Your Go-To Mergers and Acquisitions Lawyer in Calgary
Rather than starting a business from scratch, you may be interested in acquiring in an existing business or venture, which can be assisted by our mergers and acquisitions lawyers in Calgary. Just as we excel in legal areas that can include real estate law and legal guidance for small businesses, we can also help you with all services pertaining to mergers and acquisitions.
As reputable M&A lawyers in Calgary, we can ensure that we will work diligently with you to assist with the appropriate due diligence pre-acquisitions and any agreements that may be required in order to complete your deal.
Dimic Law is here to protect what matters most!
Acquisition of a Business Related to the Purchase of Shares
In a share purchase transaction, a buyer acquires the shares of a corporation that owns assets and carries on business. The buyer of the shares does not directly or indirectly acquire the assets or liabilities of the corporation whose shares are being sold. However, the value of the shares depends on the underlying value of the assets and liabilities of the corporation.
Preference for this type of transaction for the buyer includes that the initial purchase price when purchasing shares may be lower than an asset purchase; there is no GST payable on a purchase of shares, a share purchase avoids the payment of a sales tax levied by jurisdictions that have a sales tax, processing the transaction may be less expensive because the buyer will not incur certain fees such as registering security against assets or land titles registration costs and a share purchase minimizes the disruption to customers, suppliers and employees of the business.
From the seller’s point of view, a seller may receive more net after-tax sales proceeds in a share sale than in an asset sale/purchase transaction, and there are no restrictions that may stop a sale, unlike with a sale of assets. Full due diligence from both sides is required in order to properly protect from the risks associated with the transaction, and this process can be made more simplified by hiring us as your corporate lawyer in Calgary.
Legal Counsel For Business Acquisition Related to Asset Purchase
The buyer may prefer to purchase assets directly instead of the shares because they would only be accountable for liabilities associated with particular assets, avoiding unsecured creditors only through the asset purchase and allowance for certain income tax advantages. The seller may prefer to purchase assets
Contact one of our business acquisition lawyers in Calgary or one of our corporate lawyers today.
Frequently Asked Questions
What is a merger or acquisition?
A merger generally involves combining two businesses, while an acquisition occurs when one business purchases another business, its shares, or selected assets. The appropriate structure depends on the goals of the parties, the companies involved, and the legal and financial details of the transaction.
What is the difference between a share purchase and an asset purchase?
In a share purchase, the buyer acquires the shares of the corporation and takes ownership of the company as a whole. In an asset purchase, the buyer purchases selected assets and may assume only specific liabilities identified in the agreement. Each structure has different legal, financial, and tax considerations.
Why is due diligence important when buying a business?
Due diligence allows the buyer to investigate the company before completing the transaction. This may include reviewing corporate records, contracts, financial information, assets, liabilities, employment matters, intellectual property, leases, and potential legal disputes. The process helps identify risks that could affect the value or terms of the deal.
What documents may be required for a business acquisition?
The documents depend on the structure and complexity of the transaction. They may include a letter of intent, confidentiality agreement, purchase agreement, shareholder resolutions, corporate records, financing documents, assignments, releases, and closing documents.
Should I buy the shares or assets of a business?
The appropriate option depends on factors such as existing liabilities, contracts, assets, financing, tax consequences, and the buyer’s long-term plans. A lawyer can review the proposed transaction and explain the legal differences between purchasing shares and purchasing assets.
How can a seller prepare a business for sale?
A seller can prepare by organizing corporate records, financial statements, contracts, licences, employee information, intellectual property documents, and details about existing liabilities. Addressing missing or outdated documents before due diligence may help make the transaction more efficient.
How can a mergers and acquisitions lawyer help?
A Mergers and Acquisitions Lawyer in Calgary can help structure the transaction, conduct legal due diligence, identify potential risks, negotiate the terms of the deal, prepare purchase agreements, and coordinate the legal closing process.
