The two main ways to acquire a business are through the acquisition of assets or shares. The acquisition of assets may involve the acquisition of some or all of a company`s assets, usually in the absence of a recovery of historical liabilities. In the event of a share acquisition, the company is acquired with all assets and liabilities. The buyer is not the direct owner of the assets or liabilities. He will own the shares, but the value of the shares depends on the assets within the company minus the debts. Depending on the type of activity of the target, there may be many other representations and guarantees. For example, sellers are notified during the sale transaction and buyers are assured that they have the protection of the guarantees and compensations contained in the asset or share purchase contract. The final scope depends on the size and nature of the transaction. The lens and the seller will usually make the following insurances and guarantees. Due Diligence is an information-gathering process whereby the buyer strives to know as much as possible about the acquired business or the assets acquired.
The goal is to get an idea of the objective in terms of strength, weakness and potential liabilities. The share purchase agreement is the main contract that governs the acquisition of the shares of a company or group of companies. It is the most important agreement and contains the terms of sale. Depending on the complexity and size of the transaction, the agreement can often cover more than 100 pages. It generally contains conditions of precedent that may be subject to the sale of business lists that must be provided, and compensation and guarantees. The agreement is traditionally written by the buyer, except in an auction. In the case of asset purchases, only selected assets and liabilities are acquired. The acquisition of assets may include the transfer of separate assets that make up the entity.
It is more likely that in the event of a sale of assets, the agreement of a third party is necessary than in the case of the purchase of shares. Real estate held under a lease or contract with third parties is generally subject to third-party approval to change the identity that occurs when the assets are sold.