In addition to reviewing the financing aspect for mergers and acquisitions, M&A attorneys also provide invaluable advice relating to drafting and negotiations of contracts for stock purchase sales. A good M&A attorney will also share his or her knowledge of mergers and acquisitions law on a local, state, and federal level.
Common Stock Purchase Agreement - 1-800-ATTORNEY Inc. and Robert J. Lyszczarz: Learn more about this contract and other key contractual terms and issues by viewing the many sample contracts FindLaw has to offer in our Corporate Counsel Center.
AGREEMENT. Section 1. Sale and Issuance of Common Stock. 1.1 Subject to the terms and conditions of this Agreement, the Company has authorized the sale and issuance (the " Issuance " to Purchaser of the Shares. At the Closing (as defined in Section 2.1 ), the Company shall sell to Purchaser, and Purchaser shall purchase from the Company, the ...
Apr 26, 2021 · Owning a stock confers many rights to the owner, or stockholder. A stockholder, or shareholder, has the right to a share of the company’s earnings. They also have voting rights which may be used to vote on certain corporate decisions, such as the election of the board of directors. This may sound like a large amount of power, but that depends ...
The importance of a lawyer’s review of an Agreement of Purchase & Sale. An Agreement of Purchase and Sale, once signed, and once all of the conditions (for example, financing and home inspection) have been waived or fulfilled is a binding contract between the buyer and seller which cannot be changed unless both parties agree to do so. Usually ...
A stock purchase agreement (SPA) is a common M&A contract used to take control of another company by buying all or a majority of another company’s shares. The legal entity of the company remains intact, as do any contracts, assets, partnerships, supply agreements, and major elements of the business. Control simply changes over to the buyer. A SPA specifies how many shares will be purchased and (in cases where not all shares are transferred in the sale) what kind of control the buyer gains after the transaction is complete.
A common way to buy another company is to simply become a majority or total shareholder through a stock purchase agreement. In M&A transactions, stock purchase agreements are a complex, yet much-used tool to allow companies to acquire other companies. If you are considering any merger or acquisition, especially through a notoriously complex ...
In a SPA, this is usually a very long, detailed section, as risk is a major factor in the transaction that must be allocated and established. In some cases, the buyer will not take on certain liabilities, making them instead something that the seller must deal with before the transaction can be completed. Purchase Price.
A material adverse change clause allows both parties terminate a transaction in the event of certain, specified types of major adverse changes to the state of the company before closing. Closing Conditions. Usually, there are conditions that must be satisfied or waived before the SPA can be closed.
Logistics. The basic structure of SPAs and APAs differs greatly. A SPA transfers full ownership of the company through a purchase of stock. An APA transfers operations of the company through purchases of major assets, including equipment, property, leaseholds, licenses, client lists, trade secrets, trade names, and inventory.
A SPA transfers full ownership of the company through a purchase of stock. An APA transfers operations of the company through purchases of major assets, including equipment, property, leaseholds, licenses, client lists, trade secrets, trade names, and inventory. Usually such deals include no cash and no debt.
In an APA, buyers can "step-up" the company's depreciable basis in its assets, thereby getting a beneficial tax position. The seller, on the other hand, will pay ordinary taxes (not capital gains taxes) on proceeds related to tangible assets sold for a higher overall tax burden. Transfers.
Tax representations and warranties cover a number of tax concerns, including, but not limited to: filing of tax returns, payment of taxes, tax liens, sufficiency of tax reserves, audit history, tax sharing agreements, FIRPTA, and a number of other tax issues. Tax representations and warranties are used as part of the tax diligence process and also form the basis for buyer’s recourse through the indemnification provisions for pre-closing tax exposures.
Tax covenants also cover an array of future tax related actions, including making tax elections, filing of future tax returns, payment of taxes, handling of tax refunds, filing of amended returns, and dealing with tax audits for pre-closing periods.
Tax representations and warranties are used as part of the tax diligence process and also form the basis for buyer’s recourse through the indemnification provisions for pre-closing tax exposures. The accuracy of the representations and warranties, as of the closing date, may also be a condition to closing.
Tax indemnification is a promise to pay for taxes incurred that contradict the agreement of the parties, generally embodied in the tax representations and warranties. Indemnification is usually an option in private deals, but the value of indemnification is contingent on seller’s creditworthiness.
An asset purchase agreement (APA) might benefit a buyer who wants to exclude liabilities or redundant assets. For example, a target may have uncollectible accounts receivable.
In a stock deal, the buyer purchases shares directly from the shareholder. Stock acquisitions are the most common form of acquiring a private business. They are mostly used by small corporations selling stock, but not usually when the owner is the sole stockholder, or when the buyer is acquiring 100% of the stock.
A stock purchase agreement (SPA) is the contract that two parties, the buyers and the company or shareholders, written consent is required by law when shares of the company are being bought or sold for any dollar amount. In a stock deal, the buyer purchases shares directly from the shareholder.
Representations and warranties of the seller and buyer – Here the buyer and seller list all of the statements they are signing off to be true. For example, the seller warrants that they own the stock, and that the corporation is in good standing, and where the buyer warrants their ability to consummate the transaction.
An asset purchase agreement (APA) might benefit a buyer who wants to exclude liabilities or redundant assets. For example, a target may have uncollectible accounts receivable. All assets and liabilities being bought and sold must be itemized in the APA.
One major difference between preferred and common stock is that common stock has variable returns while preferred stock has a guaranteed, fixed dividend.
A stockholder, or shareholder, has the right to a share of the company’s earnings. They also have voting rights which may be used to vote on certain corporate decisions, such as the election of the board of directors. This may sound like a large amount of power, but that depends on how many shares the stockholder owns.
The more stock an individual owns, the more assets or earnings they are entitled. There are two different kinds of stock, common and preferred. Common stock is, as the name suggests, the most common type of stock. When stock is discussed, it is generally common stock. This type of stock is considered the most risky of investments.
When stock is discussed, it is generally common stock. This type of stock is considered the most risky of investments. It is considered more risky than preferred stock. Preferred stock is similar to common stock in that it gives the stockholder ownership in a company.
A preferred shareholder will receive payment before a common shareholder in the event of a company liquidation. The stock is also callable, meaning it may be repurchased by the company at any time and for any reason. The majority of companies will divide their stock into different classes.
These classes are designated by letters. This is done in order to keep voting rights isolated to a particular group. Stock prices may change based on the economic concept of supply and demand.
Stock prices may change based on the economic concept of supply and demand. The more stock that is purchased, the higher the stock price increases. The inverse is also true. The less the stock is purchased, the more the price will decrease.
An Agreement of Purchase and Sale, once signed, and once all of the conditions (for example, financing and home inspection) have been waived or fulfilled is a binding contract between the buyer and seller which cannot be changed unless both parties agree to do so.
A financing condition allows a buyer to terminate the Agreement of Purchase and Sale if he does not qualify for financing. No matter how friendly your banker may be, if you qualify for financing he will not assist you in terminating the Agreement by delivering to you a letter stating that you do not qualify for financing if in fact you do.
The Purchaser shall have completed the due diligence review of the business, results of operations, condition (financial and otherwise), prospects, assets and liabilities of the Company and its business and the results of such due diligence shall be satisfactory to the Purchaser in its sole and absolute discretion.
No party to this Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Agreement because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control.