimes purchasing the assets of an Atlanta company makes more sense than purchasing its stock because when purchasing a company’s stock you run the risk of inadvertently purchasing hidden liabilities (such as prospective lawsuits against the company). The purchase of a company’s assets requires the drafting of an asset purchase and sales agreement as well as many other legal documents.
Asset Purchase vs. Stock Purchase
When purchasing a company, two primary methods are immediately obvious. If the company has issued transferable shares (as in a corporation or limited liability company, for example), the buyer can purchase them. The other alternative is to simply purchase the assets of the company, leaving the seller with an empty “shell company” at the end of the process. Buyers tend to prefer a purchase of assets in most instances because the transfer of assets will not transfer company liabilities such as debts or pending lawsuits.
A company asset purchase may include both tangible and intangible assets. Tangible assets may include items such as real estate, equipment, furniture, fixtures, inventory, vehicles, and cash. Intangible assets may include intellectual property rights such as trademarks, patents, copyrights and trade secrets, company goodwill, accounts receivable, executory contracts and leases, among other property.
Drafting an Asset Purchase and Sale Agreement
The asset sale and purchase agreement is typically signed by both parties before the sale is finalized on the closing date. An asset sale and purchase agreement can be long and complex. Some of its typical provisions include:
- A list of assets being sold. These are often listed in a binding attachment to the agreement;
The sale price for each asset. It is crucial that you “do your homework” before assigning these values;
Terms for a security deposit to be provided by the buyer if he defaults on the sale before or on the closing date;
- Detailed requirements for the closing date;
- Arrangements for a promissory note if buyer will not pay in full by the closing date;
- A statement that the buyer will not pay the seller’s company debts or other company liabilities. The buyer may agree to assume certain known liabilities in exchange for a lower price;
- Representations and guarantees by the buyer and the seller (a representation by the seller represents that he owns the transferred assets, for example)’
- A provision on the risk of loss of the assets. This risk typically passes to the buyer at the closing of the transaction;
- Standard contract “boilerplate” provisions such as amendment of the agreement, dispute resolution and governing law (if applicable).
Closing the Deal
The closing date normally occurs after the date that the asset purchase and sale agreement is signed. At the closing, the transfer of assets becomes legally effective. The closing process can be surprisingly complex and can require a great volume of documentation. At the closing, the buyer normally makes payment of the remainder of the purchase price (the initial purchase price minus the value of the deposit).
Following is a very incomplete list of dozens of documents typically required for a company asset purchase closing:
- Bill of Sale,
- Titles for all titled assets such as vehicles and real estate,
- Assignment documents for the assignment of items such as executory contracts and intellectual property rights,
- A list of employees with whom the buyer will sign employment contracts,
- A non-compete agreement between buyer and seller,
- A certified check or other document evidencing payment of the purchase price,
- A promissory note (if applicable),
- A list of business licenses and permits,
- A U.C.C. Financing Statement,
- A copy of corporate resolutions authorizing the sale.
Asset purchases can turn out to be deceptively complex transactions. The company asset purchase attorneys at Danowitz & Associates P.C. have years of experience in arranging every detail of these types of transactions. If you are considering selling or purchasing most or all of the assets of a company located in the Atlanta metro area, call us today at 770-933-0960 or email us at email@example.com
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Danowitz & Associates P.C
300 Galleria Parkway, Suite 960, Atlanta, GA 30339