Many entrepreneurs launch their business journey by acquiring an existing business that comes with assets, clientele, or market presence. However, understanding how to approach the purchase—whether through an asset or stock acquisition—is crucial. Enlist the expertise of a Jurado & Associates business attorney to navigate this critical decision and guide you through the process.
Approach One in Business Acquisition: Asset Purchase
Think of this as the “a la carte” option, allowing you to pick and choose specific parts of the business. Ideal if you only need certain assets, it provides transparency into what you’re acquiring before finalizing the deal. This approach minimizes risks, especially beneficial for entrepreneurs starting.
Two caveats to note for an asset purchase: you need an existing entity to hold acquired assets or must form one for this purpose. Also, keep in mind that purchasing assets essentially breaks the business apart.
Approach Two in Business Acquisition: Stock Purchase
Unlike an asset purchase, a stock purchase acquires the entire business, transferring legal ownership as-is. Sometimes insisted upon by sellers who want to retain existing staff, it may suit buyers wanting to operate an established business without dismantling it.
The catch is that it’s an all-or-nothing arrangement. You must buy the whole business, including all assets—good and bad. A stock purchase is potentially rewarding but comes with inherent risks.
Determining the Optimal Approach for Business Acquisition
The answer depends on various variables, primarily your risk appetite. Asset purchases are generally safer, but stock purchases may align better with your business goals or risk tolerance. This decision demands legal expertise.
Jurado & Associates, P.A. has experienced business lawyers to help with these decisions. They provide informed and dependable counsel throughout the acquisition process. If faced with uncertainty about buying a business, call us at (305) 921-0976 or email [email protected].
