Stock and Asset Transfers
Quarterman Hodson & Morang, P.C. is experienced in assisting with the sales of businesses, including assisting in obtaining appropriate consents and drafting stock or asset transfer agreements, bills of sale and other documentation required to properly transfer assets.
Typically, asset sales and purchases in mergers and acquisitions can be a complicated matter, and so often the parties to such a transaction seek the advice of an experienced business law attorney. One way for one company or business to “acquire” or buy another company or business is to buy its assets. Such a transaction has multiple variables and factors that need to be considered, such as (1) how the sale will be structured, that is, what will the buyer use to pay for the assets; (2) what can and can’t be sold or transferred; (3) if and when the shareholders need to approve of the sale; and (4) who’s responsible for the debts and liabilities of the merged or acquired company. A business can sell its assets to another company for cash, notes, or property, or for stock of the acquiring company or corporation. The typical sale involves cash for the purchase price or for part of the purchase price, with a note or notes for the balance. Other variations of the basic “assets for cash or notes” transaction include (1) financing the acquisition with cash earned from the public or private sale of the buyer’s stock; (2) arranging for the buyer to purchase only part of the seller’s assets immediately and to lease the rest with an option to buy; and (3) exchanging the purchaser’s stock for the assets of the selling corporation. There are numerous possibilities here, and the form of the transaction will depend largely on the needs and capabilities of the buyer and the seller. For example, if the buyer is short on cash, a stock exchange might be best. Generally, the parties negotiate on what will be sold, and the buyer usually picks and chooses the assets, or some times it buys them all. Regardless, there are some assets that can’t be transferred automatically. For example, mortgages and loans often contain a clause forbidding the seller-debtor to dispose of the property or assets, and so the buyer, if it wants that property or asset, will likely have to assume the mortgage or the loan, subject of course to the lender’s credit approval. Also, contracts, like property leases, and franchises and licenses, might not be able to be transferred without the consent of the landlord or owner of the franchise or license. In Georgia, if the buyer does not intend to assume all of the seller’s debts, the buyer often must notify the seller’s creditors of the assets that the buyer is going to take and debts that it will assume.