If your client is contemplating an asset acquisition, there are many complex factors to consider. In an asset acquisition, the buyer only acquires the assets and liabilities it identifies and agrees to acquire and assume, subject to any liabilities imposed on the buyer as a matter of law. This is fundamentally different from a stock acquisition or merger where the buyer acquires all the assets and liabilities (including unknown or undisclosed liabilities) of the target company as a matter of law. The ability to pick and choose specific assets and liabilities provides the buyer with flexibility. The buyer does not waste money on unwanted assets and there is less risk of the buyer assuming unknown or undisclosed liabilities. However, this also makes asset acquisitions more complex because the buyer has to spend time identifying the assets and liabilities it wishes to acquire and assume.
The attached document created by Practical Law Company’s expert attorneys is a comprehensive checklist outlining the steps in an asset acquisition of a private company, including process and structure considerations, preliminary agreements, due diligence, the asset purchase agreement and pre-closing, closing and post-closing matters. For more information about this document and to access a FREE trial for our service please visit our website at Practicallaw.com
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