Orlando Asset & Stock Purchase Lawyer
There are a number of legal methods used to purchase or sell a business, but the two (2) most prevalent are the asset purchase and the stock purchase. There are significant differences between these methods that should be understood and considered prior to committing to the method which is most advantageous to the parties involved, and which is the most appropriate for the transaction based on the results to be achieved. Orlando asset & stock purchase lawyer Godfrey has the experience necessary to assist in identifying the appropriate approach based on the total circumstances of the sale and the business concerns of the parties.
Briefly, a stock purchase is just that: the purchase of all (or substantially all) of the stock in a corporation from the individual owning same. For example, Jane Smith owns 100% of the stock in Corporation A. Joe Doe buys Jane Smith’s stock and John Doe now owns Corporation A. Jane Smith deposits the proceeds from the stock sale into her personal bank account, and now has no interest in the corporation.
On the other hand, in an asset purchase, John Doe buys substantially all of the corporate property (inventory, equipment, intellectual property, etc.) from Corporation A, and John Doe starts a new business (possibly using the trade name previously used by Corporation A). Jane Smith, as the owner of Corporation A, either dissolves the corporation and retires, or has Corporation A start a noncompeting business using the proceeds from the asset sale.
One distinct advantage of doing a stock purchase is the potential ease of transition of ownership. Typically, just shares of stock have to be transferred and little or minimal actions are needed to effect the transfer. The employees stay the same, property remains in the name of the company, vendor relationships remain and customers/client base may never know the difference. However, a disadvantage could well be the prior and potentially unknown liabilities of the business. If you buy the stock, you also inherit any “lingering” or unknown problems the company may have. It is important to have an experienced business attorney perform the legal due diligence needed to uncover those potential problems and put in place the legal mechanisms to protect each party’s interests.
An important advantage of doing an asset purchase is the ability to purchase only those assets of the business that are of core value and leave out the few things owned by the business that are of no value to the new business structure. An asset purchase also comes with the exclusion of the company’s “lingering” liabilities, including any employment issues, taxes and potential lawsuit, which remain the responsibility of the seller. However, significant disadvantages include: having to obtain third-party releases or approvals of the transaction from landlords, vendors and lenders, and the loss of beneficial credit ratings, past operating history, and existing business relationships. Attorney Godfrey can provide the legal due diligence needed to identify the potential pitfalls, and provide experienced guidance in resolving issues with practical business solutions to close your transaction in a timely manner.
Contact Our Experienced Orlando Asset & Stock Purchase Lawyer Today
Whether representing the seller or the buyer, there are a variety of legal and practical business concerns that an experienced business attorney can help to identify, and assist the parties in finding mutually acceptable solutions. Attorney Godfrey has over 30 years of hands-on experience assisting clients in the purchase and sale of businesses, both large and small.
Contact Orlando asset & stock purchase lawyer Godfrey online or call 407-459-1285 or toll free 866-249-2256 to discuss your corporate law concerns today.