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.

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