In the case of an asset purchase transaction, the buyer takes over the target transaction by purchasing a collection of specific assets and rights and sometimes taking responsibility for certain debts that include the target transaction. The main document involved in this type of transaction is an asset purchase agreement (APA). The buyer and seller will negotiate exactly what assets the buyer will buy from the business after the closing of the business. Assets not agreed upon by the buyer at the end of the APA are retained by the seller. Therefore, it is important that the APA be clearly worded to include only the assets for sale that the buyer is prepared to acquire. Asset Purchase Here, the buyer “chooses” the items or assets of the company he wants to buy. It is important to determine exactly what is selected; such as machinery, warehouses, work in progress, premises, contracts, value, etc. It is equally important to determine which positions are not purchased, such as existing creditors and debtors. As a footnote, we will indicate that there are regulatory/agreement mechanisms in place to deal with situations in which shareholders refuse a sale procedure when the majority is interested in promoting it. These are, of course, Bring-Along and Tag Along mechanisms that can be enshrined in a constitution agreement or in the statutes of a company, and they are even expressed in the Corporations Act, which provides for a mechanism with similar purposes and purposes, in which a party interested in acquiring the shares of a company may also forcibly acquire the shares of opposing shareholders (in accordance with the terms of the law or statutory article). Several benefits of buying shares appear below: when the shares of the company that runs the business are acquired, it is usually the buyer`s lawyers who establish the first documentation. This is because there will be important guarantees and compensations in the documentation to protect the buyer, which makes it useful for his lawyer to prepare them.
In this blog, we explain the difference between the options of sale and purchase. In the event that the sale involves the transfer (transfer) of a lease agreement, this can cause problems, since the lessor must give legal consent to the transfer for the premises. Since a lessor is not involved in the disposal of assets, he often does not have the motivation to ensure that the transfer progresses on time and will most likely require reimbursement of their legal costs related to the transfer. Unlike an asset purchase, stock buyers cover the seller`s tax debts, so buyers should ensure that sellers pay all tax debts before the sale. Buyers can also obtain the seller`s commitment to pay all pre-sale tax commitments that will not be discovered until after the sale. In some cases, the parties may agree to withdraw a certain percentage of the proceeds from a fiduciary account intended to repay undedified debts. When two companies decide to merge their business by acquiring one business by the other, there are a number of opportunities they can seize if the two main companies (1) are the acquisition of shares of the target company (2) the purchase of the business and/or assets of the target company (of course, there are additional opportunities to complete the transaction through the merger, to which we will not refer in this article).