The buyer’s payment terms are then specified in the terms of sale. The purchase price can be paid in full with cash, but it’s more likely to be paid in part with cash and part with seller financing. The buyer gives the seller a promissory note for a portion of the purchase price in this case. Asset purchase agreements have several advantages and disadvantages when compared to the use of a share purchase agreement (or a share purchase agreement) or a merger agreement in the context of a merger or acquisition transaction. In the event of a capital acquisition or merger, the buyer receives all of the target company’s assets without exception but also assumes all of the target company’s liabilities.
10+ Equity Purchase Agreement Samples
A stock or equity purchase, on the other hand, occurs when a buyer buys a stock or other equity interests in a company and becomes its legal owner. This type of transaction also involves a beneficial transfer of assets and liabilities from the seller to the buyer, but rather than taking the assets and liabilities directly, the buyer acquires ownership of the entire company. The assets, unlike in an asset purchase, remain titled in the company’s name and are not to be re-titled to the buyer.
1. Equity Purchase Agreement Template
2. Editable Equity Purchase Agreement
3. Equity Purchase and Seller Agreement
4. Equity Interest Purchase Agreement
5. Equity Purchase and Contribution Agreement
6. Printable Equity Purchase Agreement
7. Equity Purchase Real Estate Agreement
8. Equity Purchase Agreement Closing Checklist
9. Amendment to Equity Purchase Agreement
10. Oncology Equity Purchase Agreement
11. Assets Equity Purchase Agreement
Pros of an Equity Purchase
- Voting rights and ownership – By acquiring voting stock in the company, an equity purchase allows the buyer to gain control of the company. Unlike an asset purchase, in which the buyer simply buys the company’s assets, an equity purchase involves the buyer purchasing the company itself, which can be advantageous if the company is performing well or has additional value as a going concern.
- Easier to assign – An equity purchase does not necessitate the company transferring ownership of all assets to the buyer. Though it may appear to be a minor technicality, re-titling assets can be a costly and time-consuming legal process. Instead, the buyer buys the company’s stock, which gives the buyer legal ownership of the entire company, but the assets remain in the company’s name. If the company being acquired has particularly complicated assets, such as patents, trademarks, permits, or government contracts, this can be significant.
- Straightforward – Some private companies have a small number of shareholders. If you’re looking to buy a company with a small group of owners, a stock sale might be a better option than a complicated asset purchase, where individual assets and liabilities must be listed.
- Lower capital gains taxes for sellers – When it comes to buying a business, there are a lot of tax implications to consider. Although buyers may lose the “step-up basis” benefits of an asset purchase, sellers may prefer to sell their business as a stock sale because the sale of stock is taxed at the capital gains rate.
What is an asset purchase?
An asset purchase agreement lists all of the assets and liabilities that the buyer is willing to buy and assume, with the seller keeping everything else by default. The buyer receives title to all of the specified assets, but the seller retains legal ownership of the company.
What are the things included in the asset purchase?
- Real estate
- Existing contracts
Buying a business is a big decision, and there are a lot of different ways to do it. Because there are significant differences between the two methods, you should consult an attorney to discuss the advantages and disadvantages of an asset purchase vs. an equity purchase.
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