When it comes to buying or selling a business, the seller and the buyer are both subject to a potentially complicated experience if the right method is not selected. To ensure minimal complications and less of a hassle for all parties involved, the buyer and seller must be aware of the different methods that can be used to buy or sell a business and select the method that best works for the situation at hand. In this instance, there are three different options to consider, an Asset Purchase, a Stock Purchase, and a Merger. Each has its advantages and disadvantages that may help make or break a deal. At Gateville Law Firm, we are Joliet Purchase and Franchise Business Attorneys serving Plainfield, Shorewood, Joliet, Crest Hill, and surrounding areas.
Asset Purchase Agreement in Joliet, Illinois
The first method to consider is an Asset Purchase Agreement. This type of agreement allows more freedom for the buyer side. This is because the Buyer can choose which assets, they want to buy out of the selling business, whether it be a few or the entire business. However, the Buyer must keep in mind that, whatever assets are being purchased out of the selling business will be accompanied by all liabilities associated with that particular asset. If the buyer does not purchase the entirety of the business, then any unsold assets and liabilities must be taken into consideration when the business is in the winding down phase of dissolution.
While the Buyer has the advantage of selecting which assets to purchase, there is a disadvantage in that the purchasing phase will be longer than in other types of business sales because all the assets and liabilities to be purchased must be considered and fully distributed before the sale goes through. Additionally, if the seller is looking to sell the entire business, an Asset Purchase Agreement may not be the best method of sale, since the Buyer is given the option to select which assets they want to purchase and are not required to buy the entire business. Without the entire business being sold, it will not automatically dissolve, and the seller must then wind down and dissolve the company after accounting for the assets and liabilities that are left.
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