Are You Buying or Selling a Business?
The lawyers at Fisher Stone have you covered! Let us guide you on buying or selling a business, company, or corporation in New York City.
Make sure the right clauses are there to protect you.
Make sure you know what you are getting.
3 Easy Steps
Answer a few easy questions
Draft, review, and assemble all your documents
Have your closing and keep living
Ways to Structure the Deal
There are two ways to buy a business: asset purchase and stock purchase. From the seller’s perspective, the two terms are called asset sale and stock sale. The two sets of terms are two sides of the same coin. They mean the same thing but carry different legal implications for buyers and sellers:
- Asset purchase/sale: buyers buy all or some of the target company’s assets but do not obtain ownership of the company’s securities.
- Stock purchase/sale: buyers buy securities of the target company and hence obtain its ownership; the target company may not need to take any action on its part.
The primary differences between the two methods lie in taxes and liabilities. Your role in the transaction will determine which method is optimal. Generally, buyers would want an asset purchase for its tax benefits as well as to avoid assumption of the selling company’s liabilities; sellers would want a stock purchase for its ease of process and the ability to transfer liabilities.
Buying or selling a business is a complicated process. Regulations abound, and the tasks essential to each transaction vary. Talk to our lawyers to find out how to do it right.
- Determine the price of the business
- Find a proper buyer or seller
- Negotiate details
- Execute sale contracts
- Closing and make filings with governing agencies
In the early stage of negotiation, it would be beneficial for the two parties to lay out basic terms of the transaction in a letter of intent. To structure a purchase/sale transaction correctly will involve consideration of a number of factors, including:
- How will liabilities of the target company shift or stay
- Does the purchase/sale trigger any tax consequences
- The mandatory regulatory filings in the specific type of business
- Change of control in licenses, permits or regulatory approvals
- Level of legal due diligence needed
- Legal protection in contracts
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If you have any questions, our attorneys would be happy to answer them for you. Speak with an attorney today.