business acquisitions negotiating and preparing the acquisition agreement
TRANSCRIPT
BUSINESS ACQUISITIONS
NEGOTIATING AND PREPARING THE
ACQUISITION AGREEMENT
BASIC TYPES OF AGREEMENTS
• Asset Purchase
• Stock Purchase
• Cash Merger
• Stock Merger
WHAT THE ACQUISITION AGREEMENT COVERS
• Describes the transaction structure, purchase price and procedures for closing
• Allocates risk between the buyer and seller for both known and unknown liabilities and obligations
• Contains promises (i.e., covenants) of the parties
• Contains indemnification procedures
• Contains the extent of commitment to close the transaction.
WHAT THE BUYER WANTS
• Receiving what is expected at closing– Good Title to the Purchased Assets or Stock– All of the Facilities, Individuals, Assets,
Rights, Contracts and other Items Needed to Continue and Enhance the Businss
• The option to “bail out” if the business is not what has been represented or what is expected
• Post-closing protection against contingent or unknown risks
WHAT THE SELLER WANTS
• Certainty and speed of Closing
• Receiving the Purchase Price without Risk
• Not being at risk for the assets, liabilities or operations of the business after the closing
GENERAL SECTIONS OF ACQUISITON AGREEMENTS
• Introduction and Description of Transaction
• Consideration for Transfer of Business
• Representations and Warranties of Seller
• Representations and Warranties of Buyer
• Covenants of the Parties
• Conditions to Closing
• Termination Procedures and Remedies
• Indemnification
INTRODUCTION AND DESCRIPTION OF TRANSACTION• Description of Parties to the Stock Purchase
Agreement– Shareholders as Sellers in a Stock Purchase
Transaction– The Corporate Target is Often a Party to the
Agreement, even if it’s a stock Purchase– In some states, spouses to the shareholders are
necessary– Need to be sure that stock option and stock warrant
holders are parties
INTRODUCTION AND DESCRIPTION OF TRANSACTION• Description of the Form of the Transaction
– Stock Purchase for All of the Capital Stock of the Corporation
– Consider using a Merger transaction in order to not have each of the shareholders sign the Acquisition Agreement and Avoiding a Recalcitrant Shareholder
– Be Certain that All of the Capital Stock is Being Acquired
• Review the Stock Record Books of the Corporation
• Pay particular regard to Stock Options, Stock Warrants and Conversion Rights of Debt and Preferred Stock.
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is madeas of _________, 199__, by ___________, a___________ corporation ("Buyer"), ___________, anindividual resident in ___________ ("A"), and__________, an individual resident in ___________("B" and, collectively with A, "Sellers").
RECITALS
Sellers desire to sell, and Buyer desires topurchase, all of the issued and outstanding shares(the "Shares") of capital stock of ____, a _____corporation (the "Company"), for the considerationand on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agreeas follows:
THIS IS ONLY A PARTIAL VIEW OF THE FULL DOCUMENT. THE REMAINING PAGES ARE INTENTIONALLY NOT SHOWN. THEY ARE SHOWN ONLY IN THE MEMBERS DOWNLOAD AREA.
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