Monarch Law Group
Monarch Law Group
Expertise, Individual Attention, Results
New York
Long Island

Monarch Law Group
Monarch Law Group
New York
Long Island

Options for Structuring the Purchase of a Business

Commercial Ligation

When you are seeking to buy or sell an existing business in New York, there are many factors to consider regarding the structure of the transaction. In general, there are three ways you can acquire an existing organization. Though state law on corporations covers the legal requirements, it does not provide much guidance on how to choose the right fit for your situation. A New York business transaction attorney can offer advice on your options as they relate to your objectives, but an overview of the different alternatives may be helpful.

Merger

This acquisition structure involves integrating the target company into the acquiring enterprise, usually through creation of a third entity under the purchasing organization. Using a subsidiary reduces the potential risk of assuming the target company’s financial obligations and legal liabilities. Still, you should consult with an attorney regarding how to achieve the merger through this type of “triangular” arrangement. It will be necessary to consider whether the target’s assets remain with it or are subsumed by the created subsidiary.

A few additional considerations to note with mergers include:
Stock Acquisition

Here, the purchasing company acquires stock in the target company from its stakeholders. The transaction must be approved by the board of directors for the acquiring organization. However, the acquiring organization must come to an agreement with each target company shareholder, being the owner of the stock. It is usually not necessary to get approval from the board of directors of the target company, because the stockholders hold the shares.

Acquisition of Assets

With this type of business acquisition, the purchasing company buys the assets titled in the name of the target organization. Again, it is often preferable to create a subsidiary to protect the acquiring entity. One issue that may arise through an asset purchase involves long-term contracts with third parties. It may be necessary to obtain consent when you are transferring contractual rights and responsibilities to the purchasing company.

There are also unique considerations with an asset acquisition, such as:

Consult with a New York Business Transactions Lawyer About Acquisitions

For more information on buying or selling a business, please contact the attorneys at Monarch Law Group at our Wall Street or Long Island, NY offices. We can set up a consultation to review your circumstances, discuss your goals, and develop a strategy to achieve them.

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