acquisition structures bh

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ACQUISITION STRUCTURES

Submitted To : Submitted By:Ms. Amisha Mehta Kunal Kashyap (11)

Sumit Kumar (23 )



What is AcquisitionStructure???



Types Of Acquisition Structure

There are three common types o ac!uisitionstructure"

Asset #urchase Stoc$ #urchase Mer%er



Asset Purchase

An asset purchase is &here the buyerac!uires some or all o the assets o thetar%et' usually in echan%e or cash or

buyer shares. n this type o transaction' the buyer is

buyin% only those assets and assumin%those liabilities o the tar%et that it chooses

to ac!uire. The tar%et continues to eist' but &ith +ery

di,erent assets' liabilities and operationsthan prior to the ac!uisition.



Understandin Asset Purchase



Asset Purchase ! Ad"antaes

-n$no&n' undisclosed or contin%entliabilities do not carry o+er to the buyer.

istin% union a%reements do not carry o+er

to the buyer. istin% employee pension and bene/t

plans do not carry o+er to the buyer. Step up in ta basis o ac!uired assets'

resultin% in smaller ta deductions. More 0eibility in choosin% accountin%

treatment or ac!uired assets and liabilities.



Asset Purchase ! #isad"antaes

orporate identity and eistin% %ood&ill are notpreser+ed.

orporate structure and operations chan%e'&hich is disrupti+e to the business.

ontracts' employment a%reements and otherle%al documents may need to be chan%ed'inno+ated or transerred.

Ad+anta%eous ta assets and ri%hts may be lost. Bul$"sales la&s and other potential restrictions

on the sale o assets may apply. Sales ta may be an issue.



Stoc$ Purchase

A stoc$ purchase is &here the buyerac!uires the +otin% shares o the tar%et'usually in echan%e or cash or buyer

shares.

n this type o transaction' the buyer isbuyin% all the assets and liabilities o thetar%et &hich' rom a le%al standpoint'continues to operate as it did beore theac!uisition.



Understandin Stoc$ Purchase



Stoc$ Purchase ! Ad"antaes

orporate identity remains unchan%ed. orporate structure and operations remain unchan%ed. ontracts' employment a%reements and other le%al

documents usually remain unchan%ed by the

ac!uisition. ontranserrable ri%hts and assets (e.%. ranchises'

licenses and permits) can usually be retained by theBuyer.

#reser+es ad+anta%eous ta assets and ri%hts (e.%. netoperatin% loss carryor&ards)

A+oids bul$"sales la&s and other potential restrictionson the sale o assets

A+oids sales ta issues



Stoc$ Purchase ! #isad"antaes

-n$no&n' undisclosed or contin%ent liabilitiescarry o+er to the Buyer

istin% (possibly disad+anta%eous) uniona%reements carry o+er to the Buyer

istin% (possibly disad+anta%eous) employeepension and bene/t plans carry o+er to the Buyer.

ess ability to cherry pic$ assets and liabilities o step up in ta basis o ac!uired assets'

resultin% in smaller ta deductions #ossible ri%ht o appraisal issues must be

addressed i there are dissentin% shareholders



%erer

A mer%er is &here t&o or morecompanies combine their operations andassume a ne&' combined le%al identity.

n this type o transaction' one partymer%es into the other' recei+in% shares inthe sur+i+in% corporation.

4ollo&in% the mer%er' the mer%in% party'also $no&n as the 5disappearin%company'6 ceases to eist.



Understandin %erer



%erer ! Ad"antaes

e%ally simple. ess costly to a,ect than an ac!uisition. ontracts' employment a%reements and

other le%al documents usually remainunchan%ed by the ac!uisition.

#reser+es ad+anta%eous ta assets andri%hts.

A+oids bul$"sales la&s and other potentialrestrictions on the sale o assets.

A+oids sales ta issues.



%erer ! #isad"antaes

A%reement o shareholders is re!uired toa,ect a mer%er.

ooperation o both /rms7 mana%ement

is re!uired to a,ect a mer%er. -n$no&n' undisclosed or contin%ent

liabilities carry o+er to the Sur+i+in%ompany

istin% employee pension and bene/tplans carry o+er to the Sur+i+in%ompany.



CASE STU#&

acquisition structures bh

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