M&A Agreements: Opportunities and Perils in Asset Acquisitions

Description

Asset acquisitions offer opportunities and perils that stock purchases and mergers do not, but can be more complex. Buyers often prefer asset purchases as a way to acquire a business without its liabilities, but there may be significant tax costs to the seller and legal doctrines that may limit the effectiveness of liability limitations.

Asset agreement provisions specifying assets and liabilities to be transferred, representations, closing conditions, and indemnification covenants are key to accurately reflecting the parties’ bargain. Deal counsel should also address statutory issues such as bulk sales and fraudulent transfer statutes.

Counsel should also consider issues such as de facto merger and successor liability theories. Other considerations include contractual rights with third parties related to the assets purchased, intellectual property transfer issues, tax implications, confidentiality issues and indemnification issues.

Listen as our authoritative panel of M&A attorneys discusses ways to structure and document an asset acquisition, addressing successor liability, stockholder approval, fraudulent transfers and tax implications. The panel will identify potential issues when assets purchased comprise a separate division of the seller.