Asset and Stock Purchase Agreement Attorney in Jacksonville and Orange Park
When buying or selling a company, it is standard to sign one of two agreements: an asset purchase agreement or a stock purchase agreement. Both of these are similar in their use, however, their purposes do vary. Deciding between the two depends on the company’s needs and goals. An asset purchase agreement, also known as an APA, is intended for those who want to purchase or sell a company’s assets and this agreement covers the terms and conditions of the sale. On the other hand, a stock purchase agreement is for those who wish to buy a company by either becoming a majority or total shareholder.
If a firm is to be bought or sold, then it is recommended that you consult with a business lawyer who concentrates in asset and stock purchase agreements when pursuing this transaction.
Difference Between Asset and Stock Purchase Agreements in Florida
Both asset purchase agreements and stock purchase agreements are useful tools for selling or buying a business. While APAs are used for buying/selling all or some of a company’s assets, a SPA is used for purchasing all or some of a company’s stocks. As well, APAs are sometimes used in conjunction with an SPA. For example, an SPA outlines how many shares a buyer will purchase from the company and what level of control they will have after the agreement is signed. However, the legal entity remains intact as with assets, contracts, supply agreements, and partnerships. Some elements that can be found in an SPA include:
- Purchase price – the agreement must outline how much the stocks will be sold for as well as any price adjustments or escrow requirements.
- Termination – there will be a specified “dead-drop” date where the buyer or seller will still possess the right to terminate the agreement.
- Closing Conditions – these are specific conditions that must be met or waived prior to the finalization of the agreement.
- Execution – this will detail how many shares will be purchased and how the shares will be transferred to the buyer and any other relevant details.
- Liabilities – this section, usually long and detailed, will dictate which liabilities the buyer will assume. Often times, there will be some liabilities that the buyer will not take on and leave it to the seller until the agreement is finalized.
Our Law Firm Assists Clients with Asset and Stock Purchase Agreements in the Jacksonville and Orange Park areas
The use of these agreements are best suited in different situations. While sellers usually prefer stock purchase agreements, buyers take preference to asset purchase agreements. There are some key differences between the two, however, including:
- Liabilities – While an SPA has the potential for transferring more liabilities of the company, an APA can exclude such liabilities to avoid lawsuits or an unfavorable contract.
- Transfers – In an APA, all assets are transferred over while in an SPA, nothing is transferred – only control as the legal entity of the company remains intact.
- Logistics – An SPA gives the buyer full ownership of the company through the transfer of stock while an APA only transfers operations through the purchase of major assets.
- Taxes – In an APA, the buyer usually reaps a beneficial tax advantage while the seller pays ordinary taxes. In an SPA, the seller reaps a beneficial tax advantage while the buyers can end up paying higher taxes.
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